1. Post

   Case Volkswagen – Could the Pelican Have Avoided Ploughing into the Turbine?

   The company’s market cap dropped by almost 40%. The CEO had to resign. The provisions in the books were raised to 6.5 billion euros. The congestion of class action suits is about to start, and in all likelihood some directors will end up behind bars. Case Volkswagen is just one example in the world of miscalculated integrity risks. Every day, we see a steady flow of news regarding suspected fraud, corruption, human rights abuses and falsification of accounts. How can companies avoid becoming part of this kind of news flow? Is there something the management or the board could do better despite their existing compliance programs and global control frameworks? The answer is … absolutely! Let’s look at the three fundamental factors determining whether a company’s reputation risk management is efficient or not: reputation-reality gap, changing expectations and unity. Mind the Gap Volkswagen has always had a good public reputation topped off with high integrity. The Volkswagen brand has almost become a synonym for reliability. Why did this perception collapse overnight? Volkswagen has a global compliance program and organisation in place, so in this regard everything should have been under control. Contrary to the public perception, is it possible that the company didn’t in reality have the means to exercise its integrity risk management properly? Despite express obligations of integrity in their code of conduct, for some reason the implementation failed. Tools in Place but not Maintained? The second explanation could be that the company did not challenge and monitor its existing risk management system. Did Volkswagen regularly acid test the functioning of its whistle-blower communications channels? Did the compliance organisation have direct and independent access to the board, or was it subject to the interests of the operative management? Had the workability of the existing system and the independence of compliance administration been secured, the problem might never have occurred. At least it would have come to the attention of the board much earlier, allowing sufficient time to take corrective measures before it was too late. Maybe communications channels existed, but the fear of disclosing the problem and retaliation kept mouths shut? Walk the Talk? The third explanation could be that the company was ultimately unable to jointly ‘walk the talk’. Was this due to a fragmented organisation, siloed decision making, fear or sub-optimisation resulting from eccentric incentivisation? Based on the latest allegations in the news, some directors were warned, but the problem was quickly polished over by ignorance. Nevertheless, the existence of flawless internal communications and internal trust can be questioned. Reputation Risk Management 2.0 Failures in compliance always occur when a complex company structure is managed without effective risk management tools. Compliance management is not a stand-alone exercise. Instead it should be integrated into every company’s global risk management processes. Despite existing codes of conduct, internal instructions and policies, companies should understand the essence of taking their compliance systems to the next level. Otherwise, their businesses can easily fall into ostrich management principles, i.e. putting their heads in the sand and hoping that their problems go away. To switch back to my original bird metaphor, compliance 2.0 is absolutely crucial if you want to keep your pelicans out of the turbine.

   Published: 5.10.2015

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   Fintech and the Finnish Market — Are They Ready for Each Other?

   The next big thing on both sides of the Atlantic is financial technology, more commonly known as fintech. As the Guardian noted in an  article last spring , startups focusing on specialised financial services are making use of cheap cloud computing, big data, mobile devices and social media applications to compete with banks and other conventional providers of financial services. From personal finance planning apps to crowdfunding, fintech companies leverage user-friendly interfaces and the flexibility of their services to take market share in products and services [1] that used to be the exclusive domain of larger players. Complex Regulation Makes Dangerous Waters for Fintech Startups As fintech companies enter the Finnish market, their biggest challenges may well be understanding and navigating complex regulation. Even simple fintech services, such as providing mobile payment solutions or trading applications, may require licenses to provide payment or investment services. When it comes to peer2peer lending, operators should keep in mind that micro-lending is also regulated by consumer protection rules, and prospective service providers may need to register with regional authorities. Obtaining licenses for all this and complying with statutory obligations can be both cumbersome and costly, which is far from an ideal fit for the generally lean and agile startup business model. Therefore, creating a proactive policy to address and mitigate regulatory concerns are vital initial measures for a startup looking to enter the fintech market. Personal Data a Potential Land Mine The use of personal data is strictly regulated in the EU under the Data Protection Directive (95/46/EC). Further data protection regulation is expected to come into effect during the upcoming years in the form of the new European Data Protection Regulation. At the same time as regulation is increasing, new technologies are looking for broader opportunities to permissibly utilise personal data. Certain personal data has long been used for risk analysis in the financial industry. However, many traditional concepts associated with data processing are facing a revolution in the form of developments such as dual purpose social media applications, such as peer2peer lending platforms. As tempting as the significant opportunities to use personal data available through various social media platforms may be to fintech startups, they have to watch their step and make sure their operations comply with constantly developing  data protection rules. What to Look Out for In Fintech Investments When looking to invest in fintech startups, venture capital investors should keep in mind the regulatory landscape described above. Most importantly, investors need to take into account the possibility of increased compliance and risk management costs as well as liability risks when conducting due diligence relating to start-up targets. This is especially demanding in the current environment of swelling regulation that remains inherently ambiguous with respect to new and disruptive technologies. At worst, a fintech startup’s business could involve significant liability risks if it has neglected regulatory obligations. It is vital that investors identify such situations and engage the expertise to appropriately assess the risks involved when making investment decisions. As fintech companies gain more ground in the financial sector, venture capital and private equity investors have two possible ways to react: adapt  or invest. If the financial sector  is reluctant to adapt by embracing new technologies, we may see a repeat of the kind of changes that occurred in the music industry since the launch of mp3 and P2P networks, albeit restricted by the industry’s regulated nature. The mobile pay applications that have been launched by large banks and welcomed by customers are a good example of using investment to integrate fintech in existing businesses. Fintech clearly holds potential that intrigues investors. This is evident in BlackRock’s recent of acquisition of FutureAdvisor , a previously Sequoia-backed start-up offering automated algorithm based financial planning services to consumers. While interest among investors grows, fintech start-ups in the US are already expanding into insurance, yet another highly regulated financial services business. Despite the limitations set by regulation, the advance of fintech into the Finnish market seems inevitable. After all, this is a country that is already accustomed to widespread and well-functioning digital financial services, such as long-established internet banking portals. [1] A World Economic Forum graphic of the fintech scene

   Published: 1.10.2015

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   Is Your Legal Strategy Reactive or Proactive – Or Maybe Even Creative?

   A reactive style creates a vicious cycle of hurry, inefficiency and stress. Little or no time is left for development, leadership and innovation. A manager of this style cannot be a great leader. One who cannot manage oneself can never successfully manage others. A second, far better style is a proactive style . Here the manager has learned the skill of managing him- or herself. Instead of constantly being in fire drill mode, he or she prepares and plans for the future. A proactive manager plans how to prevent fires and then executes that plan so that not even the slightest smoke can form. This strategy leaves plenty of space for leadership, development and innovation. Have you ever wondered why some of the best business leaders’ desks are empty? It is because of their choice, practice and execution of proactive management strategy. Luck or Skill? These same main styles of management are directly applicable to legal strategy in modern corporations. It is my experience that many companies could do much better in this area. Let me elaborate through an imagery contractual situation: A company, Reactive Ltd, enters into a long term agreement with a supplier, Proactive Ltd. Reactive does not have a legal strategy. It negotiates the agreement without legal consultation, because it wants to get things done without legal hassle. At some point, problems arise in the contractual relationship. Reactive tries to solve the problems as they appear. All of the sudden, the problems escalate and Proactive sues Reactive. Now Reactive approaches an attorney. The supplier in this contractual relationship, Proactive Ltd, has a proactive legal strategy. It keeps its attorney up to date on the contract negotiations and receives constant feedback. The agreement is legally solid on the Proactive’s side. When the problems arise, Proactive consults its attorneys immediately. The attorneys see the possibility for future conflict and give Proactive specific advice on what kind of correspondence should be executed to manage the risks in advance. When things escalate, Proactive terminates the agreement and takes legal action. Which one you think has the stronger hand, the purchaser, Reactive, or the supplier, Proactive? I have litigated on both sides. Let me tell you, the war has most often been won before battle has even been joined. It is exactly as Sun Tzu wrote: ‘victorious warriors win first and then go to war’. Winning with a reactive strategy is luck. Winning with a proactive strategy is skill. Lawyer Are a Bit Like Doctors The legal profession is much like the medical profession. We, the lawyers, analyse the symptoms (facts and problems) and provide the treatment. As in the medical profession, in the field of law, patients most often seek help far too late. In that situation, the options for and effectiveness of the treatment are much more limited. Sometimes the illness has already reached the terminal stage before help is sought. Some preventive health care would certainly have been more helpful. If you had time to read this far, that proves that you are proactive yourself. Why don’t you also take a couple of minutes to think about your legal strategy rather than putting it off until later? PS.  Oh yeah, I almost forgot, there is a third type of strategy, a creative one. Even though society is packed with norms, there is always room for legal innovation. As a client, you should demand more, push us lawyers to the limits. Tell us your goals and make us innovate. This is a creative strategy, but only few master it.

   Published: 24.9.2015

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   Disruptive Internet Services Face to Face With Finnish Law

   On the other hand, the renowned Bengt Holmström, Professor of Economics at Massachusetts Institute of Technology (MIT), has said that ‘the Internet, robots and the digitalisation of business are like laws of nature. Their development cannot be prevented. The more we deny new business models, the more we will fall behind’  [1] . Instead of being given the opportunity to flourish, these new services are sometimes seen as troublemakers, and seem to have hit a tightly knit web of laws and regulations hindering them in this country. In this post we discuss two of these ‘new kids on the block’ and the legal hurdles they have found themselves facing in Finland. Uber Uber provides a service that connects customers in need of a ride with available drivers via a smartphone app. In Finland, this great innovation has faced strong opposition as the authorities have found it hard to fit Uber into the classic and heavily regulated taxi service model.  As in some other countries, operating a taxi in Finland requires a license. Only a restricted number of taxi licenses are available, and room for newcomers is very limited. The problem with Uber appears to be that the Finnish authorities have a hard time establishing whether the service Uber provides is to be classified as operating a taxi and, therefore, requiring a license. According to Uber itself, it is not a taxi service, but only provides a platform for ride sharing. Regardless of the ambiguity regarding the nature of Uber’s service, the Finnish Taxi Association has stated that drivers with a valid license have been urged to report Uber drivers to the authorities. Lately even the Finnish police asked the public to report Uber drivers to the police. This is due to an ongoing investigation in which the authorities are trying to establish whether or not Uber is in breach of Finnish taxi legislation and driver safety requirements. Instead of actively rethinking the passenger transport business and considering the benefits of more flexible services, the authorities seem to be more willing to deny Uber’s business entirely. Airbnb Uber is not alone in its struggle with the tight web of Finnish laws and regulations. Airbnb, which provides an online platform for people to rent out properties to others in need of short-term accommodation, has also come under the all-seeing eye of the Finnish authorities, who see Airbnb’s operating model as some shade of grey in legal terms. At the moment, the authorities are trying to decide whether it is a temporary rental to help offset vacation costs, whether it subletting or whether it is an accommodation business – all three possible interpretations are firmly regulated. The Finnish Hospitality Association, MaRa, has demanded that the same tax liabilities and the numerous regulations that apply to other service providers in the accommodation business, such as hotels, should also apply to Airbnb. According to MaRa’s argument, Airbnb has an unfair competitive advantage otherwise. In addition, residential buildings – generally organised in Finland as a special type of limited liability company that residents own shares in – are considering whether they could and should prohibit short-term rentals in their articles of association because of the possible disturbances travellers might cause. These Services are Here to Stay Digitalisation is not a new topic in Finland. Even the new government’s platform underlines the importance of digitalisation. However, new and innovative services are often not welcomed with open arms in practice. Finns want these new services and the benefits they bring in terms of new business opportunities, cheaper consumer prices and more options to choose from. Keeping in mind the relative small size of the Finnish market, none of these benefits are self-evident and new business models enabling them should be encouraged rather than weeded out. Indeed, instead of building legal barriers to their development, we should be breaking down old barriers and looking ahead. Fortunately Bengt Holmström sees that there is hope in Finland. As encouraging examples Holmström mentions software companies, the video game industry, Slush and the whole Finnish startup scene. The best way to face the challenges of digitalisation is to actively take part in it and find new ways to support it instead of fighting against it. [1] http://www.hs.fi/talous/a1439870365925   Discussion in the Finnish Media Uber : Helsingin Sanomat:  Poliisi kehottaa tekemään Uber-kuskeista ilmoituksen – "Akuutissa tilanteessa soitto hätäkeskukseen" Iltalehti:  Näinkö kohuyhtiö Uber ratkaisee kiistansa myös Suomessa? Haluaa eroon kuskeista Nyt.fi:  Call 911 if you see an Uber, Finnish police says Edilex:  Uber-kyytien välitys laillista, mutta ajaminen vaatii taksiluvan Yle:  Taxi Association demands Uber intervention Yle:  Taxi industry deregulation only a matter of time, says expert – even in Finland Mtv3:  Ministeriö: Uber-taksipalvelu ei voisi tulla Suomeen ainakaan heti Airbnb : Helsingin Sanomat:  Vuokralaiset välittivät luvatta helsinkiläismiehen asuntoa kuukausia Airbnb-turisteille Yle:  Finland learning to live with Airbn b Yle:  Tuesday’s papers: Centre, Finns parties reach consensus, Airbnb headaches, online cellphone deal turns into knifepoint robbery Iltasanomat:  Airbnb:n toiminta Suomessa raivostuttaa: ”Täysin kestämätöntä” MaRa: MaRa tekee yksityisiä majoituspalveluja koskevan lainsäädäntöaloitteen Helsingin Sanomat:  Alivuokrausta ei voi kieltää

   Published: 21.9.2015

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   IFA Annual Congress: Practical Protection of Tax Payers’ Rights and BEPS in Focus

   A general report prepared for the IFA drew conclusions from data provided by the branch reports from each jurisdiction. The idea was to identify minimal standards and best practices for the timely and effective protection of fundamental tax payers’ rights. Twelve separate aspects were identified, which were then discussed in the panel. An interesting observation was that Finland was mentioned only three times among the best practices rated in the charts presented. It seems the protection of tax payers’ rights deserves to be in focus in the Finnish tax field, as well. Seeking Greater Transparency in Taxation As expected, hardly any seminars at the IFA congress were held without mentioning BEPS (base erosion and profit shifting) . BEPS is a project of the OECD and the G-20 aimed at getting rid of tax planning strategies that exploit gaps and mismatches in tax rules to shift profits to locations where they are lightly taxed so that little or no overall corporate tax is paid. Within that project, the OECD has created an action plan that sets out fifteen key areas of international tax rules . These should be addressed by 2015. The panelists representing tax advisors and business life at the IFA/OECD seminar took a somewhat cautious viewpoint when they evaluated what aspect of BEPS would have the biggest impact. For example, Krister Andersson, Chairman of the Tax Policy Group BUSINESSEUROPE, noted that there is a risk that countries may have different views or interpretations of the steps presented by the OECD in the action plan. The panelists felt that it is crucial that all countries implement the BEPS actions consistently. Double taxation disputes could arise if countries unilaterally attempt to address these issues without consensus-based principles. It was underlined in the seminar that the OECD must take a strong role in the finalisation and implementation procedure, as BEPS may cause some uncertainty between the countries. Ron Durand, Partner at Stikeman Elliott, took the view that governments have to make the system work, and national tax administrations need to be well educated. In addition, most of the panelists noted that effective dispute resolution mechanisms are an essential part of the BEPS project. In sum, it seems to be up to countries how BEPS is implemented in their jurisdictions. A Step in the Right Direction Marlies De Ruiter from the OECD agreed that BEPS may not be ideal, but it is a good first step. A package related to the action plan will be delivered to the G20 Finance Ministers in October 2015, together with a plan for follow-up work and a timetable for its implementation. During the next stage, implementation measures will be stated at the level of domestic legislation and international coordination. Adapting to a New Environment without Forgetting Tax Payers’ Rights The practical protection of tax payers’ rights will continue to be a topic for some time to come. This is due to the focus of current international discussions and projects, such as BEPS, being on increasing tax payers’ liability to deliver information to the tax administrations. This will cause extra compliance and administrative costs and increase of reporting requirements. More disputes between businesses and tax authorities are expected to arise as the rules are amended, especially where they lead to arrangements or structures previously accepted by tax authorities becoming forbidden. Tax payers may not have a well-protected position in this situation, and tax assessments result in lengthy appeal procedures. Taking into account the increasing exchange of information between the countries, it will be worth paying attention to confidentiality and the proper use of tax payers’ commercially sensitive or tax-related information.

   Published: 14.9.2015

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   EU-Wide Data Protection Regulation Moves Forward – Nine Things You Should Know

   I have gathered nine highlights of the new data protection rules that you should know. One continent, one law : the Regulation will establish a single, pan-European data protection law replacing the current inconsistent patchwork of national laws. In the future, your company will only have to deal with one law, not 28. Strengthened individual rights: companies will have to inform individuals in a clear and understandable way about the processing of their personal data. When there are no longer legitimate grounds for retaining data, an individual will be able to ask for the data to be deleted (right to be forgotten).  A right to data portability will help people transfer personal data between service providers. Right to know if hacked : your company will have to notify the national data protection authority as soon as possible (not later than 72 hours) about data breaches and will also have to notify affected data subjects without undue delay. Data protection impact assessment: an assessment will be required when processing is likely to result in a high risk for the individuals, such as discrimination, identity theft or fraud, financial loss, damage to reputation, unauthorised reversal of pseudonymisation or significant economic or social disadvantage. Data protection officer: it will no longer be obligatory to appoint a data protection officer unless mandatory under national law. Codes of conduct : the regulation will encourage codes of conduct to be drawn up for specific sectors and for specific needs of SMEs (small and medium-sized companies). European rules on European soil: if your company is based outside the EU, it will have to apply the same rules and guarantee the same level of protection for personal data when offering services in the European market. More powers for independent national data protection authorities: in order to effectively enforce the rules, national data protection authorities will be empowered to fine companies that violate EU data protection rules. The fine may be up to €1 million or 2% of the global annual turnover of the offending company. One-stop shop: companies will only have to deal with a single supervisory authority, which will make it easier and cheaper for companies to do business across the EU. Similarly, individuals will only have to deal with their national data protection authority—in their own language—even if their personal data is processed outside their home country. I am optimistic that the new regulation will strengthen and harmonise data protection rules in the EU. We will be closely monitoring the progress of the new general data protection regulation and keep you up-to-date on any developments.

   Published: 17.6.2015

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   New Government Programme: The End of an Era for Wind Power in Finland?

   Based on the current legislation, the Finnish feed-in-tariff is available for new wind farms to be built in Finland up to an aggregate power of 2,500 MVA. Approximately 72% of this capacity has already been reserved at this point. The new proposal is to cut the quota from 2,500 MVA to 2,000 MVA. This means that there may be room for an additional 312 MVA. This is still unclear. Is this now the end for new wind power developments? No, but we need clear guidelines and legislation on what will happen after the current subsidy programme. In practice, this change will have no impact on the wind power projects to be installed during the next two to three years as they have already been admitted to the feed-in-tariff system. In fact, it means the ramping up of wind power faster than anyone expected. This is good news. The bad news is that several wind power developers may face insolvency due to a lack of interest by international investors if there is no clear future for the next subsidy programme. Parliament should now focus on safeguarding the continuous construction of wind power beyond the current feed-in tariff programme. I am positive that there are investors willing to invest in Finland even after the feed-in-tariff is no longer available. However, this will require clear and transparent discussion of the next subsidy arrangement. Otherwise, the whole wind farm sector will freeze after 2017.  This would mean that the whole development base of wind power, approximately 11,000 MW, could be wasted.

   Published: 28.5.2015

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   Personal Data is the New Oil

   The US is by far the leader in the competition to collect, use and control the use of personal data, mainly thanks to large American internet and social media companies and legislation that grants extensive information rights to the state. However, China is not far behind. Recently Russia has also taken some major steps in the field by enacting new legislative amendments restricting companies’ use of Russian citizens’ data. Restrictions to Processing Data of Russian Citizens Abroad In Russia, a set of new legislative amendments will come into force on 1 September 2015. The amendments are primarily aimed at restricting the processing of Russian citizens’ personal data on servers located outside of Russia. They also develop state supervision procedures and empower the Russian Data Protection Authority ( Roscomnadzor ), under certain conditions, to block access to websites where personal data violations take place. From the perspective of data operators, it will be illegal to collect personal data of Russian citizens and directly send it to servers located outside of Russia without processing the data ‘with the use of’ a database installed on a Russia-based server or computer. However, the amendments contain several exceptions. One of them could be interpreted as being applicable to Russian employees of international companies. The obligation to process data in Russian databases may not be applicable if personal data is processed either for purposes stipulated by an international agreement of the Russian Federation, for purposes set out in law or for exercising the powers or performing the functions and obligations of data operators under Russian law. The purposes for which employers process the data of their employees are in fact defined by law and, thus, may fall into the second category. Websites Containing Illegally Processed Personal Data May Be Shut Down Under the amendments, Roscomnadzor will be given powers to block access to websites containing illegally processed personal data in Russian territory. For this purpose, Roscomnadzor will enter the banned domain names, network addresses and other details in a special state register. A website can be blocked only on the grounds of a court act. The website owner will be informed of the violation of personal data laws and asked to rectify the violation voluntarily prior to the website being blocked. If the violation is not rectified, the website will be blocked not later than in three days. The website owner will have the right to apply for the removal of its website from the state register after all personal data violations have been rectified or if a court reverses the act blocking of the website. These rules can be construed as being applicable only to websites containing illegally processed personal data, including social networks, public databases, address books and blogs. On the other hand, Roscomnadzor may interpret the new rules broadly and try to apply them to all websites used in any way that violates any of the Russian legal requirements concerning personal data. Practical Solutions to Legal Challenges How, then, should one react to these new regulations and prevent localisation politics for affecting business? From a formal point of view, it will be necessary to relocate databases containing information about Russian clients, partners and, arguably, employees to Russia. If a company ignores data privacy requirements, it may be subject to several fines for various violations. However, the legislative changes do not apply to cross-border data transfers. This fact provides certain loopholes for reorganisation of global ICT systems used by international companies. There will be no need to completely disconnect Russian offices or websites from the corporate networks. Keeping in mind that the amendments enter into legal force in less than five months, it is a good time to start assessing possible ways of modifying the ICT systems. The strategic importance of oil has not prevented it from being an important commodity in international trade. Similarly, increased state interest in personal data is in no way an obstacle to continuing business. The importance of personal data for commercial actors is, indeed, one of the main factors that also make it interesting for any state. In order to not let variable legislation affect your business in Russia, it’s better to consider possible options for complying with the new amendments and start preparations now.

   Published: 24.4.2015

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   Is an Electric Vehicle Boom About to Take Off in Finland?

   Nothing More Certain than Taxes Unlike some other countries, electric vehicles do not, at the moment, have special tax benefits in Finland. However, EVs belong to the lowest tax class in all three tax groups: car tax, motor vehicle tax and tax on driving power. Nevertheless, actual financial incentives to promote electric transportation remain few. At the moment there is no CO2 tax, but the topic is brought up regularly. On the other hand, companies investing in electric vehicles may be eligible for energy investment support from the Ministry of Employment and the Economy. The support is only available for companies leasing an electric car or building a charging station on their premises. The support period of 36 months is expected to end in 2017, and companies that want to benefit from the 35% funding for cars and 30% for charging stations should apply at the latest in April 2015. Battery Low? Finland currently has some 250 EV charging stations, 35 of which are located in Helsinki. The stations are built and operated mainly by private operators, since the government does not actively participate in the construction of charging networks, but focuses instead on coordination and support. The charging station network is expected to expand in 2015 when the first Tesla Supercharger stations are opened in Southern Finland. Auto-Outlet Oy , the company that imports Teslas into Finland, looks like it’s going to have a busy year! In Helsinki, regular parking is also cheaper for clean vehicles such as EVs. Some parking operators even provide free downtown parking for EVs. A general 50% discount on parking fees in city-operated areas requires a special sticker available at the city engineer’s office. Even cheaper parking and the right to drive in bus lanes are being discussed in Finland, but there are no concrete plans yet. Even though there is political will to encourage electric transportation in Finland, some legal obstacles still need to be removed. For example, in housing companies, parking and charging electric vehicles easily collides with the general principle of equality between residents when it comes to sharing parking spots and investing in additional electricity services. In addition, the Limited Liability Housing Companies Act provides no clear opinion in cases where residents wish to install charging facilities on their own to parking spots they are using. Residents with electric cars do not, in general, have priority to plug-in parking spots. On the contrary, the general meeting of residents may even decide to forbid charging electric vehicles in parking spots altogether. In addition, the charging costs may require payment either according to consumption or by monthly instalments. Vroom Goes the European Electric Car EU incentives in the EV field also have an effect on the Finnish market. Many European countries are promoting electric transportation by funding a comprehensive charging network or offering investment support for EVs. For example, France plans up to grant EUR 10,000 in support to drivers who switch their old diesel car to a new electric one. On the other hand, state aid, even when given for environmental reasons, may restrict competition in the Union, since building an extensive network of charging stations requires cooperation with a broad range of actors. For example, contracts between car manufacturers and energy suppliers can exclude other actors from the market. However, the environmental advantages of promoting electric transportation are often emphasised in the EU over market issues, and even state aid has exceptionally been accepted in several cases. The Union has also taken important legal steps in order to develop and enhance a Europe-wide charging station network. By 2020, the network should be extensive enough make commuting in cities and along main roads by electric means feasible. Also, EV plugs have been harmonised on the continent so there’s no need for adapters between, for example, Utsjoki and Gibraltar. Safety and recycling issues have also been taken care of. For example, by 2021, pedestrians will be better aware of the currently quiet EVs, since they will be equipped with warning sound systems. At the moment EVs are already subject to the same security requirements as other cars. All in all, the increase in the number of EVs on the roads is making life interesting, even for lawyers. The upcoming years will likely bring new developments both at the Finnish and European level, hopefully making green driving even more attractive.

   Published: 2.3.2015

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    When Human Rights Sat Down at the Corporate Table

    Basic Ingredients First of all, many international human rights conventions oblige countries to comply with their standards and implement respective national legislation (for example, the UN Universal Declaration of Human Rights, International Covenant on Economic, Social and Cultural Rights and ILO Declaration on Fundamental Principles and Rights at Work). Human rights are at the core of corporate responsibility. From the start of the 21 st century, human rights have also entered into the corporate world with increasing power and are, thus, something corporate lawyers have to think about as well. The most recent international proof of this development is the UN Guiding Principles on Business and Human Rights . These so called Ruggie principles are seen as a starting point for more a coherent responsibility approach within multinational companies. The field is certainly evolving, and there is pressure for lawyers to elaborate on how these principles, conventions and declarations affect everyday business. Corporate responsibility is too large a chunk to bite off in one mouthful. To make it more digestible, I decided to serve you a three course menu: Appetizer – Setting up Guidelines and Policies The whole starting point for corporate responsibility is how a company operates. Companies follow the rules derived from the legislation, but voluntary codes of conduct are increasingly defining how to operate. A natural extension of an internal code of conduct is to extend it to the supply chain of the company in question. This seems to be the most crucial corporate responsibility topic today, as supply chains are long and complex. The first thing many companies have to do is to define their supply chain. Not an easy task if your business is, for example, buying umbrellas from a warehouse in China and selling them globally through wholesalers. Do you really have a clue who dyed the fabric used in the umbrella and whether any harmful chemicals were used in the process? A code of conduct for suppliers attached to the agreements you make with them safeguards you against scandals in the supply chain. Freshfields has examined the economic effect of the scandals in 12 countries across the UK, Europe, Asia and the US. The ‘Fun Fact’ of the survey is that 53% of scandal-struck companies had not seen their share prices regain pre-crisis levels. Getting hungrier?   Main course – Making Sure Policies Are Understood and Followed Now that you have drafted codes of conduct for your company and your suppliers and have attached them to your agreements, you can relax, right? In an ideal world yes, but not in a real life. Codes of conduct not only require training, but also follow-up on how the guidelines have been adopted by the employees and suppliers. These kinds of compliance functions are usually where corporate responsibility and legal departments meet. The costs of proper training and compliance are marginal compared to the expenses that a company can incur if the milk spills. Let’s go back to our chosen products, umbrellas. Your warehouse manager gave you the list of the used manufacturers in accordance with the code of conduct for suppliers. I hate to be pessimistic, but can you rely on the list and on simple written confirmation that no harmful chemicals are being used? Regular audits are recommended to see what is really happening at the manufacturing site. Like in other risk scenarios, your agreements should include penalties for misconduct if the policies are not properly followed. Now, I think it’s time for something sweet. Dessert – Expanding through Acquisitions There may come a time when your company has cash burning a hole in its pocket, and you start looking for something nice to buy. A traditional legal due diligence review keeps a close eye on the agreements, reorganisations, and assets of the target company to find potential risks and action points before signing the deal. However, today it is equally important look at corporate responsibility aspects: you don’t want to be surprised by a front page headline that your supplier in Asia has used forced labour in its umbrella factory. When a scandal hits the front page, it doesn’t matter whether the supplier mistreated employees under the previous owner or on your watch. We have heard rumours that clear shortcomings in corporate responsibility matters can affect valuation. I have no problem believing this rumour. The three course menu above is linked by one clear common theme: each course seeks to minimise risks. Proactively. Before the milk spills. Over the upcoming spring, we are organising a client seminar on business and human rights. These three aspects are sure to be discussed in the seminar, but we would be happy to listen to your thoughts earlier!

    Published: 10.2.2015