Compliance Playbook For US Companies In Response To Europe's CSRD

Forbes

2 days ago

James Felton Keith is CEO at Inclusion Score Inc. and Labor Economist at Keith Institute. His latest book is #DataIsLabor.
As Europe tightens the screws on corporate accountability through the Corporate Sustainability Reporting Directive (CSRD), many American business leaders may assume this legislation is a foreign affair. It's not.
U.S. companies with European operations—whether through subsidiaries, branches or major supply chains—will be swept up in the CSRD's broad reporting requirements. And the clock is ticking.
Having already started and phasing in through 2028, the CSRD will apply to over 50,000 companies, including thousands of U.S.-based firms. This includes if your company is publicly listed in the EU, has more than €150 million in EU revenues and at least one EU subsidiary or branch or is a large private company doing business in the EU.
In other words, you can be subject to CSRD compliance, even if your headquarters is in New York, Houston or Silicon Valley.
Compliance is not just about carbon disclosures. It demands a comprehensive environmental, social and governance (ESG) narrative—validated by third-party audits and reported in a digital format aligned with the European Sustainability Reporting Standards (ESRS). Social impact, particularly around human capital and workforce inclusion, is a major pillar.
This is where I think many U.S. companies will stumble. American firms often lag behind their European counterparts in measuring and managing workforce equity in a systematic and certifiable manner.
To communicate effectively across international borders, companies and governments are turning to the ISO-30415:2021 standard on diversity and inclusion, which provides a clear framework that supports the social reporting requirements of the CSRD. It breaks diversity and inclusion into four business functions:
1. Governance
2. Human resources
3. Product delivery
4. Supplier diversity
These all mirror the key dimensions the CSRD asks companies to assess. Among the four, product and supplier diversity is typically the least developed, particularly across the S&P 500 and S&P Europe 350. Overall, though, I find that none of the four DEI categories are being effectively integrated into or conveyed through companies' operational risk management framework or personnel.
This is not just a regulatory issue, but an insurance risk management cost. This is a global issue, and it is important to note that Lloyd's syndicates are using the ISO-30415 standard for DEI to segment underwriting of employment and professional insurance lines as grievances and lawsuits rise.
According to a recent analysis by Bank of Montreal (BMO) and the Swiss Re Institute, the social inflation rate—the trend of rising insurance claims costs driven by increased litigation—is not expected to slow in 2025, posing a threat to insurer profitability and overall market stability. Under normal conditions, social inflation rates are about 3.7%. However, rates averaged about 7% between 2017 and 2023.
For companies under CSRD scrutiny, this means focusing on audit-readiness for social impact statements, maturity models for continuous improvement and workforce data collection and analysis frameworks that can stand up to European regulators. My previous article explores the shift toward systematic DEI management through the adoption of ISO standards.
To be clear, the ISO standard is the first and only global consensus on intentional equity and inclusion, designed as a risk management tool for complex organizations—particularly those operating across state and international borders. Companies should seek certification of both individuals and organizational silos in the standard to communicate their maturity to both insurers and regulators.
In my experience, people often assume that there have been many "DEI" standards, but that is not the case. What we're seeing instead is the emergence of an industry focused on managing people alongside technology as central to the future of work.
The ISO 30415 standard, in particular, is currently being adopted by a range of national and international regulators, including the French Association for Standardization (AFNOR) in France, the British Standards Institution (BSI) in the United Kingdom, the Standards Council of Canada (SCC) in Canada, the Colombian Institute of Technical Standards and Certification (IconTec) in Colombia and the National Science Foundation (NSF) in the United States. The ISO-30415 Diversity and Inclusion Service Management Forum currently offers certification in more than 100 countries and in four languages.
The list of those who will be impacted within the United States is extensive and include:
• Big tech (e.g., Apple, Meta, Microsoft, Google) with large European footprints
• Pharmaceutical and healthcare companies (e.g., Pfizer, Johnson & Johnson, Abbott) with global clinical trials and EU sales
• Financial services firms (e.g., JPMorgan Chase, Goldman Sachs, Citibank) with EU branches or listings
• Multinational manufacturers and energy giants (e.g., General Electric, ExxonMobil, Ford, Caterpillar)
• Retail and consumer goods companies (e.g., Procter & Gamble, Nike, Coca-Cola, McDonald's) selling to or sourcing from the EU
If your company does over €150 million in revenue in Europe, has EU-based subsidiaries or trades in European markets, you're on the hook, and you will need a social accounting system to demonstrate compliance.
Failing to comply with CSRD means more than reputational damage. It could lead to legal penalties, investor pressure and contractual barriers to market access in the EU. On the other hand, companies that take proactive steps to align with ISO-30415 stand to gain:
• A competitive edge in global procurement and investment
• A clear internal roadmap for DEI implementation
• The ability to future-proof their workforce reporting in line with international standards
As European regulators shift sustainability from voluntary to mandatory, American businesses must shift diversity and inclusion from a moral initiative to a measurable business function. I believe the ISO-30415 standard is the best tool to get there—and the CSRD is the reason you can't wait.
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