Workshop GG Corporate Sustainability Best Practices A Case Study - - PDF document

Workshop GG

Corporate Sustainability Best Practices … A Case Study of Bridgestone’s Global Sustainability Procurement Policy for Natural Rubber … An Interactive Session

Wednesday, March 27, 2019 11:15 a.m. to 12:30 p.m.

Biographical Information

• E. Chase Dressman, Attorney, Taft Stettinius & Hollister LLP

425 Walnut St. Ste. 1800, Cincinnati OH 45202-3957 513-357-9406 Fax: 513-381-0205 cdressman@taftlaw.com

• E. Chase Dressman is an attorney in the Environmental practice group at Taft

Stettinius & Hollister LLP's Cincinnati office. Chase advises clients with regard to compliance with federal and state environmental laws and regulations, environmental due diligence and transactional negotiations, and represents clients in environmental litigation. He has defended clients in dozens of environmental enforcement matters and pursued, defended and resolved dozens of environmental litigation claims under CERCLA and other state and federal environmental laws. He is currently serving his third term as the Chair of the Cincinnati Bar Association's Environmental Law Committee, and is the Chair of the Northern Kentucky Chamber of Commerce's Regional Youth Leadership program. Andrew D. Thompson Senior Counsel - Environmental, Health, Safety & Sustainability Bridgestone Americas Inc., 535 Marriott Dr., Nashville TN 37214 thompsonandy@bfusa.com Andy Thompson is Senior Counsel - Environmental, Health, Safety & Sustainability at Bridgestone Americas, Inc.'s corporate headquarters in Nashville, TN. Andy has significant regulatory experience both in his current role as in-house legal counsel at Bridgestone and in previous roles in environmental practice groups at private law firms. Andy has also previously served as the Bureau Chief of Ohio's Bureau

• f Underground Storage Tanks Regulation (BUSTR). Andy currently plays a key

role in Bridgestone's Global Sustainability Procurement Policy, which is committed to a sustainable supply chain for natural rubber.

Corporate Sustainability Best Practices

Applying Bridgestone’s Sustainability Ethic to the Global Natural Rubber Supply Chain

The Bridgestone Essence Framework

Core & Vision Creation of Customer Value Creation of Social Value Basis of Operation The Bridgestone Essence Safety Environment Quality

Our Way to Serve

VISION

Understanding that Serving Society with Superior Quality is our heritage and

• ur mission, and embracing our responsibility to future generations as a global

leader in our industries, Bridgestone and its teammates around the world employ innovation and technology to improve the way people move, live, work and play.

Priority Areas and Management Fundamentals

Accelerate sustainable mobility innovations through advanced technologies and solutions Employ our strengths to support our communities and enhance the way people live, learn and work Help ensure a healthy environment for current and future generations

Accessible mobility Smart mobility Safe transportation Contributing to a safer society Accessible and inclusive education Promoting healthier communities In harmony with nature Reduce CO2 Emissions Value natural resources Compliance, Fair Competition Business Continuity (BCP), Risk Management Human Rights, Labor Practices Safety, Industrial Hygiene Procurement Quality and Customer Value

MANAGEMENT FUNDAMENTALS

Global Sustainable Procurement Policy

• Global commonality and applicability
• From “guidelines” to “policy”
• Available in 13 languages
• Supported by robust internal training and

governance

• SAQ for major suppliers
• SAQ‐TRC assessment in development
• Strengthened concepts included

‒ Broad sustainability ‒ Traceability ‒ Net‐Zero Deforestation/Peatlands ‒ Land Rights ‒ Resilience

• Reflects 3rd party perspectives

‒ Consultants ‒ Major NGOs (Under NDA via consultant) ‒ Internal global working groups

• Broader than top competitors

Environment

• Deforestation
• Biodiversity (due to monoculture expansion)
• Water pollution
• Soil degradation
• Direct or indirect deforestation
• Farm management practices (water pollution, soil

degradation) Social

• Land grabbing
• Social conflicts with local communities and

traditional groups

• Child labor
• Consideration of workers’ rights
• Working conditions
• Economic vulnerability due to poor productivity

performances and exposure to a volatile commodity price

• Child labor on small size rubber farms due to poor

socio-economic conditions Governance

• Corruption issues
• No traceability

Alignment of stakeholders on the environmental, social and governance potential issues:

Potential issues regarding Natural Rubber production

Industrial rubber plantations Smallholders

Potential Legal Issues – Anti-Trust

• Sherman Antitrust Act

– Outlaws “every contract, combination, or conspiracy in restraint of trade” and any “monopolization, attempted monopolization, or conspiracy or combination to monopolize.”

• Conduct must occur during the flow of interstate

commerce or have an appreciable effect on some activity that occurs during interstate commerce.

• Does not prohibit every restraint of trade – only

those that are unreasonable.

Potential Legal Issues – Anti-Trust

• Sherman Antitrust Act
• Per se Violations:

– Conduct found to have a “pernicious effect on competition” and lacking “any redeeming virtue.” – Civil violation found merely by proving that the conduct occurred and fell within a per se category. – Require no further inquiry into the practice’s actual effect on the market or the intentions of those individuals engaged in the practice. – Examples: arrangements to fix prices, divide markets, rig bids, or concerted refusals to deal.

Potential Legal Issues – Anti-Trust

• Sherman Antitrust Act
• Violations of the “Rule of Reason”:

– Totality of the circumstances test – asks whether the challenged practice promotes or suppresses market competition. – Intent and motive are relevant when predicting future consequences. – Fact-specific inquiry, including the particular businesses involved, the history of the restraining, and why it was imposed. – Standard of whether the practice “unreasonably restrains trade.”

Potential Legal Issues – Anti-Trust

• Sherman Antitrust Act
• Penalties: civil and criminal

– Criminal penalties of up to $100 million for a corporation and $1 million for an individual, along with up to 10 years in prison. – Maximum fine may be increased to twice the amount the conspirators gained from the illegal acts or twice the money lost by the victims of the crime, if either of those amounts is over $100 million.

• Cooperation vs. Collusion
• Concerted vs. Independent Action

Potential Legal Issues – Anti-Trust

• Clayton Antitrust Act

– Prohibits additional activities not within the scope of Sherman Antitrust Act, such as:

• Price discrimination between different purchasers, if such

discrimination tends to create a monopoly.

• Exclusive dealing agreements.
• Tying arrangements.
• Mergers and acquisitions that substantially reduce market

competition.

• Bottom Line: Need to include legal analysis of

potential antitrust issues at every stage of effort. Must have game-plan and clear code of conduct among participants to avoid violations of antitrust law.

A uniquely positioned industry

Natural rubber growers/producers Consumers and end users

Tire and car makers

6 million smallholders Millions of consumers/end users

Tire Industry Project

11 Global Leading Tire Company Members

Potential Legal Issues – Contractual Arrangements

• Legal, binding contract establishing and

governing cooperative effort.

• Can involve creation of new entity or the use of
• ne or more direct contracts between the group

members.

• Scope/nature of cooperation need to be defined.
• Define group members’ rights and obligations.

– Who contributes what to the group effort? – Who has the final say? – How are decisions made?

Potential Legal Issues – Contractual Arrangements

• Contracts need to answer the basic (and not so

basic) questions about the parties’ cooperation:

– How long will the arrangement last? – What is the scope of the arrangement? – How will objectives be met? – How are disputes or conflicts supposed to be handled? – How do the parties deal with changing circumstances (e.g., market changes; employee turnover; changing laws or priorities; mergers/acquisitions/bankruptcies)? – How are new members admitted?

Potential Legal Issues – Contractual Arrangements

• Common Issues:

– Free-riders. – Late-joiners. – Frankenstein creations. – Amount/nature of group contributions (e.g., financial; administrative; marketing; company resources/contacts). – Dispute resolution. – Breaking-up. – Voting rights.

Potential Legal Issues – Contractual Arrangements

• Examples of types of group contracts:

– Joint Venture Agreements. – Contribution Agreements (e.g., asset transfers; provision

• f services).

– IP Assignment/License Agreements. – Distribution or Manufacturing Agreements. – Loan Agreements. – Guaranties. – Joint Venture Entity Formation Documents. – Permits and Approvals. – Employment Agreements.

Potential Legal Issues – Contractual Arrangements

• Contract Considerations:

– State law(s) governing business entities and group formation. – Tax laws/implications. – Antitrust concerns. – Securities laws (e.g., issuance of ownership interests in entities created for joint venture). – Intellectual property rights. – Confidentiality (e.g., exchange and protection of confidential business information and trade secrets). – Employment law issues.

Potential Legal Issues – Contractual Arrangements

• Contract Considerations:

– Assumed vs. retained liabilities. – Industry-specific and other applicable laws and regulations. – Foreign Corrupt Practices Act. – Regulatory or third-party consents or approvals. – Liability for group acts.

• Bottom Line: group rights, obligations and

procedures must be clearly spelled out in one or more binding legal contracts. All known or realistically foreseeable eventualities should be addressed (or mechanisms established for addressing truly unanticipated circumstances).

Natural Rubber

Building on existing efforts, there is opportunity for further value chain collaboration TIP CEOs committed to evaluate sustainable best practices and identify appropriate governance structures to form a sustainable natural rubber platform The tire industry is uniquely positioned in the value chain

A pragmatic and inclusive process

March 2019 General Assembly Singapore November 2018 Stakeholder Workshop Geneva October 2018 Launch Announce ment Singapore July 2018 Stakeholder workshop in Singapore May 2018 Key Stakeholders Roundtable Sri Lanka 4Q 2017 Benchmarking and surveying stakeholders

Global Platform for Sustainable Natural Rubber

Natural Rubber Producers, Processors & Traders

• Halcyon
• Kirana Megatara
• Itochu
• Mardec Berhad
• Sipef
• SIPH
• Socfin
• Southland Global
• Thai Eastern

Group Tire Makers & Other Natural Rubber Makers and Buyers

• Bridgestone
• Cooper Tires
• Continental
• Goodyear
• Hankook
• Kumho Tire
• Michelin
• Pirelli
• Sumitomo
• Toyo Tires
• Yokohama

Car Makers & Other Downstream Users & Financial Institutions

• BMW Group
• Ford Motor Co.

Civil Society

• Birdlife

International

• Mighty Earth
• PEFC
• Rainforest Alliance
• ResourceTrust
• WWF

Sustainable Natural Rubber Principles

1. Forest sustainability 2. Water management 3. Land rights (FPIC) 4. Labor rights 5. Human rights 6. Equity 7. Traceability 8. Transparent reporting 9. Anti‐corruption

• 10. Grievance mechanism
• 11. Auditing protocols
• 12. Training & Education

Challenges with Multi-Stakeholder Industry Sustainability Efforts

• Aligning partners with
• verall interests, but

nuanced differences

• Aligning competitors,

suppliers, and customers within antitrust parameters

• Contractual Arrangements
• Partnering with

Regulators

• Prioritizing the

Issues

Potential Legal Issues: Cross- Jurisdictional Work

• Identifying and complying with local, state,

federal and international legal requirements.

• Potential for conflicting or unclear legal

requirements.

• Critical to have local stakeholders and resources

to assist with navigating shifting regulatory landscape.

• Benefits and potential complications of

partnering with local stakeholders/regulatory bodies.

Potential Legal Issues – Consumer Protection/Advertising

• Federal Trade Commission

– Advertising must be truthful and non-deceptive. An advertisement is deceptive if it contains a statement or

• mits information that is: (i) likely to mislead consumers

acting reasonably under the circumstances; and (ii) is “material” (i.e., likely to affect consumers’ conduct or decisions regarding the product at issue). – Advertising cannot be unfair. An advertisement is unfair if: (i) it causes or is likely to cause substantial consumer injury which a consumer could not reasonably avoid; and (ii) the injury is not outweighed by the benefit to consumers.

Potential Legal Issues – Consumer Protection/Advertising

• Federal Trade Commission

– An advertiser must have a reasonable basis for all

• bjective product claims before making those claims.

– If an advertisement indicates a particular level of support for the product claim (e.g., laboratory tests/scientific studies), the advertiser must be in possession of the advertised substantiation. – Remedies:

• Cease and desist orders
• Civil penalties, consumer redress, and other monetary

remedies

• Corrective advertising/disclosures

Potential Legal Issues – Consumer Protection/Advertising

• Federal Trade Commission

– FTC Guides for the Use of Environmental Marketing Claims (16 C.F.R. §§ 260.1 – 260.17).

• 1992, 1998 and 2012 revisions

– Not laws or administrative rules. But provide instruction on how the FTC:

• Evaluates green marketing claims; and
• Interprets its authority to regulate unfair or deceptive acts or

practices.

Potential Legal Issues – Consumer Protection/Advertising

• FTC Green Guides apply to:

– All forms of marketing (labeling, advertising, promotional materials); – All express/implied claims; – Products, packages and services; – Marketing through any means of communication (includes Internet or e-mail).

Potential Legal Issues – Consumer Protection/Advertising

• FTC Green Guides set out four general

principles that apply to all green marketing claims:

– Make clear, prominent and understandable statements; – Identify to what the claims apply; – Do not overstate the environmental attribute or benefit; – Ensure that the basis for any comparative claims is clear.

Potential Legal Issues – Consumer Protection/Advertising

• FTC Green Guides provide regulatory guidance for

specific types of claims, including:

– General environmental benefits; – Degradable/bio-degradable and compostable; – Recyclable/recycled content; – Ozone-safe and ozone-friendly; – Certificates and approvals; – “Free-of” claims; – Non-toxic; – Made with renewable materials/energy; – Carbon offsets

Potential Legal Issues – Consumer Protection/Advertising

• Other Federal Agencies

– Food and Drug Administration

• Food, drugs and cosmetics

– U.S. Department of Agriculture

• “Natural” or “organic” food products
• Potential State Regulation

Questions?