Book Review: EU Sustainability Law and Global Supply Chains

Is EU sus­tain­ab­il­ity law ready to reshape glob­al sup­ply chains? My review of Adolf Peter’s book on EU sus­tain­ab­il­ity law and sup­ply chains has been pub­lished in the Asi­an Inter­na­tion­al Arbit­ra­tion Journ­al. I think it is worth your time, so I repro­duce it here.

First pub­lished in Asi­an Inter­na­tion­al Arbit­ra­tion Journ­al Volume 22, Issue 1 (2026) pp. 85 – 90. © 2026 Kluwer Law Inter­na­tion­al BV, The Neth­er­lands. Repub­lished with noti­fic­a­tion to SIAC.

The EU is a pecu­li­ar organ­isa­tion that believes in ever closer cooper­a­tion and some­times takes big steps without con­sid­er­ing the con­sequences. This is why Europe gave itself a single cur­rency while stub­bornly ignor­ing the dis­par­ate eco­nom­ic strengths and debt levels of its Mem­ber States, res­ult­ing in the euro­zone crisis. Sim­il­arly, the EU has abol­ished intern­al bor­der con­trols without adequately secur­ing its extern­al bor­ders, thus enabling largely uncon­trolled immigration.

Die Zeit 25/2025 [1]

I began my read­ing of EU Sus­tain­ab­il­ity Legis­la­tion and Inter­na­tion­al Sup­ply Chains: Enforce­ment and Impact on Chinese and US Com­pan­ies with the above quote from Ger­man weekly Die Zeit fresh in mind. It struck me how the obser­va­tion about the EU’s bold but some­times uncrit­ic­al steps (from the euro­zone to Schen­gen; the Gen­er­al Data Pro­tec­tion Reg­u­la­tion was not even men­tioned) res­on­ates with today’s rush to reg­u­late envir­on­ment­al, social, and gov­ernance (ESG) issues and inter­na­tion­al sup­ply chains. In a world where Europe leads the charge in cor­por­ate sus­tain­ab­il­ity law, this book’s tim­ing is superb. From the first page, I appre­ci­ated that Adolf Peter, an Aus­tri­an law pro­fess­or based in Shang­hai, tackles these issues head-on.

EU Directives: CSDDD, CSRD and Their Enforcement

Chapter 1 dives deeply into the heart of EU law on cor­por­ate sus­tain­ab­il­ity. The author metic­u­lously lays out the new Cor­por­ate Sus­tain­ab­il­ity Due Dili­gence Dir­ect­ive (CSDDD) along­side the Cor­por­ate Sus­tain­ab­il­ity Report­ing Dir­ect­ive (CSRD) and related meas­ures (the Defor­est­a­tion Reg­u­la­tion, the Forced Labour Reg­u­la­tion, and the Green Claims Dir­ect­ive). He iden­ti­fies which com­pan­ies fall with­in the dir­ect­ives’ scope and cata­logues their duties and sanc­tions. He also dis­cusses the many ongo­ing debates over the CSDDD’s pro­vi­sions (some­times leav­ing unre­solved wheth­er cer­tain oblig­a­tions might be relaxed or delayed).

The chapter also explores enforce­ment and liab­il­ity. The author devotes atten­tion to how EU civil judg­ments for CSDDD breaches could be recog­nised and enforced abroad, high­light­ing China and the United States as key examples. Sim­il­arly, the chapter exam­ines the roles and poten­tial liab­il­it­ies of com­pany dir­ect­ors and boards under the CSDDD: for example, it out­lines how dir­ect­ors’ duties are viewed in Aus­tria and con­trasts this with the frame­works in China and the US. One clear strength of the book is already appar­ent here: its prac­tic­al­ity. If you have a ques­tion about apply­ing the CSDDD or CSRD, there is a good chance you will find at least an ini­tial answer with­in its pages. The author even ven­tures into for­ward-look­ing ideas, such as a tax-based incent­ive to reward com­pan­ies that con­trac­tu­ally bind their value-chain part­ners to year-on-year decar­bon­isa­tion. This kind of pro­pos­al makes the book stand out. That said, I have a minor reser­va­tion: while har­mon­ising with glob­al stand­ards is appeal­ing, defin­ing ‘adverse impacts’ by ref­er­ence to extern­al treat­ies could cre­ate leg­al uncer­tainty and invite yet more judi­cial inter­pret­a­tion and lay­ers of bur­eau­cracy on top of an already vast com­pli­ance framework.

Global Perspective: China and the US

The second chapter zooms out to com­pare inter­na­tion­al approaches. The author can­didly observes that neither China nor the US has enacted stan­dalone laws quite like the CSDDD or CSRD. Instead, he provides a use­ful over­view of exist­ing frame­works for com­par­at­ive pur­poses. On the US side, the ana­lys­is is thor­ough: it chron­icles how vari­ous fed­er­al and state actions have recently ten­ded to roll back or neg­ate ESG require­ments, often for polit­ic­al reas­ons. This sec­tion is impress­ively detailed – per­haps more than one might need for a high-level over­view, giv­en how swiftly US policy can change these days. By con­trast, the sec­tion on China is more con­cise. The author shows that China’s sus­tain­ab­il­ity reg­u­la­tion is primar­ily estab­lished through stock exchange rules and cer­tain cor­por­ate law pro­vi­sions. Though short­er, this sec­tion hits the key points without over­whelm­ing the read­er, high­light­ing reg­u­lat­ory guid­ance and evolving cor­por­ate gov­ernance stand­ards in shap­ing sus­tain­ab­il­ity com­pli­ance. It also notes the prac­tic­al lim­its of enforce­ment, par­tic­u­larly the dif­fi­culties asso­ci­ated with recog­ni­tion of European judg­ments in China. These obser­va­tions are espe­cially valu­able for non-Chinese prac­ti­tion­ers, as they tem­per expect­a­tions about form­al leg­al con­ver­gence while offer­ing a real­ist­ic account of how com­pli­ance pres­sures are likely to oper­ate on Chinese com­pan­ies in prac­tice. Taken togeth­er, the com­par­at­ive sec­tions on the US and China serve to con­tex­tu­al­ise the EU’s reach: one comes away appre­ci­at­ing how uniquely ambi­tious the EU’s legis­la­tion is, and why these new rules will have ripple effects across glob­al sup­ply chains.

Contractual Cascading and Remedies

Chapter 3 addresses how the new due dili­gence duties can and should cas­cade through con­tracts in a sup­ply chain. The author explains ‘con­trac­tu­al cas­cad­ing’ – a term that did not make it into law – via twelve real-world case stud­ies (includ­ing Shell, RWE, and Heinek­en) from vari­ous jur­is­dic­tions (the Neth­er­lands, Ger­many, Aus­tria, and oth­ers). These cases set the stage for sample con­trac­tu­al clauses pro­posed later in the chapter. Not­ably, these clauses are framed in com­mon law terms (such as rep­res­ent­a­tions, war­ranties, liquid­ated dam­ages, and indem­nit­ies) as the primary enforce­ment mech­an­ism for the envir­on­ment­al and human-rights pro­vi­sions. I admire the thor­ough­ness of this exer­cise; it gives spe­cif­ic guid­ance on writ­ing ESG oblig­a­tions into con­tracts. How­ever, giv­en that the CSDDD and the CSRD are cre­ations of European law, and that many affected com­pan­ies will oper­ate under civil law con­tracts, I was mildly puzzled by the chapter’s sole reli­ance on com­mon law rem­ed­ies. Civil law sys­tems per­mit con­trac­tu­al pen­al­ties, which could be a highly effect­ive means of enfor­cing ESG duties, yet these are only intro­duced in the fol­low­ing chapter. This tech­nic­al dif­fer­ence felt some­what awk­wardly split between chapters, even though the author’s under­tak­ing of the sub­ject is oth­er­wise comprehensive.

Climate Obligations and Model Clauses

Chapter 4 builds on the pre­vi­ous chapter by focus­ing on cli­mate com­mit­ments. The argu­ment is clear: since the largest mul­tina­tion­als (the primary tar­gets of the CSDDD/CSRD) account for the vast major­ity of glob­al emis­sions, embed­ding cli­mate tar­gets in con­tracts is crit­ic­al. The author sur­veys the rel­ev­ant instru­ments: not only the CSDDD’s own require­ment for a cli­mate trans­ition plan (with Scope 1, 2, and 3 green­house-gas tar­gets), but also the EU Emis­sions Trad­ing Sys­tem and the Car­bon Bor­der Adjust­ment Mech­an­ism. The chapter then turns to inter­na­tion­al examples, such as California’s cap-and-trade pro­gramme, the US’ Region­al Green­house Gas Ini­ti­at­ive, China’s nation­al emis­sion trad­ing scheme, and even devel­op­ments in the auto­mot­ive sec­tor (includ­ing For­mula 1), show­ing how cli­mate oblig­a­tions are (or are not) addressed around the world.

This chapter also includes cli­mate-spe­cif­ic mod­el clauses for con­trac­tu­al cas­cad­ing. Not­ably, it tackles the dis­tinc­tion between ‘liquid­ated dam­ages’ and civil-law ‘con­trac­tu­al pen­al­ties’, which the pre­vi­ous chapter had only hin­ted at. I still think it might have made more sense to dis­cuss this tech­nic­al dis­tinc­tion along­side the oth­er rem­ed­ies in chapter 3. Nev­er­the­less, the expos­i­tion here is clear. We learn, for example, how to draft clauses for year-on-year decar­bon­isa­tion tar­gets and what kind of trans­ition-plan com­mit­ments the major com­pan­ies might incorporate.

Arbitration and ESG Enforcement

The fifth chapter boldly con­siders wheth­er arbit­ra­tion could help enforce ESG duties along inter­na­tion­al sup­ply chains. At first glance, this seems coun­ter­in­tu­it­ive: arbit­ra­tion is con­sen­su­al, so in a multi-tier chain one would need a web of com­pat­ible arbit­ra­tion agree­ments and mech­an­isms (con­sol­id­a­tion, join­der, etc.) to bring all parties togeth­er into a single pro­ceed­ing, ideally. The author con­fronts this chal­lenge head-on. He explains how such chain-wide arbit­ra­tion clauses would require care­fully cal­ib­rated con­sol­id­a­tion and join­der pro­vi­sions, and he even provides sample arbit­ra­tion clauses designed to cas­cade into a chain of activities.

There are many con­struct­ive ele­ments in this chapter. The author sug­gests, for example, that arbit­ral insti­tu­tions might adopt CSDDD-spe­cif­ic rules and main­tain lists of arbit­rat­ors who are experts in ESG mat­ters. A mem­or­able ral­ly­ing call is that ‘Inter­na­tion­al com­mer­cial arbit­ra­tion will play a sig­ni­fic­ant role in CSDDD-related dis­putes involving mul­tiple parties from the chain of activ­it­ies.’ Wheth­er this optim­ism is jus­ti­fied remains to be seen, but it is inspir­ing to think big.

That said, the chapter does have its quirks. Mid­way through, it detours into a dis­cus­sion of how claims under the United Nations Con­ven­tion on Con­tracts for the Inter­na­tion­al Sale of Goods (CISG) might relate to ESG dis­putes – a sec­tion that feels some­what out of place in a chapter focused on arbit­ra­tion. Also, the author sur­veys con­sol­id­a­tion and join­der clauses in the rules of vari­ous insti­tu­tions, though I noticed that the latest arbit­ra­tion rules of the Arbit­ra­tion Insti­tute of the Stock­holm Cham­ber of Com­merce (SCC) and the Ger­man Arbit­ra­tion Insti­tute (DIS) were omit­ted – a curi­ous gap giv­en their rel­ev­ance with­in the EU. These are rel­at­ively minor points in what is oth­er­wise a rich and insight­ful chapter.

Per­haps my main prac­tic­al reser­va­tion is this: in com­plex sup­ply chains, it is very dif­fi­cult to ensure that every con­tract con­tains a com­pat­ible arbit­ra­tion agree­ment, par­tic­u­larly where the sup­ply chains are multi-layered, mean­ing that a party enters into more than one con­tract with its imme­di­ate neigh­bour in the chain. Many prac­ti­tion­ers (myself included) sus­pect that well-resourced courts, rather than arbit­ral tribunals, might ulti­mately handle these com­plex dis­putes more effect­ively. The numer­ous com­mer­cial courts that have recently emerged in many jur­is­dic­tions come to mind. This would be espe­cially true if the inter­na­tion­al recog­ni­tion and enforce­ment of court judg­ments were fur­ther strengthened, for example through the Hag­ue Con­ven­tion of 30 June 2005 on Choice of Court Agree­ments. This con­ven­tion is cur­rently in force in the EU and all its Mem­ber States (includ­ing Den­mark). It has not yet entered into force in China or the US, due to the absence of ratification.

Conclusion

In sum­mary, EU Sus­tain­ab­il­ity Legis­la­tion and Inter­na­tion­al Sup­ply Chains: Enforce­ment and Impact on Chinese and US Com­pan­ies is an impress­ive and timely con­tri­bu­tion to the field. I would high­light the fol­low­ing fea­tures in particular:

• An exhaust­ive ana­lys­is of the CSDDD and CSRD, cov­er­ing scope, duties, and enforce­ment challenges;
• a glob­al per­spect­ive that com­pares the EU’s approach with frame­works in China and the US;
• prac­tic­al tools in the form of case stud­ies and mod­el con­tract clauses that trans­late duties into real con­tracts; and
• a brave ven­ture into nov­el ter­rit­ory, such as detailed cli­mate clauses and the role of arbit­ra­tion in ESG disputes.

My reser­va­tions are minor: a bit too much detail on recent US devel­op­ments, some edit­or­i­al choices about where cer­tain dis­cus­sions sit (such as the treat­ment of liquid­ated dam­ages), and there remain fair ques­tions about how far arbit­ra­tion can real­ist­ic­ally go. But these points do not sig­ni­fic­antly dimin­ish the book’s over­all achieve­ments. If any­thing, they high­light how thought-pro­vok­ing the work is; it is a mark of qual­ity that this volume invites dis­cus­sion and debate rather than offer­ing simple answers. Above all, I admire the sheer scope and depth of this work. It will serve as an essen­tial ref­er­ence in the evolving field of sus­tain­able cor­por­ate gov­ernance. In an area where the law struggles to keep pace with eth­ic­al and envir­on­ment­al demands, this book provides insight, and a wealth of new ideas. I con­grat­u­late the author on this sub­stan­tial achieve­ment. It is to his cred­it that read­ing this book feels like join­ing a learned con­ver­sa­tion – one I am eager to continue.

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[1] Trans­lated by me. Ori­gin­al wording:

Die EU ist ein selt­sames Gebilde, das im Glauben an ein immer engeres Mitein­ander bis­wei­len große Sch­ritte wagt, ohne die Kon­sequen­zen zu beden­ken. Deshalb hat sich Europa eine eigene Währung gegeben – aber hart­näckig igno­riert, dass die Wirtschaft­skraft und die Ver­schul­dung in den Mit­gliedsstaaten so weit aus­ein­an­der­la­gen, dass daraus eine Euro-Krise entstehen kon­nte. Ganz ähn­lich hat die EU die Gren­zkon­trol­len in ihr­em Innern abgeschafft – ohne die Außen­gren­zen angemessen zu sich­ern. Und dam­it eine weith­in unkon­trol­lierte Zuwan­der­ung ermöglicht.

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First pub­lished in Asi­an Inter­na­tion­al Arbit­ra­tion Journ­al Volume 22, Issue 1 (2026) pp. 85 – 90. © 2026 Kluwer Law Inter­na­tion­al BV, The Neth­er­lands. Repub­lished with noti­fic­a­tion to SIAC.