CSR And Codes Of Business Ethics In The USA, Austria (EU) And China And Their Enforcement In International Supply Chain Arbitrations

This book analyzes the implementation of CSR reporting and codes of business conduct and ethics in the legal systems of the USA, Austria and China and their enforcement in international supply chain arbitrations. The book demonstrates that long-term profit maximization is increasingly intertwined with corporate ethics and CSR policies. In order to prevent window-dressing and greenwashing, certain control mechanisms and legal standards are required along the entire supply chain. This book introduces an ethics and CSR system recommending a reward-based whistleblowing mechanism, internal oversight by a CSR and Ethics Committee comprised of independent board members and at least one sustainability expert, and an external, independent and comprehensive assurance of CSR reports provided by auditing firms or newly formed governmental agencies consisting of certified CSR experts. The author emphasizes the significance for supply chain leaders to ensure contractual enforcement of their codes of business ethics and conduct along the supply chain. Against this background, the author created a comprehensive fictitious case scenario covering a supply chain dispute arising from the breach of the supply chain leaders code of business conduct and ethics by a lower-tier supply chain member. The author acknowledges the fact that in most of the cases the governing law of international supply chain contracts is English law or law based on English law. Thus, the author discusses potential contractual claims for damages arising from a loss of profits caused by a loss of reputation resulting from violations of core provisions of the chain leaders supplier code of conduct pursuant to English law. As international supply chain disputes usually involve more than two parties, and international arbitration is the ideal means for the resolution of these disputes, the book compares the arbitration rules for consolidations and joinders of some of the most significant international arbitration institutions: SIAC, ICC, AIAC, ICDR, VIAC, CIETAC and HKIAC. The book is directed at legal practitioners, legislators of various jurisdictions, board members of corporations, ethics and compliance officers, academics, researchers and students. It is the authors main goal that the book serves as an inspirational source for the establishment or the improvement of a corporate ethics and CSR system preventing window-dressing and greenwashing and covering the entire supply chain. Furthermore, it is intended that students develop a deeper understanding for the enforcement of corporate ethics and CSR policies--from back cover Introduction......Page 5 Contents......Page 7 About the Author......Page 11 Abbreviations......Page 12 List of Figures......Page 16 1.1 Corporate Governance......Page 17 1.2 Shareholder Theory of Corporate Governance (Shareholder Primacy Model)......Page 18 1.4 CSR......Page 19 1.5 Corporate Code of Business Conduct and Ethics......Page 20 2.1 Hypothesis 1......Page 22 2.2 Hypothesis 2......Page 23 2.3 Hypothesis 3......Page 24 3.1 From Shareholder Value to Stakeholder Value?......Page 25 3.2.1 The U.S. Sarbanes-Oxley Act of 2002......Page 30 3.2.2 The U.S. Sentencing Guidelines......Page 37 3.2.3 Corporate Codes of Ethics Post-SOX......Page 38 3.2.4 The Audit Committee Pursuant to US Law and the Requirement for an Ethics and CSR Committee Comprised of an Ethics and CSR Expert and Independent Directors......Page 51 3.3 CSR Reporting in the USA......Page 54 3.3.1 Positive Financial Impact of CSR Policies on the Financial Performance of Companies......Page 55 3.3.2 Recent Sustainability Index Event Studies......Page 60 3.3.3 The Si2/IRRCI Report on the State of Sustainability and Integrated Reporting 2018......Page 62 3.3.4 KPMG Survey of Corporate Responsibility Reporting 2017......Page 64 3.3.5 Mandatory Reporting of Material CSR Aspects in Financial Reports of US Companies?......Page 65 3.3.6 The Requirement for an Independent CSR and Ethics Committee, Minimum CSR Reporting Standards and Mandatory External Evaluations of CSR Reports......Page 68 4.1.1 Section 70 of the Austrian Stock Corporation Act......Page 71 4.1.2 The Business Judgment Rule......Page 72 4.1.3 Compensation of Members of the Management Board......Page 73 4.2 The Austrian Code of Corporate Governance......Page 74 4.3 Mandatory Corporate Governance Reports......Page 78 4.3.1 OMV AG......Page 79 4.3.2 STRABAG SE......Page 80 4.3.4 Erste Group Bank AG......Page 81 4.4 Corporate Codes of Ethics or Conduct......Page 82 4.4.1 OMV AG......Page 83 4.4.2 STRABAG SE......Page 86 4.4.3 voestalpine Group......Page 90 4.4.4 Erste Group Bank AG......Page 92 4.4.5 Do Violations of a Code of Ethics/Conduct Trigger Criminal Consequences Pursuant to Section 163a of the Criminal Code?......Page 96 4.5.1 Directive 2014/95/EU and the Austrian Sustainability and Diversity Improvement Act......Page 98 4.5.2 Analysis of CSR Reports......Page 103 4.6 The GRI Sustainability Reporting Standards......Page 106 4.8 Mandatory Due Diligence as to Human Rights, Environmental and Governance Risks Along Supply Chains......Page 111 5.1 Mandatory Stakeholder Value in China?......Page 115 5.1.2 The Chinese Code of Corporate Governance......Page 116 5.1.3 Chinese Stock Exchange Rules......Page 118 5.1.4 SASAC Guidelines to the State-Owned Enterprises Directly Under the Central Government......Page 122 5.2 Corporate Governance in Chinese Companies......Page 123 5.2.1 The Particularities of the Chinese Two-Tier Board System......Page 124 5.2.2 Independent Directors and Supervisors in Chinese Companies?......Page 125 5.2.3 Board Committees in Chinese Companies......Page 127 5.2.4 The Party Committee......Page 128 5.3 Codes of Ethics/Conduct of Chinese Companies......Page 130 5.3.1 PetroChina Company Limited......Page 132 5.3.2 Huawei Investment & Holding Co., Ltd.......Page 136 5.3.3 Ping an Insurance (Group) Company of China, Ltd.......Page 139 5.4.1 Statistics......Page 141 5.4.2 Liability for Inaccurate or Incomplete CSR Reports Pursuant to the Chinese Securities Law......Page 145 5.4.3 The Impact of CSR Measures on Companies’ Performance......Page 146 6.1 Supply Chain Management......Page 150 6.2 Third Party Rights and Collateral Warranties......Page 155 6.3 Possible Contractual Claims for Damages Arising from the Violation of Codes of Business Conduct and Ethics in the Context of Supply Chain Disputes Involving Multiple Parties......Page 157 6.3.1 Fictitious Case Scenario......Page 158 6.3.2 The Significance of English Law for International Contracts......Page 159 6.3.3 Privity of Contract and Domestic, Nominated or Named Subcontractors......Page 160 6.3.4 Can a Breach of a Material or Core Violation of a Code of Conduct Be Qualified as a Repudiatory Breach of the Contract?......Page 162 6.3.5 Foreseeability, Causation and Mitigation......Page 163 6.3.6 Loss of Profits......Page 168 6.3.7 Contractual Penalties or Liquidated Damages......Page 170 6.3.8 Examples for Material Violations of a Code of Conduct Triggering Payment Under a Liquidated Damages Clause......Page 174 6.4 The New York Convention......Page 176 6.5 The Consolidation of Supply Chain Arbitrations......Page 177 6.5.1 Consolidation in Singapore......Page 180 6.5.2 ICC Arbitration Rules on the Consolidation of Arbitrations......Page 188 6.5.3 The AIAC Arbitration Rules......Page 190 6.5.4 Consolidation in the USA......Page 192 6.5.5 Consolidation in Austria......Page 194 6.5.6 Consolidation in Mainland China and Hong Kong......Page 195 6.6.1 SIAC, AIAC, CIETAC and HKIAC Rules......Page 200 6.6.2 ICC Rules......Page 201 6.6.3 ICDR Rules......Page 202 6.6.4 Vienna Rules......Page 204 6.7 Human Rights Arbitration......Page 208 7.1 Conclusion Regarding Hypothesis 1......Page 211 7.2 Conclusion Regarding Hypothesis 2......Page 215 7.3 Conclusion Regarding Hypothesis 3......Page 220 Bibliography......Page 223 Case Law......Page 237