213 Engagement of social and ecological stakeholders.

Beyond shareholders and employees, the board has no explicit legal duty to engage with other stakeholders of the corporation, such as customers, creditors, suppliers, neighbouring communities or civil society representatives. Nevertheless, there are two grounds on which boards might be expected to engage with such stakeholders. The first ground follows from the responsibility of the board to consider the interests of all stakeholders involved in the corporation.1 In order to fulfil this responsibility, stakeholders might expect the board to engage with them about their interests before taking a specific decision. To this end, institutional investors are required by law to engage with other stakeholders of the corporation.2 The second ground for stakeholders to engage with the board is that they might have the right to annul a board decision in specific circumstances. The Dutch Civil Code provides a right for stakeholders to request the annulment (vernietigen) of a board decision if it violates the principle of reasonableness and fairness (redelijkheid en billijkheid) and if the stakeholder has a reasonable interest (redelijk belang) in the compliance of the board with the principle of fairness.3 Under the current law it is debatable whether this provision applies to non-institutionalized stakeholders, especially social and ecological stakeholders.4 Eijsbouts has suggested that such stakeholders should be allowed to use this provision, in order to encourage the societal engagement of the corporation.5 Others like Raaijmakers object that widening the provision would lead to uncertainty and potentially arbitrariness.6

In order to determine the preferable engagement of stakeholders other than employees or shareholders, I propose to distinguish between a problem of identification and a problem of representation.7 The first problem of identification involves the issue of identifying the relevant stakeholders which boards might be expected to engage with. Who are these stakeholders? And how should they be identified? The pursuant problem of representation involves issues related to the representation of stakeholder interests in corporate governance. How should stakeholders be represented in corporate governance? Belonging to this is the problem of representing interests which are not directly attached to an identifiable stakeholder group, such as the interests of a natural ecosystem or general public interests such as national security. Who should be allowed to represent those interests? How should those representatives be engaged by the board? All in all, this raises the issue of determining how boards should be required to identify and engage with stakeholders other than employees or shareholders, particularly stakeholders representing social and ecological interests.8