The Extra-territorial Effect of ESG Legislation From the EU: What Malaysian Lawyers Should Know?

29 April 2024

Our Head of European Desk, Dr. Harald Sippel, conducted a seminar at the Bar Council of Malaysia entitled The extraterritorial effects of EU Law in the field of ESG. During the two-hour session, Dr. Sippel made it clear that ESG requirements in the EU ultimately force Malaysian companies in supply chains of large EU companies to comply with the ESG standards demanded by EU legislation. Being forced is not a legal requirement, but a practical requirement: failure to comply will lead to being left out from global supply chains, even when Malaysian companies are not exporting directly to the EU, but only supply to another company, which then supplies to an EU-procurer. This is because the EU procurers will impose such obligations upon everyone in the supply chain.

Dr. Sippel also highlighted to the participants what contractual clauses they are likely to see in practice and how they can best protect their Malaysian clients from the potential risks related to non-compliance with ESG obligations imposed by procurers. The event was very well-attended, with over 60 people having registered.