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2026 will be a critical year for Malaysian exporters into the EU. Five major regulations – CBAM, EUDR, PPWR, ESPR and CSRD – will take effect almost simultaneously, each demanding different supply-chain data from carbon emissions to plot-level geolocation, packaging recyclability and product passports. The challenge is not one rule in isolation, but the integration of overlapping requirements across the same supply chain. Companies that prepare early by building centralised compliance and data systems will safeguard EU market access – those that delay risk exclusion.

Bain & Company’s Visionary CEO’s Guide to Sustainability 2025 highlights how global business leaders are moving from lofty promises to pragmatic, verifiable action. For Malaysian companies, the lessons are urgent as the European Union rolls out sweeping ESG regulations – including the Deforestation Regulation (EUDR), Carbon Border Adjustment Mechanism (CBAM), Corporate Sustainability Due Diligence Directive (CSDDD), and Packaging and Packaging Waste Regulation (PPWR). These rules make sustainability both a legal and commercial requirement for exporters seeking EU market access. The article distils Bain’s insights into four key lessons for Malaysia: bridge the “do-say gap” with proof, turn sustainability into business value, build robust rather than fragile supply chains, and tackle Scope 3 emissions through supplier engagement. The message is clear – compliance is no longer optional. Malaysian businesses that act now will safeguard their EU market presence and gain a competitive edge, while those that delay risk exclusion.

The article explains that the EU–Malaysia statement recognises MSPO as helpful but not carte blanche under the EUDR – the Regulation is a due-diligence regime requiring EU operators to secure plot-level geolocation, verify compliance with Malaysian law, assess and mitigate risk, and file a Due Diligence Statement – with Malaysia currently standard-risk (minimum 3 % checks) and timelines starting 30 December 2025 for large/medium EU companies and 30 June 2026 for micro/small; it urges Malaysian producers to prioritise an audit-ready Legal Compliance Dossier covering land-use rights, environmental approvals, third-party and indigenous rights including FPIC, labour and human-rights compliance, tax/customs and anti-corruption, supported by contract flow-downs, remediation procedures and governance – and dispels myths such as “MSPO equals automatic compliance.”

Directors in Malaysia must meet strict requirements under the Companies Act 2016. Learn what European companies should know about resident directors, disqualification risks, and the importance of a clear company constitution.