The Netherlands' plans to encourage Corporate Social Responsibility

In the Netherlands, in Europe at large, and in the United States, the idea of corporate social responsibility – CSR – is spreading. Nike and Levi jeans have come under the gun for their overseas manufacturing processes and subsequently changed them. Starbucks in the US and coffee houses in Europe offer beans and brews that boast an "environmental stamp of approval".

I’ve read that US celebrity Kathie Lee Gifford has testified before Congress regarding child labor and her products.

You can’t walk through downtown London, Paris or New York and not notice the ubiquitous health and beauty stores selling organically-grown and environmentally-safe products. Even tyre merchants are using recycling as part of their advertising strategy.

What does this all mean? I think we can conclude that Corporate Social Responsibility is more than just "feel good, in vogue" politics – it is a trend, a growing trend, and a positive trend to boot.

A substantial and structural development like CSR forces us to rethink the traditional roles and responsibilities of the business community, government and social organisations.

It also raises important new issues. For instance, what do government and the business community expect of each other? What could and should government do to assist businesses in making CSR work?

At base, CSR is the product, the result, of a company’s corporate attitude: companies develop corporate social responsibilities in line with their character and capacities.

This attitude and the resulting conduct cannot be imposed from the top down. Legislation requiring companies to do so would not only be almost impossible to enforce, but could also become counterproductive. Of course, where specific legislation is useful or necessary (for example labour law or fiscal measures), the government should act.

As for government, its role is not only to legislate, but also to stimulate and facilitate. In many areas, government should afford the business community the opportunity to regulate its own production processes and services.

Under such cooperative arrangements, businesses often assume their responsibilities more readily. And they often better appreciate their role in the realisation of socially relevant objectives; their good citizenship becomes internalised, if you will. In the Netherlands, we have achieved very strong results with this model, particularly with covenants in the environmental field.

In addition to being a legislator, regulator and stimulator, the government is also an active participant in the market. Government buys goods and services in particular markets, and in doing so its actions can shape those markets. Government actions in the employment, procurement and contracting markets should be beyond approach, and it should lead by example wherever and whenever possible.

As an employer, it can pay explicit attention to ethnic minorities, women and the handicapped, and it can provide opportunities to combine work and care. As a procurer and contractor, it is more than just another market party; the government must comply with European directives and other rules on public procurement and tendering which are designed to ensure equal opportunities for business.

As an international actor, my government seeks to strengthen the international legal system in various international bodies. For example, we support the International Labour Organisation’s efforts to develop mechanisms for compliance with basic labour standards.

Bribery also requires an internationally coordinated approach. OECD discussions have led to a treaty outlawing the bribery of foreign officials, and Dutch law has already been amended to reflect those standards.

Last, but certainly not least, my government wholeheartedly supports the revised OECD Guidelines for Multinational Enterprises and it is committed to actively promoting them.

It is all very well and good to talk about things in theory, but traction is gained where, as Americans say, the rubber meets the road.

It is at the local level, particularly in the areas of social exclusion, unemployment, health care, the living environment and safety – that CSR becomes 'truly' visible.

The Dutch government will support the various players in local partnerships, and several instruments have been developed for that purpose.

At the national level the Netherlands government will take initiatives to:

• establish an independent knowledge and information centre on corporate social responsibility that will actively collect, analyse and disseminate information about CSR;
• improve company reporting on corporate social responsibility;
• engage private enterprise and enhance their contributions to solving environmental problems, and
• build additional CSR criteria into the government’s "playbook" as a market participant.

My government thus will play an active role in promoting CSR in both the public and private sectors.

I would now like to dwell on a unique role the government plays as provider of subsidies and guarantees. This role affords the government a unique opportunity to shape individual and corporate behaviour.

I want to dwell on this not only because it is of personal interest to me, but also because my recent plans in this field have caused some people to look more closely at what we are doing.

Since early 1998 I have been discussing CSR with Parliament. Parliament in turn has been influenced by strong feelings in Dutch society about CSR.

Late last year, Parliament asked me to investigate how to link CSR criteria – and the OECD Guidelines in particular – to the subsidies government provides for international trade promotion, investment and export credit insurance.

I recently submitted my letter of response to Parliament on this topic, and the letter was adopted by the Cabinet and subsequently endorsed by Parliament.

What all that means is that the policy outlined in the letter is now the policy of the Netherlands Government.

The policy is not without controversy, but then again The Netherlands is well known for some of its other controversial – we like to say progressive and thoughtful – policies!

The letter states that the Dutch government considers CSR to be primarily the private sector's own responsibility.

When direct and indirect government support is given to Dutch companies that are active in foreign markets, however, there is a certain implied co-responsibility of the Government in those activities.

In the Dutch political context, it is unacceptable that taxpayers' money would be used to support projects acquired by bribing foreign officials, by seriously polluting the environment in developing countries or by involving child or forced labour. Dutch taxpayers wouldn’t support this, and thus neither should Dutch policy.

Against this background, the Dutch Government decided that elements of CSR should be incorporated into the official support programs for export, overseas investment promotion and international co-operation.

The Netherlands' government CSR policy is based upon two building blocks.

Under the first building block, the OECD Guidelines were adopted as a suitable reference for acceptable corporate conduct.

Under the second building block, detailed criteria will be developed and implemented to govern official support for Dutch companies' foreign operations.

Regarding the first block, or the explicit linkage to the Guidelines as a whole, the following should be noted. It was clear from the outset that the Guidelines were negotiated by governments to be used on a voluntary basis by the private sector.

They were not designed to become a legal instrument under which governments were given a set of transparent and enforceable rules for their subsidy and guarantee programs.

With this in mind, the Dutch government's CSR Policy uses the Guidelines as an element of "moral persuasion," in the sense that private companies should act in a responsible manner when supported by public funds.

Consequently, companies wanting financial support will be required to declare in writing that they are familiar with the Guidelines and that – within the limits of their ability – they will attempt to apply the Guidelines to their own actions. The government will not monitor compliance with this "declaration of intent" and sanctions are not foreseen.

While this policy encourages businesses to implement the Guidelines, I remain convinced that the threshold between recommendations and binding rules has not been crossed.

Why? Because no enterprise is forced to apply for government subsidies or guarantees. Each company determines for itself whether or not to apply for official support. If it wants that support, it must meet the criteria. Also, as I just stated, the government will not monitor compliance with this "declaration of intent" and sanctions are not foreseen.

Regarding the second building block, detailed criteria, it is important to note that many Guidelines elements are expressions of a consistent policy in pursuit of certain policy objectives.

For instance, the chapters on Employment and Industrial Relations, Environment and Combatting Bribery are related to other international instruments, such as the ILO Declaration on Fundamental Principles and Rights at Work, the Rio Declaration on Environment and Development and Agenda 21 and the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.

Consistent with such instruments, concrete criteria will be developed in relation to corruption, the environment and social conditions for government programs that support Dutch companies' foreign operations.

In sharp contrast with the "rules of the game" of the first building block of our policy, compliance with these concrete, qualifying criteria on environment, corruption and industrial relations of this second building block will be monitored and enforced.

In my letter to Parliament, I noted the possibility of withdrawing support in cases of a serious breach of the criteria. I noted also, however, that enforcement of CSR criteria would be particularly difficult in legal terms. Therefore, we have made clear that the criteria now under development must be transparent and contestable, even in court.

Some claim that we have abridged the terms of the Guidelines and moved beyond the Ministerial agreement of June 2000. I strongly disagree. The explanation just given should clarify the scope of my CSR policy.

I firmly believe that we have struck a fine balance between societal concerns about the government's implied co-responsibility for unacceptable conduct of the Dutch private sector abroad, the international community’s recommendations as laid down in the OECD Guidelines and the government's objectives in the promotion of exports, overseas investments and international co-operation by the Dutch private sector.

We are happy with this policy and we are hopeful that it will garner positive results, not only for Dutch business but also for the developing world.

Corporate social responsibility is a phenomenon that has become firmly established in our society: it is here to stay. We see signs of it becoming established across the international community.

At base, CSR is the private sector's response to structural changes in domestic society and in the international community. Given the dynamic that is inherent in corporate social responsibility, the government's role must likewise change to reflect changing needs and future goals.