3.6.1 Commentaries to the Frijns Code and subsequent developments

Regarding the inclusion of CSR as a subject in the Frijns Code, various developments are interesting to record.

The first one is positive: various leading Dutch companies have set up a CSR committee.1 This shows an increasing awareness of the importance of the role of CSR. Even more so, it demonstrates that these companies consider CSR a strategic issue.

The second development is disappointing. Not only is the lack of a CSR definition reiterated as a manifest problem, but supervisory board members interviewed indicated their concern that the new CSR provisions may only be a 'tick-the-box' exercise.2 Furthermore, informal consultations with Dutch listed companies indicated that corporate secretaries of boards often have a legalistic approach. They seem unsure about the content and extent of the new CSR provisions and wonder whether they pertain to strategic decisions only or also to decisions at the operational level that relate to CSR.

The third development is an interesting one. In section 3.3, it was explained that Frijns Code provision .2 requires the management board to report on the main elements of the company's CSR strategy in the annual report. The Dutch MP Kalma thought the meaning of this provision unclear. He pondered that it could be understood as referring to the obligation included in article 2:391(1) DCC, accounting Guideline 400 or the GRI G3. Since the Monitoring Committee does not elaborate on this, Kalma has put questions to the Dutch Cabinet. The answers did not clarify the point.3 Consequently, he decided to prepare an initiative bill on this. The Bill proposes to amend article 2:391(1) DCC so that the text thereof aligns with the Frijns Code, i.e. to require Dutch companies to give an account in their annual reports on CSR aspects important for the enterprise: 'report or explain'.4 Small and medium-sized companies will be exempted from this obligation. It would however apply to all large companies including non-listed companies. In addition thereto, inspired by Swedish and Danish legislation, the author has suggested to propose a Decree as meant in article 2:391(5) DCC to designate the GRI G3 guidelines as a code of conduct with which large companies have to comply in their annual reporting or in a separate sustainability report. They should be allowed to deviate, subject to an explanation as to why and to which extent they deviate. Kalma has subsequently mentioned this option, although so far the Cabinet has responded negatively to the suggestion.5

Another development that will be mentioned here is not a new one that relates to the Frijns Code, but affirms the decision of the Frijns Committee to consider CSR as a principle of corporate governance. Since a few years there have been shareholders of listed companies who have called for a more sustainable board strategy. Vide e.g. the resolution of Shell shareholders submitted for the general meeting 20 06.6 They indicated that they had concerns about three projects: Corrib Gas in Ireland, BayelsaState in the Niger Delta and Sakhalin in Russia. In the resolution they requested that in the interests of the good reputation of the Company, and the avoidance of costly delay to, or interruption of, production', the directors undertake greater action on environmental sustainability in order to ensure the peace, safety, environment and prosperity of local communities directly affected by the company's operations. The resolution also called upon the directors to report to the shareholders by the 2007 general meeting how the company has implemented the measures. At that time, the Shell directors issued a recommendation to the general meeting to reject the resolution arguing that it was not necessary to adopt the resolution as the Shell board already acted responsibly. The resolution was defeated with 83 per cent voting against it and 6 per cent for it. A percentage of 11 abstained from voting. The value of the shares that day that did not follow the board recommendation was over £10 billion.7

In 2010, another resolution was presented by the organisation FairPensions (London) requiring Shell to perform further research as to how the intended oil exploration of the tar (oil) sands in Canada can be performed in a sustainable way. Eleven per cent of the shareholders voted for the resolution or abstained.8 The Dutch pension asset manager APG has indicated that it considers to withhold its votes or to vote for the resolution, depending on whether the critical questions that it submitted to Shell will be answered satisfactorily by Shell.9 This resolution is scheduled for Shell's general meeting in May 2010. A similar resolution has been proposed for the BP general meeting in April 2010. A number of institutional investors have communicated the intention to vote for these shareholder resolutions.10 From a responsible corporate governance perspective, reflecting in hindsight on the BP disaster in the Gulf of Mexico and the fact that BP had successfully lobbied with the US Minerals Management Services for an exemption from performing a detailed environmental impact analysis, those shareholder resolutions seem to have been on the spot.11