Chapter 14 Samenvatting dissertatie (Dutch summary)

Corporate social responsibility (CSR) has rapidly gained a foothold in business. In the last decade, many companies developed 'Planet, People, Profit' strategies, and put them in practice. Governments and civil society have called on private actors to contribute in resolving the dilemmas and difficulties of global governance. This book concentrates foremost on legal aspects of CSR but also deals with CSR in the broader perspective of assessing best practices. It elaborates on international developments in this field over the decade 2000-2010.

The introductory chapters sketch the background of globalisation in relation to sustainable development, thereby identifying the role of CSR and comparing it with corporate governance.

Part I of the book offers an overview of, and discussion on, the legal and semi-legal frameworks which can assist a business organisation in the course of becoming a socially responsible company. Examples are the institutionalisation of CSR in the corporate governance code, annual reporting on CSR, setting up an anti-corruption programme to support the internal control process, making human rights impact assessments part of corporate due diligence investigations, making use of private regulation and sustainability labels, and providing consumer product information.

Part II contains five case studies that show how CSR works in practice. Two of them focus on conflict situations concerning CSR practices of companies (one regards the oil industry in Nigeria, the second relates to the textile industry in India and the Netherlands). The other three case studies focus respectively on water management by companies, biodiversity concerns for the capital market and on how to invest in nature.

Tineke Lambooy studied Constitutional & Administrative Law and International Law at Leyden University in the Netherlands, American Corporate and Tax Law at Baylor University in the USA, and pursued a post-academic study Corporate & Commercial Law at the Grotius Academy in the Netherlands. She started her career as a commercial lawyer with an international law firm in the Netherlands. Presently, she holds positions as lecturer and researcher at UtrechtUniversity and Nyenrode Business University.

This chapter sets out the parameters of the study contained in this book. The study focuses on the position of companies in realising sustainable globalisation. According to international organisations, governments, civil society and companies, corporate social responsibility (CSR) can contribute to sustainable globalisation. The concept of CSR embraces the idea that multinational companies (MNCs) should operate in a socially responsible manner and that they should publicly report on their policies and behaviour to ensure that they can be held accountable by civil society. Stakeholder engagement and mediation rather than litigation can also be considered part of responsible business conduct.

The chapter demonstrates that CSR has been promoted by governments through legislation, and by international organisations and civil society by providing codes containing ethical norms and values, e.g. the civil society document - the Earth Charter, the Global Reporting Initiative sustainability reporting guidelines (GRI G3), and the codes of conduct issued by the United Nations (UN) and by the Organisation for Economic Cooperation and Development (OECD). Companies themselves have also positively contributed to the acceptance of CSR over the last decade. They have formulated tangible ambitions concerning, for example, sustainable water use; they have agreed on industry codes of conduct and sustainability labels, often in collaboration with civil-society representatives; they have implemented anti-corruption programmes in their organisations; and they have established public-private partnerships (PPP) to contribute to the Millennium Development Goals (MDG).

In this chapter, it is pointed out that CSR relies on and interacts with certain legal and semi-legal frameworks, such as corporate governance, annual reporting, internal control and management information systems, private regulation, due diligence assessments, and (supply chain) product information systems. The author asserts that these frameworks can support CSR, but that companies have to actively use them. It is argued that if they do, incorporating CSR in their normal practices will enhance their business position in various ways: from managing risks in a more comprehensive manner to having early access to new product and services markets. On a fundamental level, CSR will help to safeguard companies' licence to operate because it encourages them to firmly engage with the communities in which they operate.

CSR and corporate governance are international developments attracting considerable attention while sharing common features. Both developments concern the behaviour and internal management of large, mostly international,

companies. The international business community has been urged to incorporate ethical awareness and integrity practices into its everyday business.

This chapter provides an analysis of the developments in the field of CSR and corporate governance. These concepts are contrasted with each other on key issues such as their rationale and objectives, initiators and interested parties, initiatives taken, specification of objectives, voluntary versus compulsory standards, differences and parallels.

Codes of conduct are instrumental for CSR and corporate governance. With a view to stimulating good corporate conduct, the accountability of companies and directors has been increased. In addition, compliance with corporate governance standards demands that companies give reasons for derogating from corporate governance codes. Corporate transparency has also been increased in order to provide adequate information to interested parties, allowing them to judge whether or not a company behaves ethically and in accordance with corporate governance standards. If interested parties have doubts about this, the information provided may serve as a starting point for taking up the issue with the company in question. Communication between companies and interested parties is becoming ever more important. If communication cannot solve the matter, interested parties may initiate legal proceedings to enforce their view of good conduct or to claim damages.

CSR and corporate governance have not as yet evolved into strict legal norms and it will therefore be difficult for interested parties to successfully enforce their view of good corporate behaviour before a court. When interpreting open legal norms, a judge can take into account codes of conduct and developments in society. It is likely that a code of conduct that is entrenched in law and subscribed to by a company in its annual report, will be awarded more importance by a judge than a code of conduct that is established or adopted by a company on a voluntary basis.

Against the backdrop of the contemporary financial crisis, and the need for a corporate transition towards more sustainable business practices, the author explores the way in which CSR has recently been institutionalised in the new Dutch corporate governance code, i.e. the Frijns Code, which became effective in 2009. CSR promotes long-term business plans, the internalisation of external costs, the accountability for corporate conduct, stakeholder engagement, and the transparency of Environmental Social and Governance (ESG) factors. The author discusses the background and the content of the new CSR provisions in the Frijns Code and pertinent corporate law revisions. One of the themes discussed more in depth concerns gender considerations in a board composition. Furthermore, the author poses the question whether institutional investors can play a more functional role in implementing CSR. She analyses to what extent important reports issued by UNEP FI (produced by Freshfields) and Eumedion allow and recommend ESG considerations to play a role in the investment process and evaluates the relevant Frijns Code provisions.

Since 2003, the Member States of the European Union (EU) have been implementing the provisions of the Modernisation Directive, among which are the new standards for the annual reports of large EU-based companies. One of the new standards entails, where appropriate, the provision of information on non-financial matters, such as environmental and employee matters, relating to the worldwide business activities. The European Parliament (EP) has frequently directed political attention to the development of CSR. Transparency in corporate practices, in the EU and abroad, seems desirable for consumers, banks and institutional investors.

A quick scan of the 2006 annual reports of large Euronext listed companies, registered in the Netherlands, revealed that the majority addressed environmental and employee matters in their annual reports. However, companies tend to easily generate information on personnel matters, whereas they are lacking in generating substantial and clear information about other non-financial aspects.

The author points out that a number of leading MNCs prepare sustainability reports which follow the GRI Guidelines on a voluntary basis. These reports address the environmental, social and ethical aspects of business operations and activities.

Corruption is a major obstacle to realising public goals. Corruption also has a severe impact on the private sector since it distorts competition and adds substantially to the cost of doing business. Corruption has two sides: a supply side and a demand side. Where public officers traditionally occupy the demand side, the private sector is usually the payer of the bribe. Over the past few years, various anti-corruption laws and conventions have been enacted targeting the private sector. A violation thereof can lead to prosecution in multiple jurisdictions, high penalties, and even the personal liability of the directors. Reputational damage and loss of business opportunities complete the picture of how a corruption scandal can affect a company.

A company's internal control systems do not function adequately if employees can use company funds to pay bribes. By definition, such expenditures are not properly accounted for in the company books, hence the financial statements will be incorrect and the directors will not be 'in control'. It is an indication of poor corporate governance. Corruption can however be prevented by implementing an in-house anti-corruption compliance programme. In this contribution it is argued that, consequently, 'in control' implies that a company has such a programme in place.

With CSR developing, governments and civil society expect socially responsible behaviour and transparency from companies, also on the subject of corruption. These expectations can be fulfilled by providing public information on a company's efforts to keep its employees from becoming involved in corrupt practices. A next step for a company would be to join collective action initiatives in order to scale up best practices and to promote a value-based level playing field among businesses.

It is advocated in this chapter that any company involved in international business has to be alert to corruption risks, and will benefit from addressing these. The position of companies and corporate governance tools are the focal point of this chapter.

Has private regulation proven to be generally more successful than public regulation in controlling the transnational conduct of multinational companies? The exponential growth of private regulations aimed at influencing corporate behaviour - as a result of the fast global market expansion - shows the full relevance of posing this question. In the light of existing international private standards, this chapter defines and analyses certain major elements of private regulation that may impact on compliance with private regulation, namely: quality, legitimacy, enforcement, and effectiveness. These elements are applied to three private regulatory initiatives that have been referred to by the EP as private regulation that has reached a certain level of maturity: the Global Compact Principles, the OECD MNE Guidelines and the GRI Guidelines. In assessing the characteristics of these private sets of norms, some interesting references to the privately developed norms by current public regulation in the field of corporate responsibility are observed as are links with the enforcement of norms in the ' normal' legal arena. The question emerges whether the development of private norms strengthens or weakens public regulatory systems. Moreover, lessons learned from the recent financial crisis pose the question whether vital matters should be entrusted to private actors to be regulated.

This chapter aspires to assist companies and human rights analysts in determining why, when and how human rights impact assessments can be integrated into existing corporate due diligence processes. It elaborates on the approach proposed by Professor Ruggie, the UN Special Representative on human rights and business. His policy framework relies, amongst other things, on 'the corporate responsibility to respect human rights', i.e. to act with 'due diligence' to avoid infringing on the rights of others. In this chapter, the corporate and human rights law origins and the application of ' due diligence' are explored. Subsequently, the concept of due diligence as catered for in the Ruggie policy framework is discussed, and suggestions are offered as to how this can be practically applied in business transactions. Dilemmas are identified.

This chapter addresses the consumer's right to information against the background of the European ' REACH' legislation, which, amongst other things, obliges companies to supply information to consumers concerning whether certain chemical substances are present in a consumer product. Certain other European Directives are also briefly evaluated to the extent that they are relevant in the context of a consumer's right to information. Dilemmas related to the consumer's right to information also emerge in the current political debate in the Netherlands, where the Labour Party is preparing a legislative proposal on a corporate duty to supply information to consumers - motivated by concerns of CSR. This chapter goes into questions such as: (i) what does the consumer's and the worker's right to information entail under REACH? (ii) is the consumer's right to product information also regulated by other EU legislation? (iii) can a consumer obtain information on CSR aspects of the products he intends to buy? (iv) do companies have the obligation to provide the requested information? (v) how do these rights work in practice?

In the aftermath of the execution of the Nigerian activist Ken Saro-Wiwa, the leader of the Movement for the Survival ofthe Ogoni People (MOSOP), several legal proceedings were brought against the company Shell, its subsidiary and the Government of Nigeria in connection with human rights violations and environmental damage caused by the oil exploitation. This chapter reviews the major related cases and the problems for the claimants in obtaining legal remedies against MNCs considering, inter alia, the concept of the 'corporate veil' and the uncertain application of human rights treaties' obligations to corporations. This situation triggers the question to consider whether the present development of CSR, which habitually embraces the protection of human rights, could serve as an alternative response and have positive impacts with regard to regulating corporate conduct of the oil industry in a sociopolitical situation such as the one of the Ogoni People.

In 2008, the former Prime Minister of the Netherlands, Mr Ruud Lubbers, led a mediation process to resolve the conflicts which had arisen between two Dutch campaigning organisations, various Indian non-governmental organisations (NGOs) and labour unions, two Dutch internet providers, an Indian clothing producer, and a Dutch jeans brand. The mediation took place at the request of the disagreeing parties and the Dutch and Indian governments. The conflict related to CSR standards followed by the textile companies. It, however, also concerned the way in which the campaigning organisations and NGOs communicated concerning these issues. Their campaigns against the Indian jeans producer and its Western customers nearly forced the Indian company into bankruptcy. In defence, the Indian company started lawsuits against the Indian and Dutch civil society organisations, which catalysed even more worldwide internet campaigning. Since some of the organisations received funds from the Dutch government, the Indian government was also provoked. It protested to the Dutch and European authorities, claiming that unfair trade practices had been used. Finally, the imminent threat that 5,500 Indian employees and their families would become the victims of the closure of the factories, contributed to finding and implementing a structural solution supported by all parties.

The essential dilemmas in this case were: (i) whether the filing of lawsuits against civil society organisations is an effective way of countering public campaigns and of avoiding reputation damage; (ii) to which extent should civil society organisations investigate the truthfulness of allegations concerning labour rights abuses; (iii) which role should local labour law play in pursuing a sustainable international supply chain; (iv) whether engaging in a battle concerning CSR standards leads to better CSR practices; and (v) to what extent can or should a government require accountability on the part of civil society organisations?

Freshwater scarcity is no longer limited to sub-Saharan developing countries; also in Western society, access to unlimited amounts of freshwater is not assured at all times. It has been argued - and laid down in many national legal systems - that access to freshwater is a basic human right. What if corporate freshwater use threatens to interfere with this human right? The main focus of the chapter is to explore the role of today's companies in relation to freshwater. A number of tools have been developed to attend to the necessity to reduce corporate use of freshwater. This chapter discusses specialised water reporting instruments such as the 2007 Global Water Tool and the 'water footprint' calculation method. In addition, attention is paid to a CERES report (2010) revealing that the majority of the 100 world's leading companies in waterintensive industries still has weak management and disclosures ofwater-related risks and opportunities. To obtain tangible information about corporate water strategies and practices, an explorative analysis was conducted on 20 Dutch multinational companies. The chapter highlights various innovative practices. In sum, it is demonstrated that companies are expected to bear responsibility for their impact on water resources, in particular when it influences public access to water in areas with freshwater scarcity and/or weak government. Notwithstanding the critical conclusions of the CERES report, it is interesting to see an evolution in corporate research concerning sustainable water use and the development of greener products and greener ways of production. Thanks to CSR?

This chapter analyses to what extent and how institutional investors (can) pay attention to a company's performance in relation to biodiversity and ecosystem services (BES) in their investment decision-process (as part ofthe considerations regarding the P of Planet and the E of Environmental aspects).

'Biodiversity' refers to the variety of all forms of life. 'Ecosystems' sustain biodiversity. Biodiversity is pivotal for the life of every living organism and ecosystems provide the basis for life. We all depend on them, business is not an exception.

The impact of the activities of companies on the environment can imply business risks, both from a financial and a reputational perspective. Besides company impacts, an investor also needs to consider a company's dependence on ecosystem services, such as the provision of natural products (food, timber), freshwater, fertile soil or pollination by bees, that are threatened by the current ecological crisis. The dependence implies a risk that the company's business activities cannot be continued, or only at much higher cost. It is pertinent for an investor to be informed of the links between companies and BES as they can be material in determining the financial value of an investment.

The focus of the study is on the market for 'information products', which relate to companies and BES. The research revealed that ESG rating agencies are exploring ways to create such information products and wish to sell them to institutional investors. Interest from the side of institutional investors to buy such products is awakening. However, overall, this market is currently immature. The study identified nine characteristics of this market, also referred to as 'barriers', which explain why the market is not functioning to its full potential. At the same time they can also be considered 'opportunities' for ESG rating agencies because new products can be developed. Since the characteristics are interrelated, it was estimated that collaborative action by asset owners, asset managers, ESG rating agencies, companies, governments and NGOs is needed for a further development of the BES market.

The last part of this chapter specifically focuses on change processes within a multi-stakeholder setting. The question is addressed how such a change process can be stimulated by external intervention. This part discusses relevant theoretical frameworks and provides a methodological reflection on a workshop which was organised as a follow-up to the study. The workshop aimed at stimulating the participants to actively pursue the exchange of information on companies' links with biodiversity (both impact and dependency links). The workshop made use of action research, systems thinking and change management insights. This case study shows the complexity of starting up a process of multi-stakeholder collaboration.

Investors can contribute to nature conservation, and can also profit from its enhancement. One of the ways to contribute to, and to profit from, biodiversity conservation is to invest in it. Investing in BES markets is a niche. This chapter presents the results of a study into new markets related to BES and into BES investment opportunities. They offer interesting investment opportunities and contribute to nature conservation at the same time. The research showed that the emerging BES markets can be classified as follows: (i) sustainable forestry; (ii) nature conservation including wetland banking and biodiversity offset programmes; (iii) ecotourism; (iv) watershed management; and (v) carbon sequestration through agricultural projects and REDD (Reducing Emissions through Deforestation and Forest Degradation). Many BES investment funds have been structured as private equity funds. They often cooperate with local authorities and NGOs, often as a PPP. In the analysis of the BES markets and the BES funds, certain barriers and obstacles that hinder the full participation of mainstream investors are identified and addressed.

The study revealed that investors have little knowledge of the existing options to invest in BES. Secondly, on a more fundamental level, there is a lack of understanding of the links, and dependencies, of business and ecosystems. In their decision-making, mainstream investors do not consider the fact that ecosystem degradation and species loss are directly interlinked to 'normal' business activities, nor that the long-term profitability of most investments depends on healthy ecosystems.