3.4.1 Management board and CSR

According to Dutch law the task and duty of the managing board is to: 'manage the company' (article 2:129 DCC). Many books have been published about the role of the directors in managing the company. Defining the strategy, organising the business, and the creation of value are the themes that usually emerge.1 The Frijns Code stipulates in Principle II.1:

Compared to the Tabaksblat Code, the inclusion of the CSR theme is new. Principle is linked to best practice provision II.1.2, which lists the subjects the management board shall submit to the supervisory board for approval. Under (d), 'corporate social responsibility issues that are relevant to the enterprise' are mentioned. Clearly times have changed since introduction of the Tabaksblat Code: CSR issues are now considered part of management strategy and are believed to be sufficiently important to require the supervisory board's consent.2

According to the last sentence of best practice provision II.1.2, the main elements of a company's CSR strategy must also be mentioned in the annual report. This provision is in line with Dutch corporate law and accounting guidelines. Article 2:391(1) DCC requires the inclusion of extra-financial information in the annual report such as information regarding environment and employee matters.3 In addition, the Dutch Council for Annual Reporting has issued Guideline 400, which recommends providing ample information on CSR strategies, policies and results in the annual report.4 Consequently, best practice provision II.1.2, last sentence, did not introduce a new topic to Dutch corporate practice, as many listed companies already complied with the aforesaid legal requirement and Guideline. Best practice provision II.1.2 indeed records best practices rather than setting a new standard for recommended corporate conduct.

To support Principle II.1, best practice provision II.1.3(b) requires that a code of conduct be published on the company s website as an instrument of internal risk management and control systems. The Tabaksblat Code had a similar provision (II.1.3). As the Frijns Code does not elaborate on this provision, it should probably be understood as only relating to the company s risk and control systems.5 In the author s view, the Frijns Code missed an opportunity to validate the fact that many companies have, by way of best practices, endorsed an international and/or an industry CSR code of conduct. The Code could have recommended that any applicable CSR codes ofconduct be published on a company s website. This would have enhanced transparency concerning the question as to what type of conduct and what ambitions might be expected from the company in respect of putting their CSR policies into practice.