Targeted Social Transparency as Global Corporate Strategy

Recent years have seen the emergence of mandatory disclosure regimes under U.S. federal securities law with the express purpose of advancing geographically defined, issue-specific social policy objectives, which I collectively refer to as “targeted social transparency” (TST) regimes. This Article addresses the appeal and shortcomings of mandatory disclosure as a means of regulating global corporate conduct—focusing on the unique challenges posed by TST. Two contemporary examples of TST are analyzed: (i) the “conflict minerals” provisions in the Dodd-Frank Act, which require the disclosure of minerals whose mining is associated with human rights violations in the Democratic Republic of Congo; and (ii) disclosure requirements under the Iran Threat Reduction and Syria Human Rights Act with respect to commercial activities associated with the Iranian government’s suppression of human rights. This Article presents the concept of constructive discourse, which seeks to enhance the effectiveness of mandatory disclosure by addressing these related objectives: (i) how TST can catalyze internally driven changes in corporate behavior to the mutual benefit of MNEs and stakeholders; and (ii) how MNEs can use TST for strategic purposes. Using the concept of constructive discourse, this Article identifies and explores specific ways that TST regimes can shape socially beneficial, strategically rational corporate conduct

Organic Corporate Governance

A publicly-held corporation maintains a system of governance through separation of ownership and control of the firm. Under this framework, corporations attract capital and repatriate profits to their shareholders under the authority vested in the board of directors. However, significant evidence exists that Chief Executive Officers (“CEOs”) are commonly driven by self-interest, boards often indulge CEOs, and shareholders find it difficult to monitor management. Many recent reforms have sought to improve corporate governance through regulatory interventions that empower shareholders. This Article identifies the limitations of this approach and advances a new model that looks within the “black box” of the firm. Integrating legal analysis with insights from organizational management and finance scholarship, this Article argues that corporations can overcome weak governance practices through forces that are driven by self-interested behavior of internal corporate actors. Three distinct, yet interrelated, internal forces generate what this Article calls organic corporate governance: (1) compliance systems that establish and enforce internal rules of conduct, (2) firm-specific human capital that binds actors to the firm, and (3) mutual monitoring by superiors and subordinates that constrains the self-interested behavior that erodes firm value. This Article applies this model to the responsibilities of the Chief Legal Officer (“CLO”), also known as the firm’s general counsel, who is an indispensable generator of organic corporate governance

Social Responsibility Regulation and Its Challenges to Corporate Compliance

This Article addresses the intersection of corporate social responsibility and corporate compliance. In this context, the focus of this Article is on regulation that seeks to enhance socially responsible corporate conduct and its implications for the compliance function. Social responsibility regulation raises operational concerns for companies, including problems associated with assessing social performance, the proliferation and fragmentation of legal obligations, and the contested nature of the social issues that it addresses. As laws mandating socially responsible corporate conduct continue to grow in number and expand in scope, corporations will increasingly need to acknowledge and respond to these challenges

International Trade Law

This course examines the process and substance of international trade law, focusing primarily on the law of the World Trade Organization and secondarily on the law of regional trade organizations and the foreign trade law of the United States. We will begin with an overview of issues relating to the concept of free trade, the institutionalization of international trade, the relationship between U.S. and international trade law, and WTO dispute settlement. Next, we will cover the legal principles and rules of international trade. Finally, we will consider the relationship between trade and other global concerns, such as environmental protection, health and safety, human rights, labor, development, and democracy. Throughout the course, we will refer to economic and political debates and use analytical methods in these disciplines to augment our understanding of international trade law. A major objective of the course is to learn how to engage international trade law in a variety of different practice-oriented settings. Towards that end, this course features ( I ) role simulations, case studies, and case-based advocacy and (2) a multi-issue/multi-party negotiation exercise

Tribunalizing Sovereign Debt: Argentina\u27s Experience with Investor-State Dispute Settlement

The global sovereign debt market, lacking a formal bankruptcy regime or binding regulatory oversight, is fundamentally shaped by the specter of conflicts between debtors that refuse to pay and holdout creditors that refuse to settle. Never was this more evident than in Argentina\u27s most recent sovereign debt crisis, which spurred daring, innovative, and often controversial legal strategies. This Article focuses on one of the legacies of Argentina\u27s sovereign debt crisis: the use of investor-state arbitration under international investment law to enforce sovereign bond contracts. Following Argentina\u27s financial collapse in 2001, private creditors brought dozens of cases against Argentina before the International Center for the Settlement of Investment Disputes (ICSID). Among these ICSID cases was Abaclat and Others v. The Argentine Republic, which marked the first time that an arbitral tribunal ruled that it had jurisdiction to rule on a sovereign debt default and restructuring under international investment law. With the proliferation of investor-state dispute settlement (ISDS) mechanisms in bilateral investment treaties (BITs) and other international investment agreements, this remedy will likely grow in importance. In light of Abaclat and subsequent ICSID cases, this Article analyzes Argentina\u27s experience with sovereign debt claims under BITs in the broader context of sovereign debt disputes and ongoing measures undertaken by sovereigns in response to tribunalization. Looking forward, this Article assesses the systemic implications of ISDS for the exercise of sovereign authority in sovereign debt finance

From Public Policy to Materiality: Non-Financial Reporting, Shareholder Engagement, and Rule 14a-8’s Ordinary Business Exception

This article builds upon the author\u27s remarks at the 2018-2019 Lara D. Gass Annual Symposium: Civil Rights and Shareholder Activism at Washington and Lee University School of Law, February 15, 2019. In 2017, shareholder proposals urging corporate boards to report on their climate-related risk made headlines when they earned majority support from investors at ExxonMobil, Occidental Petroleum, and PPL. The key to this historic vote was the support of Blackrock, State Street, and Vanguard, which broke with management and cast their votes behind the proposals. The 2018 proxy season saw several more climate-related proposals earn majority support, and in 2018 and 2019 record numbers of proposals were withdrawn after the companies agreed to respond to shareholders’ requests. The highly visible 2017 proposal illustrates a number of key aspects of shareholder activism today. The first is the mainstreaming of shareholder activism from its origins in the civil rights and socially responsible investment movements to a point where the largest institutional investors are integrating “environmental, social, and governance” (ESG) or “non-financial” factors into their voting and investment policies. Second, the proposal shows how the focus of shareholder activism around ESG matters has broadened beyond the civil rights, labor, and human rights issues that were its major target throughout much of the twentieth century. Climate change risk and corporate environmental impacts are now among the top subjects of shareholder proposals today. Third, as explained below, mainstream investors like Blackrock and Vanguard are supporting ESG-oriented activism for economic reasons, not only or even necessarily because of commitments to a particular ethical or political position. And finally, this proposal is one of many ESG proposals (about 20 percent of all environmental and social proposals in 2018) that seek greater corporate transparency about non-financial risks and impacts, either to better inform investor decision-making or to prompt changes in corporate practice. This Article focuses on the challenge of achieving corporate transparency for investment purposes and considers whether shareholder activism is the best way to achieve it. Many in the business community appear to think so. For example, in 2016, many corporations and law firms offered comments to the Securities and Exchange Commission (SEC) on the question of whether the agency should develop new ESG-related disclosure rules. Nearly all took the position that shareholder engagement and other forms of shareholder activism were the best way to improve ESG disclosure and that the SEC should leave well enough alone