237 Towards a qualitative evaluation of board decisions.

In my assessment, the approaches to a comparable evaluation of board decisions can be distinguished between an analysis of quantifiable metrics, including non-financial metrics, and an evaluation of qualitative considerations. Due to the focus on an evaluation of board performance by shareholders, the dominant approach in the evaluation of the annual report has been on accounting for board performance according to quantifiable metrics, particularly the financial performance of the corporation. Although other quantifiable metrics are increasingly being added in relation to non-financial aspects of corporate governance, the accountability of boards for their interference with social and ecological interests seems to imply a deeper shift towards a more qualitative evaluation of board decisions. While the comparison of board performance according to quantifiable metrics remains important, additional standards seem to be required in order to evaluate these qualitative considerations by boards in relation to the public values and interests involved in their decisions.

In general, I would suggest that the perspectives in Dutch corporate legal theory propose a complementary set of principles based on the need for efficiency, fairness and resilience in board decisions. More specifically, the self-assessment of the board requires a reference to the public interests by which its corporation is constituted and operationalized in its individual public purpose, and to the needs and limits of larger social and ecological ecosystems in which its enterprise is embedded. Consequently, boards need to account for the way in which their decisions contribute to these larger social and ecological interests invested in their corporation. Such self-assessment by reference to general standards can be complemented by articulating specific best practices in partnership with stakeholders, civil society, as well as through adjudication by the Enterprise Chamber. Such a coupling of general standards with specific best practices allows for a qualitative evaluation of board performance in comparison with other corporations, while acknowledging the unique and circumstantial nature of its decisions.

In relation to the impact of board decisions on social and ecological interests, I earlier suggested that the supervisory board has a specific responsibility to reflect conscientiously on the implications implied in those decisions.1 Such conscientious reflection should equally be accounted for in the annual statement by the supervisory board by reference to general standards and best practices, while allowing for a deviation if the specific circumstances warrant this. Due to the complex and multi-facetted nature of social and ecological problems faced by specific corporations, board interference in its environment is going to be unruly, complex and susceptible to different interpretations. Although both executive and supervisory boards should be required to account for their decisions and supervision by reference to comparable standards, I would suggest that disclosure also deserves to become a forum for sharing this complexity with stakeholders. The self-assessment by the board then becomes an invitation to stakeholders to enter into an open dialogue on collaboratively finding the best response for a specific corporation to the social and ecological problems that it faces in its unique circumstances. All in all, I therefore propose to articulate the following recommendation in relation to the need for comparable standards to evaluate the self-assessment of the board: