CORPORATE SOCIAL RESPONSIBILITY IN GENERAL
1. CSR values and practices, including levels of support from government, business and the general public
Corporate engagement as a social partner has a long unbroken tradition in the Netherlands. In the last decade the public debate on CSR has been particularly lively and CSR is now firmly on the agenda of government, various NGOs and other interested parties.
More recently, a heated debate on CSR ensued in Parliament, pivoting on the advisory report of the Social and Economic Council of 15 December 2000, which considers CSR as a core business of the company (see section 2 below). In January 2003, a two-year research programme into CSR was initiated by the Ministry of Economic Affairs and the National Initiative Sustainable Development with the collaboration of seven Dutch universities. In November 2004, the CSR Netherlands knowledge centre (MVO Nederland) officially opened; several Dutch universities have also established research centres and curricula dedicated to CSR. Various NGOs are actively involved in the discussion on CSR and the roles of government, companies and stakeholders. The Dutch Consumers Organisation (Consumentenbond), like many other NGOs, advocates the introduction of mandatory transparency on corporate CSR policy and its implementation. According to a 2002 survey by the Consumers Organisation, 73 per cent of the Dutch population believes that government should oblige shops to disclose how products have been manufactured. The Consumers Organisation applies CSR screening to many product and service tests it conducts and to its assessment of price and quality. Unions have also become more concerned about sustainability issues in conjunction with promoting employee interests, as is evident from their involvement with hallmarks and codes of conduct for pension funds, discussed further in section 9 below.
Many Dutch companies with a national and international presence have drawn up codes of conduct that include CSR-related subjects; some of these refer to international standards, such as the Universal Declaration of Human Rights, the OECD Guidelines for Multinational Enterprises and the ILO Conventions. To encourage companies with overseas activities to adopt their own code, the State Secretary for Economic Affairs has established a checklist.
The Dutch Sustainable Research organisation compared the country averages for 2003 in sustainability performances of European companies in the FTSE Eurotop 300 Index. The Dutch AEX-listed companies ranked third, after the UK and Switzerland. The 200203 Entrepreneurship Monitor (Ondernemerschapsmonitor) shows that 12 per cent of the responding 300 small, medium and large companies are concretely engaged in three or more of the five selected categories of CSR, and that 72 per cent of these companies believe they conduct their businesses in a socially responsible manner. The State Secretary for Economic Affairs announced that she would review the progress and possible social effects of CSR in 2006. In the meantime she will determine, in collaboration with the business community and other CSR stakeholders, whether complementary policy is necessary or desirable, and if so, how this should be formulated.
2. Laws, statutes, government publications or other significant framework documents
There is no overarching statute on CSR, but the national and international regulatory framework and other standards do contain various provisions relating to CSR. Particularly in the areas of employment (see section 9 below) and the environment (see section 10 below), CSR is broadly embedded in legislation and regulations with which businesses must comply. In other areas corporate compliance remains largely voluntary. The government promotes socially responsible entrepreneurship in various ways, including subsidies and tax incentives for certain investments, subsidies and charitable donations.
The Social and Economic Council, at the government’s request, presented its advisory report, Corporate Social Responsibility: A Dutch Approach, in December 2000. The 33member Council, established by statute in 1950, is an industry-funded body and acts independently of the government. Its composition reflects social and economic relations in the Netherlands; 11 members are employers’ representatives, 11 are union representatives and 11 are national government representatives. The Council maintains that the primary responsibility and initiative for introducing CSR rests with the individual company, as part of its core business. The government should play an active role, both promoting and facilitating. The Dutch government endorses the Council’s analysis, albeit with parliamentary debate.
3. International treaties, conventions or standards
A range of international treaties, conventions and standards are relevant to CSR in the Netherlands. An important international instrument for human rights is the Universal Declaration of Human Rights, adopted in 1948. The International Labour Organisation (ILO) issued the Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (revised in 2000) and various conventions and recommendations of importance to labour rights. In the area of environmental protection, several initiatives have been launched, including the Rio Declaration on Environment and Development and its Agenda 21 of 1992 and the Kyoto Protocol to the United Nations Framework Convention on Climate Change, to which the Netherlands acceded in 2002. The Organisation for Economic Co-operation and Development (OECD) has produced several instruments relating to aspects of CSR, including the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (see section 7 below). These instruments and others have all been agreed upon by national, including the Dutch, governments. Companies are not parties to the instruments and therefore, in principle, are not bound by them. The instruments may nevertheless have a bearing on companies, for example, if the instruments are implemented in national legislation or government policy or if the company declares its adherence to them.
International organisations have drawn up guidelines, principles and standards with which companies can voluntarily comply. These include the United Nations Global Compact and the OECD Guidelines for Multinational Enterprises, as revised in 2002 (see also section 6). CSR reporting standards continue to be developed, including those of the Global Reporting Initiative (see also section 14). In June 2004, the International Organisation for Standardisation (ISO) decided to develop an international standard that would provide guidance on social responsibility; the ISO expects the standard to be completed for publication in 2007.
Within the EU, CSR has been firmly on the political agenda since the Lisbon Summit in March 2000. Various documents and resolutions of the European Commission, Council and Parliament followed, including the EC Green Paper of July 2001, the EC Communication of July 2002 that introduced the European Multi-Stakeholder Forum on Corporate Social Responsibility, and the Council Resolution of February 2003.
4. Non-statutory sources of liability for companies
Being a civil law country, the Netherlands does not distinguish between common law duties and statutory duties. Under Dutch law, liabilities may exist, however, that could qualify as deriving from a non-statutory source under the law of a common law country.
A company will not readily be held liable for non-social entrepreneurship if it complies with all its statutory duties. It remains to be seen whether a company could be held liable under tort if it violates standards of CSR. Many complicated legal issues arise in this respect. A company may be liable under a species of tort if it makes a misleading public statement on its CSR. Moreover, if the information on CSR is contained in the management report and amounts to a misleading representation of the state of affairs of the company, directors of the company may also be severally liable for resulting damages suffered by third parties. To our knowledge, no cases have as yet been reported on liability for misleading statements concerning a company’s CSR.
In so-called annual accounts proceedings before the Enterprise Chamber, any interested party can request the court to order a company to amend its annual accounts or its management report if these do not meet the reporting requirements. In the past pressure groups have tried to use these proceedings to pursue their objectives. For example, in the Dodewaard case (Supreme Court 26 June 1985, NJ 1986, 307), Stop Dodewaard, an association which fought against the use of nuclear energy, requested the court to order the operator of a nuclear power plant to amend its annual accounts. Stop Dodewaard wanted more insight into the costs of producing nuclear energy. Although the Supreme Court dismissed the claim, finding that the alleged disadvantage to Stop Dodewaard was not concrete and specific enough, these proceedings might be used to attempt to challenge a management report that allegedly contained incorrect CSR-related information.
It is not inconceivable that CSR will play a role in special inquiry proceedings before the Enterprise Chamber of the Amsterdam Court of Appeal. In these proceedings, breach of CSR standards may be found to amount to mismanagement. If the Enterprise Chamber rules mismanagement, it may order one or more of the measures limitatively provided for by law, which include the nullification of resolutions or the removal of directors. In the Batco case (Enterprise Chamber 21 June 1979, NJ 1980, 71) the court attached some importance to the OECD Guidelines when reaching its decision that Batco’s resolution to close one of its factories amounted to mismanagement. Batco had accepted the OECD Guidelines as a guideline to its policy. To date, this decision is a unicum. It should be noted that only certain persons are authorised to initiate enquiry proceedings. These include shareholders or holders of depositary receipts (jointly) representing the lower of (a) ten per cent of the issued capital of the company or (b) a nominal value of €225,000 (or any lower amount provided for in the articles of association) and a trade union with members employed by the company.
5. Principal institutions, government agencies and/or major non-governmental organisations (NGOs)
The co-ordination of various governmental departments’ CSR activities rests with the Ministry of Economic Affairs. The CSR Netherlands knowledge centre (MVO Nederland), an independent institute founded by the government that officially opened in November 2004, is a key player in collecting and unlocking knowledge on CSR both in a national and an international context, and in promoting a dialogue between companies, governments, and social organisations. Dutch NGOs have collaborated for several years in the field of CSR. In 2002 the CSR Platform (MVO Platform) was established to strengthen this collaboration. Members of the CSR Platform include the Consumers Organisation, the Federation of Netherlands Unions (FNV), the National Federation of Christian Trade Unions in the Netherlands (CNV), the Netherlands Friends of the Earth (Milieudefensie), Greenpeace Netherlands, Foundation for Research on Multinational Enterprises (SOMO), the Association of Investors for Sustainable Development (VBDO) and the Social Venture Network (SNV). Other national NGOs involved in CSR include the Confederation of Netherlands Industry and Employers (VNO-NCW), the Foundation of Social Undertaking (Stimo), the Dutch Sustainability Research (DSR) and the Foundation for Corporate Governance Research for Pension Funds (SCGOP). In pursuance of the OECD Guidelines for Multinational Enterprises a Dutch National Contact Point has been established, the functions of which include encouraging observance of the Guidelines in a national context. Internationally, CSR Europe and the World Business Council for Sustainable Development are among the organisations who promote CSR.
SPECIFIC AREAS OF CORPORATE SOCIAL RESPONSIBILITY
6. Human rights
The Netherlands has ratified many treaties, covenants and conventions in relation to human rights, including the European Convention on Human Rights and the International Treaty on Civil and Political Rights. Most human rights norms have been included in national legislation also applicable to companies. Articles 93 and 94 of the Dutch Constitution dictate that certain treaty provisions are directly binding by virtue of their content. This is, for example, the case with the ECHR. Consequently, the application of national laws which would lead to a breach of this convention can therefore be challenged in a Dutch court.
Although not compelled to do so by statute, with the exception of criminal liability for some offences, most Dutch companies have committed themselves to upholding human rights in their operations abroad. This commitment has taken different forms. Some Dutch companies have become participating members of the UN Global Compact; the OECD Guidelines for Multinational Enterprises play an important role here as well. The Dutch government and one major Dutch multinational have also adopted the Voluntary Principles on Security and Human Rights for the Extractive and Energy Sectors initiated by the US and the UK. The government is keenly following the draft UN Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with regard to Human Rights. There are many active Dutch human rights NGOs, such as the Dutch chapter of Amnesty International, War Child Netherlands and Artsen zonder Grenzen, part of the international organisation Médecins Sans Frontières.
7. Corruption
Corruption is not structurally present in the Netherlands, and it is taken very seriously when it occurs. In the 2004 Transparency International Corruption Perceptions Index, the Netherlands was placed tenth, while in the 2002 Transparency International Bribe Payers Index the Netherlands shared sixth place. However, in the 2003 Transparency International Global Corruption Barometer, Dutch respondents were among the pessimists when asked whether corruption would increase or decrease in the future.
The law on corruption was revised and expanded in the Netherlands in 2001. This revision was, to a great extent, the result of international developments, such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, ratified by the Netherlands in January 2001. In April 2002 the Netherlands ratified the Council of Europe Criminal Law Convention on Corruption. The Netherlands has also ratified the EU Convention on the Protection of the European Communities’ Financial Interests and its first and second Protocol, the EU Convention on the Fight against Corruption Involving Officials of the European Community or Member States, and the EU Council Framework Decision against Corruption in the Private Sector.
In line with the OECD Convention under Dutch law, attempting to bribe officials of foreign states or international organisations is a criminal offence. While under the OECD treaty so-called ‘facilitation payments’, small payments which in some countries are made to induce public officials to perform their functions, are allowed, under Dutch law the making of such payments is, in principle, a criminal offence. However, to prevent Dutch companies abroad facing a competitive disadvantage, the Dutch Prosecution Authorities adopted a directive in October 2002 under which international facilitation payments will only be prosecuted if an improper advantage has been gained. Costs relating to crimes of which the taxpayer has been irrevocably convicted by a Dutch court are not tax deductible. A legislative bill is pending that would also make bribes non-tax deductible if it is likely, without the need of hard evidence, that these bribes would qualify as a criminal offence under the Dutch Criminal Code. Under Dutch law, proceeds of crime can be seized after conviction and even before trial. The laundering of the proceeds of a crime is a criminal offence.
8. Corporate governance and business ethics
The most significant statute for corporate governance in the Netherlands is Book 2 of the Dutch Civil Code (DCC), which was amended in September 2002 to insert the provisions of the Act on Disclosure of Remuneration and Shareholding of Members of the Board of Directors and Members of the Supervisory Board. Another amendment took effect in October 2004, and concerns the so-called structure regime, which essentially applies to large companies. Under the new structure regime more powers are conferred on the general meeting of shareholders and on the works council, having been partially shifted from the supervisory board. Other statutes relevant to corporate governance include the Works Council Act, Book 7 DCC, and the Disclosure of Major Holdings in Listed Companies Act 1996.
Corporate governance has been explicitly on the agenda in the Netherlands for about a decade. In 1997 the Peters Committee presented its Forty Recommendations. In December 2003 these were replaced by the Dutch Corporate Governance Code, Principles of Good Corporate Governance and Best Practice Provisions, usually called the Tabaksblat Code after the chairman of the committee that drafted them, Morris Tabaksblat. Like its predecessor, the Tabaksblat Code is a business-led initiative; the members of the Tabaksblat Committee are representatives of the different stakeholders involved. The Tabaksblat Code, which applies to companies with a registered office in the Netherlands listed on a government-recognised stock exchange whether in the Netherlands or abroad, pursues the integrity and transparency of decision-making by the managing board and its proper supervision. In its terms of reference the Tabaksblat committee states that the Code is not concerned with CSR, as “this subject is not tied to a national corporate structure and extends way beyond the development of a new code for the functioning of Dutch companies in the capital market” – a position which has been criticised. The Tabaksblat Code contains several sound governance principles which have been elaborated on in 113 best-practice provisions. For the first time for the 2004 financial year, listed companies should outline in their management report whether they have complied with the Tabaksblat Code or explain any deviation from it (the ‘comply or explain’ principle). It is expected that the Tabaksblat Code will be designated as the official code of conduct shortly, attaining statutory basis.
With the introduction of listed companies’ obligation to apply the International Financial Reporting Standards, The Netherlands Authority for the Financial Markets will also supervise compliance of listed companies with the reporting requirements contained in Book 2 DCC in the near future (see section 14 below). Supervision by The Netherlands Authority for the Financial Markets of compliance with the Tabaksblat Code will, in principle, be limited to assessing whether a paragraph as prescribed is included in the management report. It is primarily up to a company’s shareholders to call the members of the management board and the supervisory board to account concerning the application of the Code. In December 2004 the government announced the establishment of a monitoring commission which is charged with the task of promoting the currency and usefulness of the Tabaksblat Code and monitoring its compliance by listed companies.
In the international framework, mention should be made of the OECD Principles of Corporate Governance, revised in April 2004. In Europe, the European Commission’s Action Plan on Modernising Company Law and Enhancing Corporate Governance in the EU of May 2003 is likely to set further developments in motion in the area of corporate governance.
9. Corporate responsibility to employees
The Netherlands has a long tradition of protection of economically and socially weaker parties, reflected in a vast corpus of Dutch employment law. In line with European directives, Dutch law has an extensive regulatory framework on equal treatment banning – in short – workplace discrimination based on religion, race, sexual orientation etc, as well as workplace discrimination between men and women, or part-time workers and temporary employees and discrimination based on age, disability or chronic diseases. The Equal Treatment Commission (Commissie Gelijke Behandeling) supervises compliance with the statutory regulations on equal treatment. The Commission can initiate investigations into alleged discrimination both at an employee’s request and on its own initiative.
Pursuant to the Adjustment of Working Hours Act, employers must, in principle, grant employee requests for an adjustment of working hours, unless material business interests dictate otherwise. Furthermore, employers are mandatorily bound to working time and working conditions as stipulated by the Working Hours Act and the Working Conditions Act 1998 and the governmental decrees based on these acts. The Minimum Wage and Minimum Holiday Allowance Act assures the employee of a minimum wage and a minimum holiday allowance in line with the general standard of living.
The Employment and Care Act ensures the right of employees to all types of care leave, such as maternity, parental and adoption leave. Employees who are absent due to illness, pregnancy or birth remain entitled to at least 70 per cent of their last earned wages, to a maximum of 104 weeks, paid by the employer. After this period, employees can claim a disability benefit in accordance with the Disability Insurance Act. Ill employees, who simultaneously become unemployed, are entitled to an illness benefit in accordance with the Illness Benefits Act.
During an employee’s absence due to illness, employers, employees and the Working Conditions Services (Arbodienst) must, pursuant to the so-called Gatekeeper Act, make every effort to achieve the reintegration of the employee in the workplace, under penalty of the continuance of the obligation for employers to pay wages or the termination of the payment of wages for employees. Dutch law prohibits employers from giving notice to employees who are ill. However, employers may have the employment contract dissolved by a court if the absence is not grounded on the employee’s illness. Employees who become unemployed may be entitled to an unemployment benefit of 70 per cent of the last-earned wages, in accordance with the Unemployment Insurance Act, and subject to the employment history of the employee.
Recent developments have led to new provisions to the benefit of employees: the Act on Child Care Facilities (as of January 2005), provisions on teleworking, whistleblowers, medical examinations, a job application code and a new system (as of January 2006, ‘levensloopregeling’) that enables employees to save up time to finance unpaid leave in the future. Tax incentives are available for employers investing in business assets that are relevant to working conditions.
10.Corporate responsibility towards the environment
Although environmental regulation in the Netherlands is dense and extensive, some environmental issues have not yet been exhaustively legislated. The most important of these is the use of energy and raw materials, and the transport of goods and personnel to and from industrial facilities. Although the Environmental Control Act (ECA) formally provides a basis for establishing conditions with respect to these issues, the authorities have so far been very reluctant to do so.
For some years, the authorities have offered a choice to certain companies between a classic, detailed environmental permit and a so-called ‘outline permit’. The outline permit places great emphasis on such aspects as self-enforcement and voluntary notification of incidents. The ECA regulates production, but not the environmental impact of the product. Companies generally pursue environmental goals for their output but seldom implement environmental policies within the company. Initiatives requiring the consumer to pay extra for environmentally superior products have had little success in the Netherlands. Although there is some demand for food crops that have been grown ecologically, the public is less willing to pay extra for such food than in countries such as Germany or Austria. Nor has the introduction of eco-labels gained momentum.
For the reduction or prevention of waste disposal, specific conditions can be attached to a permit under the ECA. Some companies have imposed their own measures which go beyond the permit requirements by rethinking their production processes in terms of ‘management of the full chain’ (from raw materials to waste). Farmers, in particular, and the agricultural industry have a very long and strong history of common ownership and perceive sustainability as a primary requirement for production and profits in the long term.
A typical environmental CSR instrument is environmental reporting. Since 1999 the ECA has required environmental reporting for industrial facilities that may gravely damage the environment. Most large companies in the Netherlands began voluntarily issuing annual environmental reports before 1999 and still report more than strictly required.
Initiatives requiring collaboration within a branche or introducing thresholds on production processes are sometimes deemed incompatible with European principles on free trade. A fairly large corpus of case law has evolved around alleged conflicts between (European) free trade and (national) regulations purportedly prompted by ecological concerns. The Dutch government has created a semi-voluntary regime in areas such as waste disposal, the re-use of batteries, and packaging, by creating highly unattractive regulations which are not applicable if a company adheres to an agreement between the authorities and the relevant sector organisations. Companies generally opt for this agreement.
Several kinds of tax incentives are available for individuals and companies to support environmentally sustainable investments. These include, provided that certain conditions are met, non-taxability of profits on investments in forestry or farms, an investment deduction for energy-saving or environmentally protective investments and non-circumscribed depreciation of investments in business assets relevant to the protection of the environment in the Netherlands.
11.Corporate responsibility to communities
The approach to the development of economically deprived areas by companies is one of public-private partnership. Initiatives with government backing include the National Platform for Crime Control, the Foundation for Community & Business, the Entrepreneurs’ Platform for Urban Renewal and many local initiatives such as the Business in the Community project in The Hague. In addition, the Ministry of Internal Affairs has concluded agreements with many cities under its Large City policy. These agreements oblige such cities to achieve certain goals that may include the revitalisation of economically deprived areas. How they do so is left to their discretion.
In practice, many cities opt for co-operation with local companies. For the north of the Netherlands, a subsidy programme (Kompas voor het Noorden) for companies has been developed, with, as its central goals, the strengthening of the economy in the north and investment in urban centres. Among the criteria for Kompas subsidies are whether considerations of durability have been integrated into the project proposal and the degree to which it contributes to the regional economy. Providers of public services, such as public transportation and postal services, are subject to programmes of the Dutch government which aim to ensure that these services are offered in areas where their provision is not cost-effective or profitable.
12.Corporate responsibility for overseas activities
Dutch courts respect the limits of the liability of a limited liability company unless very exceptional circumstances press them to pierce the corporate veil. Consequently Netherlands-incorporated companies will in principle not be liable for damages from acts of their Netherlands-incorporated subsidiaries and – provided that the law of the foreign state does not impose any liability on them as parent companies – of their foreign subsidiaries.
This does not mean, however, that a parent company can never be called to account for the policy and course of affairs of a subsidiary. It follows from the Supreme Court’s decision in the Ogem inquiry proceedings that the responsibility of the management board of a holding company also extends to the business carried out by its subsidiaries (Supreme Court 10 January 1990, NJ 1990, 466 (Ogem)). If the management board of a holding company fails to intervene if a subsidiary withdraws from its obligations towards the holding company, this in itself can constitute mismanagement. The holding company has an equal obligation to intervene in a foreign subsidiary as it has to intervene in a Dutch subsidiary. In the Netherlands, shareholders and the public at large do not distinguish between the responsibility for activities of local subsidiaries and ‘group responsibility’ and are frequently critical of overseas activities. A growing number of Dutch companies expressly endorse the OECD Guidelines and the standards of the ILO regarding minimum labour conditions for their overseas activities. A confusing number of standard codes have emerged as many multinationals have their own code. Dutch government policy is that no support will be given to any corporate activity within countries that violate human rights norms and, in principle, only companies that commit themselves to OECD Guidelines will be offered financial incentives on their overseas activities.
13.Procurement
Statutory rules on tendering and procurement in the Netherlands do not specifically deal with CSR. Dutch legislation on government procurement is mainly laid down in the Framework Act EEC Tendering Provisions and two governmental decrees based on this statute. This national legislation for the most part implements the previous EC directives on public procurement. The latest EC directives (2004/17/EC and 2004/18/EC) are expected to be implemented (by similar means as the Framework Act) by the summer of 2005. Four ministries that regularly award construction contracts have issued the Procurement Regulations Works 2004, a set of general terms and conditions for procuring works contracts. It adds more detailed rules to those laid down in the EC directives and is binding on the four ministries, but does not contain specific provisions on CSR. Following the parliamentary inquiry on alleged fraud in the civil construction sector, the ministries concerned have introduced the obligation to confirm in writing that the bid has been tendered in accordance with Dutch and European competition laws. Failing to give such a confirmation renders a bid invalid. Based on case law, it is acknowledged that social or environmental considerations can be used as selection and award criteria (for example, Concordia Bus Finland, ECJ, C-513/99). Accordingly, some contracting entities use criteria aimed at boosting the employment of long-term unemployed people. There is no public procurement authority in the Netherlands. Rules on procurement are upheld both by the Dutch (civil) courts and the Court of Arbitration for the Building Industry in the Netherlands, an arbitration institute for cases initiated by unsuccessful bidders.
14.CSR reporting and socially responsible investing
Reporting regulations in the Netherlands are based on the EU accounting directives and regulations, and are now primarily contained in Book 2 DCC. The Guidelines of the Council for Annual Reporting (the Reporting Guidelines) are also significant. These Reporting Guidelines are recommendations setting forth accounting standards which are generally observed and are given a certain weight by courts. Companies are required to prepare and publish not only annual accounts but also a management report, which must provide further information on the state of affairs of the company, including future expectations and research and development activities. From January 2005, EC Regulation 1606/2002 on International Accounting Standards and the International Financial Reporting Standards are directly applicable to listed companies and regulate the preparation of annual accounts; the management report continues to be regulated by national rules.
In implementing EC Directive 2003/51/EC, the proposed amended section of the DCC requires large companies to include, in their management reports, both financial and nonfinancial performance indicators, including environmental and employee aspects, to the extent necessary for a good understanding of the development, performance or position of the company and its group. The obligation to report on environmental and employee aspects is not new in the Netherlands. Certain companies are even now required to publish an environmental report pursuant to the ECA (see section 10 above). The Working Conditions Act 1998, which is applicable, in principle, to all labour in the Netherlands, compels an employer to report annually on the implementation of the action plan on the risks involved in the work. Reporting Guideline 400 recommends including information on the ‘internal organisation structure and staffing’ in the management report. From 2005, listed companies must provide information on their corporate governance in their management report (see section 8 above).
In response to the invitation of the Ministry of Economic Affairs to advise on CSR reporting, the Council for Annual Reporting published a revised Reporting Guideline 400 and the Guide to Sustainable Reporting in 2003. Reporting Guideline 400 recommends including information on the effects of societal aspects, such as environmental, social and economic, of the undertakings of the company either in the management report or in a separate document. The Reporting Guide provides leads for the preparation of individual social reports. The Dutch government broadly supports the Global Reporting Initiative established in 1997 to develop, promote and disseminate globally applicable sustainability reporting guidelines. Other international initiatives relevant to social reporting include AccountAbility 1000 and Social Accountability 8000.
Dutch companies have increasingly been voluntarily reporting information on their CSR. However, research published by the Ministry of Economic Affairs in November 2004 concluded that many Dutch companies, as opposed to social organisations, demonstrate little or no transparency in their CSR efforts. CSR reports are frequently audited. The legal status of these reports and their auditing is still in development. A draft legislative proposal confers the supervision of compliance of listed companies with the reporting requirements contained in Book 2 DCC on The Netherlands Authority for the Financial Markets (see section 8 above). This supervision will, in principle, also extend to information on CSR if contained in a management report.
The Netherlands has a long history of ethical and sustainable investment and interest continues to grow. Tax incentives for ‘green’ investments (see section 10 above) encouraged the growth of ethical investment. The Association of Investors for Sustainable Development has joined organisations focusing on sustainable socially responsible investing. Many Dutch financial institutions have their own ethical or sustainable funds. However, recent research by Nyenrode University shows that the Association of Investors for Sustainable Development and foreign investors are most concerned with CSR; institutional investors such as pension funds seem to play a less active role. According to research conducted by the Association, only 1.8 per cent of the investments held by retail investors with investment funds in 2003 were socially responsible investments. In June 2003, ten leading banks announced the adoption of the so-called Equator Principles. In adopting these principles a bank undertakes to provide loans only to those projects that are developed in a socially responsible manner and in accordance with sound environmental practices. Two of the ten initiating banks are Netherlands-based. Several Dutch pension funds have shown interest in sustainable investment. The Pension and Savings Fund Act obliges pension funds to have a code of conduct and to prepare an actuarial and operational memorandum outlining, amongst other matters, how they will meet the obligation to make solid investments. The code of conduct and the memorandum can contain the pension funds’ view on SRI. A number of CSR indices have been developed internationally. The possibility and desirability of the introduction of a Dutch CSR Stock Exchange Index is currently being explored.
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