Until recently, legally required public tax disclosures for US multinational corporations have been the proverbial faraway train coming down the tax tracks. They haven’t been as pressing as this year’s tax filings or the fascinating progress of the OECD two-pillar project, even with EU public country-by-country reporting (PCbCR) for corporate income taxes now on the books. (And Romania, in particular, is moving quickly).

But since the Council of the EU adopted the Corporate Sustainability Reporting Directive on Nov. 28, suddenly the train—potentially carrying a much broader set of reporting requirements—got a whole lot closer to the station, with CSRD reporting being due in some cases for Fiscal Year 2024.

Even tax people following CSRD may be surprised to learn that there’s an issue, because nothing in it specifically requires tax reporting. However, the interaction of another EU instrument, the EU taxonomy together with the OECD Guidelines for Multinational Enterprises, have made this a current and major issue that could go well beyond the boundaries of PCbCR.

You may wonder: What does the CSRD have to do with a US (and non-EU) headquartered business? What do CSRD and the EU taxonomy on environmental sustainability have to do with tax? And what do OECD guidelines have to do with an EU directive? The answer is that they’re all coming together to make many US and other non-EU multinationals subject to a potentially significant novel type of tax reporting.

Let’s start with CSRD. This doesn’t require tax reporting as such. The proposal was raised as the CSRD was under consideration but then was dropped. It builds on an earlier directive on non-financial reporting, and it focuses on a wide range of business activities and whether they’re unsustainable against a number of environmental, social, and governance metrics.

This requires reporting on policies, targets, and action plans, including when such items haven’t yet been adopted. This might involve discussing potentially sensitive business model and value chain transformation—although there are some exceptions relating to IP and know-how. And this report is subject to mandatory assurance by the statutory auditor or another assurance provider if the relevant …