European Law Panel Addresses Impacts Of EU ESG Requirements Outside The EU

In October, the European Law Institute held its annual meeting in Dublin, Ireland. The meeting brought together judges, attorneys, professors, and policy experts from throughout Europe to discuss the issues facing the European Union. One panel addressed the rise in environmental, social, and governance reporting and the struggles non-EU countries face from EU reporting standards.

ELI is an independent legal think tank funded, in part, by the European Union to draft model rules and provide guidance on emerging topics, focusing on European legal development in a global context. ELI was founded in 2011 and is based at the University of Vienna. ELI Fellows gather in the fall for the annual meeting that alternates between Vienna and other host countries in the EU. The 2024 annual meeting was hosted in Dublin, Ireland at the King’s Inn.

The ELI annual meeting featured a series of panels addressing legal developments including artificial intelligence, family law, and the courts. Speakers included Marko Bosnjak, the President of the European Court of Human Rights, Donal Gerard O’Donnell, the Chief Justice of Ireland, Rossa Fanning, the Attorney General of Ireland, George Kodek, the President of the Austrian Supreme Court, and Michael O’Flaherty, the EU Commissioner for Human Rights.

Notably, the 2025 annual meeting will have a theme of “Fundamental Rights and Environmental Law.” This will most likely have a heavy focus on the recent opinion by the European Court of Human Rights that established a link between human rights and the protection from the effects of climate change.

At the 2024 meeting, one panel focused on ESG and how the EU Corporate Sustainability Reporting Directive impacts European countries not in the EU. The panel, “Navigating the ESG Regulatory Landscape in Turkey and its Harmonisation with European Law”, was hosted by ELI Turkish Huba suborganization within ELI for members from Turkey.

Over the last few years, the EU has adopted a series of regulations aimed at addressing climate change and holding businesses accountable for their environmental and human rights actions. The CSRD, Corporate Sustainability Due Diligence Directive, and the Green Claims Directive are driving the development of national law throughout the EU and is forcing other European countries and their businesses to adapt to continue to do business within the EU.

The panel speakers were Kadir Berk Kapanci, a professor at MEF University Faculty of Law in Istanbul and visiting scholar at UNIDROIT – the International Institute for the Unification of Private Law; Başak Başoğlu, an associate professor at Pîrî Reis University Law School and the Sir Roy Goode Scholar at UNIDROIT; Dr. Bora Kaya, the general counsel for Gama Holding JSC; Dr. Cem Veziroğlu, an assistant professor at Koҫ University and affiliate scholar at the UNESCO Chair on Gender Equality and Sustainable Development; Dr. Beril Özcanli, assistant professor at MEF University; and Dr. Sinan Yüksel, faculty member at Galatasaray University Faculty of Law.

To begin the discussion, Başoğlu highlighted Turkey’s need to align with EU regulations, especially given the critical role of EU-bound exports. With the EU Green Deal driving sustainability and carbon neutrality, Turkish companies face new pressures to adopt EU standards, impacting both practices and legal frameworks.

While the EU is driving legal development, neighboring European countries are not as quick to develop regulations. This leaves businesses that fall under EU laws in a difficult situation where their supply chain is not compatible with their goals.

Kapanci looked at mechanisms for businesses to meet sustainability goals in their value chain in the absence of regulations in Turkey. He argued that, if a contractual party’s behaviors are incompatible with a business’ sustainability principles, they can use contractual obligations to force action. This can also operate as a substitute for change in the absence of regulatory requirements.

Looking at the legal liability of board members for a violation of the CSRD and the Taxonomy Regulation, Kaya noted that any liability would primarily fall under the laws of their home country, in this case Turkish law.

The EU passed the CSDDD in July, but it will not go into effect until 2026. In the interim, existing national laws will continue to impact companies. Özcanli noted that the most relevant and far reaching is the German Supply Chain Due Diligence Act. However, this will only impact non-EU companies doing business in Germany, not the full EU.

Overall, the panel agreed that the fragmented approach of implementation for the various regulations creates compliance struggles for businesses not based in the EU, but doing businesses within the EU. The panel also seemed concerned that Turkey is implementing reporting requirements without the proper enforcement procedures, leaving a gap that some believe indicates a lack of desire to implement the proposals.