198 Standards for weighing of interests.

In addition to the responsibility to encourage the durable success of its corporation and its enterprise, the legal job description of the board also includes a duty of care when considering and weighing the interests of all stakeholders involved.1 Particularly when social and ecological interests are involved, this weighing of interests may effectively amount to a form of public policy-making in which a central authority distributes common and scarce resources amongst competing constituents.2 Since corporate boards are not legitimized through democratic mechanisms to engage in such public policy-making, clear ethical standards are needed in order to legitimize and evaluate their weighing of interests. Dutch corporate law provides a starting point for articulating such standards. In general, the board has a responsibility to weigh the interests of its stakeholders in a reasonable and fair manner (redelijkheid en billijkheid).3 In practice, Van Ginneken and Timmerman provide a more specific standard for guiding boards in their consideration of interests by suggesting a test of proportionality (evenredigheidsbeginsel).4 This test is a threefold one. The board should ascertain whether its decision meets the following criteria: (i) it is fit to fulfil its responsibility (and, for example, not just in its own interest), (ii) it is necessary to achieve its responsibility (meaning that no subsidiary or alternative decision with less severe consequences for stakeholders is possible) and (iii) that it does not result in any unreasonable objections by stakeholders in relation to the expected benefit of the decision.5

Particularly the third part of the test of proportionality may cause difficulties when boards include social and ecological interests in their weighing process. Boards may need more explicit publicly legitimized standards to determine which social and ecological interests should be considered, and more importantly how to weigh the objections and gravity of such public interests against other more private interests.6 As boards lack democratic or public legitimization, they face uncertainty with regard to the norms according to which they are held accountable for weighing social and ecological interests.7 Meanwhile, social and ecological stakeholders lack any legal standards and mechanisms to hold boards accountable for their potential maltreatment of social and ecological interests.8 Both make boards vulnerable to unpredictable assessments in non-legal courts of public opinion.9 Therefore, an issue arises in Dutch corporate law in relation to the ethical standards according to which boards should be legitimized and held accountable for weighing social and ecological interests.10