226 Internal accountability through supervisory board.

The supervisory board plays a key role in the accountability of the board in Dutch corporate law. In many ways it is the central governance body capable of monitoring the social and ecological aspects involved in corporate decisions. Pursuant to the Dutch Civil Code, the supervisory board is given two key responsibilities: (a) to supervise the executive board and (b) to assist the board with advice when required.1 The Dutch Civil Code further stipulates that the key objective of the supervisory board is to serve the interest of the corporation and its enterprise, similar to the key responsibility of the executive board.2 Through this, Dutch corporate law explicitly rejects the notion that the supervisory board should protect the interests of shareholders and emphasizes the independence of the supervisory board.3 The definition of the corporate interest is expected to be the same for the supervisory board as for the executive board, although both bodies may have dissenting opinions about what the corporate interest actually demands in a given situation.4

Dutch listed corporations are not generally obliged to appoint a supervisory board, except when they are subject to the structural regime.5 In practice, all listed corporations seem to have a supervisory board and the Dutch Corporate Governance Code equally assumes so.6 When appointing a supervisory board, the corporation is free (to some degree) to structure its own corporate governance as it sees fit.7 The default corporate governance framework in Dutch corporate law is a two-tier model of two separate governance bodies, distinguishing between the executive management board and the non-executive supervisory board.8 In this two-tier model the executive board is responsible for the corporation’s strategy and its daily operations, while the supervisory board is solely responsible for supervising and giving advice to the executive board.9 In 2011, Dutch corporate law has included the one-tier model from Anglo-American corporate legal regimes as an alternative for corporations to choose.10 In a one-tier model both management and supervisory board members sit in the same body as respectively executive and non-executive board members. The integration of the two separate bodies from the two-tier model in a single board enables supervisory board members to be more involved in daily management and to share their insights and critical reflections directly in the process of decision-making.11

Most Dutch corporations are still organized according to the two-tier model with a separate supervisory board.12 Nevertheless, there seems to be a convergence towards a one-and-a-half tier model in Dutch corporate governance.13 For example, the Dutch Corporate Governance Code contains multiple best practices from one-tier models such as special committees to increase the involvement of the supervisory board in management decisions.14 Also, the role of the chairperson of the supervisory board has become more dominant, resembling the chairperson of the one-tier board.15 With regard to social and ecological interests, it remains unclear which model would enable better social and ecological performance by the corporation. One might argue both ways and conclusive empirical research is still unavailable.16

For the purpose of this thesis, the question arises whether the supervisory board has a specific responsibility towards social and ecological interests.17 The Corporate Governance Code 2008 suggested as much, by explicitly considering that the supervisory board should supervise the relevant societal aspects of the enterprise.18 In the current Corporate Governance Code, the supervisory board is not specifically required to supervise the social and ecological interests involved in the enterprise of the corporation. As a consequence of the convergence towards a one-and-a-half tier model, the responsibility of the supervisory board has become more integrated with the responsibilities of the executive board.19 The Code explicitly specifies the aspects – including societal and environmental aspects – that should be considered during the development of the corporation’s strategy.20 The Code further stipulates that while the executive board is responsible for actually developing that strategy, the supervisory board is responsible for supervising this process, including the monitoring of all aspects involved.21 The supervision of social and ecological interests therefore is more implicit in the supervisory function.

All in all, the supervisory board is particularly well positioned to hold the board accountable for the social and ecological interests involved in its governance. For the purpose of this thesis, I have therefore identified the issue to which extent the supervisory board should have a specific responsibility to monitor and consider social and ecological interests.22