ESG Disclosure as Extraterritorial Command: Legal Tensions Between the EU Digital Product Passport and Asian Data Sovereignty
Accelerating resource depletion and environmental degradation have prompted a global shift from a linear to a circular economy. The EU has taken regulatory lead by introducing the Digital Product Passport (DPP) under the European Sustainability Due Diligence Regulation. Designed to ensure product-level traceability and sustainability compliance, initially for batteries and with planned extension to other sectors, the DPP imposes broad ESG disclosure requirements on all actors across global value chains (GVCs). As a precondition for EU market access, these obligations effectively extend EU regulatory authority into upstream jurisdictions.
This extraterritorial reach creates legal tensions with the data sovereignty regimes of upstream countries, particularly in Asia, where states such as China and Indonesia play central roles as raw material suppliers and component manufacturers. This paper addresses the following critical yet underexplored questions: What specific legal conflicts does the DPP generate in relation to Asian data sovereignty? What legal and geopolitical consequences might follow? Can existing international legal frameworks, such as the WTO Technical Barriers to Trade Agreement and relevant soft law instruments, effectively mediate these emerging conflicts? If not, what new legal mechanisms are needed to align unilateral sustainability regulations with coherent global sustainability governance?
This paper argues that the DPP, as an ESG-based unilateral sustainability regulation, generates significant legal tensions with the data sovereignty of upstream jurisdictions in Asia. Drawing on the cases of China and Indonesia, it shows how these tensions may provoke legal countermeasures, lead to the rise of competing national DPP regimes, and contribute to the fragmentation of GVCs. The paper demonstrates that existing international legal frameworks are ill equipped to manage such conflicts and proposes concrete legal mechanisms to enable more balanced and effective global sustainability governance.