Photo: cc2 Dan Diffendale via flickr

Obstruct, delay, weaken

The lobby by VNO-NCW against legislation on corporate accountability

For a long time, VNO-NCW, the national employers’ federation in the Netherlands, has been a fierce opponent of legislation that obliges companies to address human rights abuses and environmental damage taking place in their value chains. Now that the introduction of such legislation appears inevitable, VNO-NCW, together with its European umbrella organisation BusinessEurope, is trying tolimit and weaken Also see Initiatieve Lieferkettengesetz, Verwässern – Verzögern – Verhindern: Wirtschaftslobby Gegen Menschenrechte Und Umweltstandards, July 2020. the substance of these new rules, as new research from SOMO on the lobbying tactics of both organisations reveals.

For years, civil society organisations and trade unions have been calling for the introduction of legislation on corporate accountability. Such legislation would make companies responsible for preventing and mitigating abuses in their value chains. Voluntary initiatives, such as the Responsible Business Conduct (RBC) Agreements in the Netherlands or philanthropic projects, have failed to prevent structural human rights violations and environmental damage – such as child labour, deforestation, and exploitation – taking place in global value chains. In 2020, responding to several critical policy evaluations See among other reports the evaluation of the Dutch government’s RBC policy by the IOB (2019), the evaluation of the RBC agreements policy by the KIT (2020), the OECD Guidelines and UNGPs endorsement monitoring project by EY (2020) and the study by the British Institute for Comparative and International Law (BIICL) on options for European due diligence regulation. , the Dutch government, the European Parliament, and the European Commission finally decided to introduce legislation that addresses corporate accountability.

In the Netherlands, the Bill on Responsible and Sustainable International Business Conduct, submitted by the Christian Union (ChristenUnie), the Greens (GroenLinks), the Labour Party (PvdA) and the Socialist Party (SP), is currently before Parliament. The next Dutch government Letter to the Parliament from Minister Kaag about the policy note Van voorlichten tot verplichten: een nieuwe impuls voor internationaal maatschappelijk verantwoord ondernemerschap (16 October 2020). Dutch government is expected to take a decision on the introduction of corporate accountability legislation in the Netherlands or at EU level, while the European Commission will publish a proposal for an EU Directive on RBC later this year. This legislation See, for example, the Bill on Responsible and Sustainable International Business Conduct, the Wolters report in European Parliament and the European Commission’s Sustainable Corporate Governance initiative. will oblige companies to conduct due diligence in compliance with internationally recognised norms and standards for responsible business conduct, including the OECD Guidelines for Multinational Enterprises. As a result, companies will be required to identify risks of human rights violations and environmental damage in their value chains, and act to prevent and limit such abuses.

Photo: Dean Drobot

The business community is trying hard to weaken this legislation. Among other issues, contentious elements are whether legislation will apply to all companies and to what extent states will be able to fine and penalise companies that break the law. This counter-lobby from business has already proved successful in Germany and Switzerland See for example Konzernverantwortungsinitiative, 11 May 2020. . In 2020, the Swiss corporate accountability bill was narrowly defeated in a referendum, following a concerted campaign by business organisations, and a much weaker alternative proposal will now be enforced. And, in March 2021, the German government decided to introduce a substantially watered-down proposal for mandatory due diligence legislation, as a result of a strong counter-lobby See Initiatieve Lieferkettengesetz, November 2019, July 2020, October 2020; Süddeutsche Zeitung, 1 September 2020. from the business community.

This analysis shows how VNO-NCW lobbies in the Netherlands and at EU level, to weaken and block corporate accountability legislation.

Fierce opponent

For years, VNO-NCW was a fierce opponent of the introduction of corporate accountability legislation. While the business association did consider it important to comply with international standards for RBC, it also asserted that binding rules were not the way to enforce such standards. On its website Source: website VNO-NCW, ‘Standpunten, Maatschappelijk Verantwoord Ondernemen’ (accessed 8 April 2021). Shortly before publication of this article, VNO-NCW changed its position on the website. The old position can be found through archive.org (28 February 2021). , VNO-NCW makes its position clear: ‘An acceleration of sustainable or socially responsible business conduct cannot be achieved through legislation.’According to the lobbying organisation, imposing legislation would see companies stopping all RBC efforts in their value chains, and a better way to combat abuse would be through voluntary multi-stakeholder agreements. At an expert meeting in the Dutch Senate in 2017, for example, VNO-NCW opposed not only the Dutch Child Labour Due Diligence Bill, but RBC legislation in general VNO-NCW at the expert meeting on the Child Labour Due Diligence Bill in the Senate, 3 October 2017, p. 16; also see the letter from VNO-NCW on the Child Labour Due Diligence Bill to the Senate, 15 December 2017. : ‘The road of mandatory legislation will undermine the RBC agreements policy [of the Dutch government].’ Earlier in 2017, VNO-NCW told the Dutch parliament VNO-NCW during a roundtable discussion in Parliament on the RBC Agreements, 13 February 2017, p. 34. : ‘Companies will therefore think ‘I won’t invest myself in an RBC agreement if the legislator will propose legislation anyway’. It’s as simple as that.’

In 2019, however, as awareness began to grow that companies would not adhere to voluntary standards, the Dutch parliament and government began moving towards introducing legislation. The Dutch Senate adopted the Child Labour Due Diligence Act, an initiative by the Dutch Labour Party (PvdA) that forbids companies to sell goods or services that have involved child labour in their production. In the same year, the Dutch Ministry of Foreign Affairs began evaluating the voluntary RBC agreements policy and started a project to investigate options for broader RBC legislation.

Photo: cc4.0 Steven Lek

Position change

When the introduction of legislation appeared to be inevitable, VNO-NCW changed its position. After years of opposing new rules for business, the employers’ organisation suddenly announced it was in favour See, among others, VNO-NCW (7 December 2020); Minutes of the SER Council meeting 18 September 2020, p. 8-9; VNO-NCW (2020), Internationale Actieagenda Covid-19, p. 7. of a legal obligation to conduct due diligence, although only at EU level. According to VNO-NCW VNO-NCW, 7 December 2020. , national legislation would put Dutch companies at a disadvantage with their foreign competitors (the so-called ‘level playing field’ argument): ‘A patchwork of different requirements and rules in different [EU] member states is not helpful. This also creates an uneven playing field. Uniform legislation and regulations for all companies in the EU are exactly what increases the effectiveness and impact of policy.’ The business association also made this plea See Minutes of the SER Council meeting on 18 September 2020, p. 8-9 and the SER advisory report “Samen naar Duurzame Ketenimpact”. at the Dutch Social and Economic Council (SER), an advisory body for the government that was working on recommendations on the introduction of RBC legislation.

How can this shift in position be explained? Has VNO-NCW suddenly become convinced of the need for binding corporate accountability legislation? Sluggish, lengthy EU legislative processes offer many opportunities to postpone and water down new rules. Advocating European legislation while emphasising the need for a ‘level playing field’, enables VNO-NCW to take a constructive position in public while simultaneously lobbying in Brussels for weaker regulations. This tried and tested strategy has been used previously by the business lobby to tackle measures combating climate change, for example. At the time, BusinessEurope, the European umbrella organisation of employers’ organisations, was publicly pleading NRC Handelsblad, 20 September 2018. for stronger climate policies but, behind closed doors, using delaying tactics and the ‘level playing field’ argument to weaken climate regulations as much as possible. SOMO’s analysis of the lobbying efforts of VNO-NCW and BusinessEurope reveals that, despite their public statements, the employers’ lobby is against ambitious corporate accountability regulations.

BusinessEurope, a European lobby group, is an important partner in VNO-NCW’s EU lobby. VNO-NCW is a member of BusinessEurope’s board and states Website VNO-NCW, “Wat doet VNO-NCW in Brussel?” (accessed 17 May 2021). it co-operates ‘intensively’ with the organisation. Although BusinessEurope goes further than VNO-NCW in its opposition of corporate accountability legislation, the two organisations nevertheless work together to achieve ‘a balanced and efficient draft [of European legislation] in line with the position VBO FEB, 13 January 2021. of BusinessEurope.’ This cooperation allows VNO-NCW to conveniently ‘free ride’ on BusinessEurope’s strong counter-lobby to delay and weaken progress on this issue, while presenting itself publicly as a constructive supporter of EU legislation.

“Unworkable, vague and draconian”

In April 2020, EU Justice Commissioner Didier Reynders announced that the European Commission would work on a proposal for EU rules on responsible business conduct. The President of BusinessEurope, Pierre Gattaz, responded BusinessEurope (July 2020), p. 142-144; Response BusinessEurope to the EU consultation on Sustainable Corporate Governance and Due Diligence (2021), p. 20. by stating his opposition to any form of European regulation on corporate accountability. BusinessEurope claims that EU legislation would be detrimental for those working in the value chains of European companies because it would reduce investment from companies. It is another use of the ‘level playing field’ argument; while VNO-NCW argues against national legislation because of the level playing field in Europe, BusinessEurope BusinessEurope (July 2020), p. 142-144. opposes EU regulation because it would disadvantage European companies with those outside the EU. Instead of legislation, BusinessEurope argues, the EU should use multi-stakeholder initiatives to encourage and support companies. The lobby group’s Director General, Markus Beyrer, argued against legislation again in conversation with Reynders European Commission, Meetings of Commissioner Reynders with organisations and self-employed individuals; Letter BusinessEurope 13 October 2020. , and in a letter to the EU Commissioner in October 2020. In Autumn 2020, BusinessEurope stated its case three more times European Commission, Meetings of Cabinet members of Commissioner Didier Reynders with organisations and self-employed individuals (12 June 2020; 7 October 2020; 19 November 2020). to Commissioner Reynders’ Cabinet. In February 2021, as part of the consultation launched by Commissioner Reynders to gather input for an EU legislative proposal, BusinessEurope BusinessEurope response to EU consultation on Sustainable Corporate Governance (2021), p. 20. again opposed binding EU rules and claimed that companiesalready take action BusinessEurope response to EU consultation on Sustainable Corporate Governance (2021), p. 14. to prevent violations in their value chains.

VNO-NCW also conducts its own lobby in Europe. In February 2021, VNO-NCW VNO-NCW, letter “Reactie VNO-NCW op concept Wet verantwoord en duurzaam internationaal ondernemen” (23 February 2021). told the Christian Union, the Greens, Labour Party and Socialist Party that their legislative proposal for Responsible and Sustainable International Business Conduct in the Netherlands was not needed, because work was being done at a European level: ‘We believe that this process is gaining speed. Commissioner Reynders, for example, has announced a proposal for the second quarter of this year. And in the meantime, there are recommendations in the European Parliament from EP rapporteur Lara Wolters. The Wolters report contains a comprehensive recommendation for the introduction of an EU Directive obliging companies to prevent and tackle abuses in value chains. BusinessEurope strongly opposed this recommendation and wrote a letter Letter BusinessEurope (21 January 2021). to the European Parliament, asking it to not draw ‘premature conclusions’ and to postpone a vote on the report.

While VNO-NCW, in its communications VNO-NCW (17 March 2021). VNO-NCW was consulted during the development of the proposal (Twitter (9 September 2020); European Parliament (2021), p. 87). Also see VNO-NCW’s statements at the EURACTIV Virtual Conference on 9 March 2021. with Dutch political parties, emphasises supposedly swift progress at EU level, it hits the brakes in Brussels. According to VNO-NCW The head of the Brussels office of VNO-NCW acted as Vice-President of the Employers Group (Group 1) of the European Economic and Social Committee at the EURACTIV Virtual Conference. , the Wolters report is ‘completely unworkable’, contains ‘unclear definitions’, ‘vague and open standards’ and even ‘draconian sanctions’. This was also the message delivered by the VNO-NCW Brussels lobbyist  at a digital conference in March 2021, speaking on behalf of employers’ associations from all over Europe. In early 2021, VNO-NCW’s new President VBO FEB, 13 January 2021; European Commission, Meetings of Commissioner Reynders with organisations and self-employed individuals. new President, Ingrid Thijssen, along with her Belgian and Luxembourg colleagues, discussed their ‘concerns’ about legislation with Commissioner Reynders.

VNO-NCW’s eagerness to delay legislation was also evident in its request VNO-NCW (2020), Internationale Actieagenda Covid-19, p. 7. to put ‘on hold’ the Dutch Ministry of Foreign Affair’s project investigating options for legislation, because of the Corona crisis. The Ministry, however, decided to continue working on a new RBC policy.

Weakening new rules

Assuming that regulations will be introduced, BusinessEurope and VNO-NCW intend to use the argument of ‘workability’ to water them down BusinessEurope response to EU consultation on Sustainable Corporate Governance (2021), p. 17, 22; VNO-NCW, letter “Reactie VNO-NCW op concept Wet verantwoord en duurzaam internationaal ondernemen” (23 February 2021). . They argue BusinessEurope response to EU consultation on Sustainable Corporate Governance (2021), p. 17, 22. , for example, that regulation should only contain obligations of means, rather than obligations of results and that climate change related impacts in value chains should not be considered as environmental damage under the law. Moreover, VNO-NCW suggests VNO-NCW, letter “Reactie VNO-NCW op concept Wet verantwoord en duurzaam internationaal ondernemen” (23 February 2021). that the rules should apply only to companies who employ more than 3,000, or even 5,000, people.

BusinessEurope goes even further and argues BusinessEurope response to EU consultation on Sustainable Corporate Governance (2021), p. 16 (“The focus should be: on the area of direct impact, i.e., companies’ own operations, and tier 1 suppliers of the upstream supply chain with whom there is an established commercial relationship; on the most severe risks.”), p. 22 (“Companies’ efforts should be limited to first-tier suppliers/subcontractors.”); also see VNO-NCW, 19 February 2021. that any legal obligations should apply only to the first tier of a company’s supply chain (known as ‘tier one’). If this were the case, a company would not be responsible for preventing abuse at the deeper levels of its value chain. This is a remarkable argument, as it contradicts the OECD Guidelines that BusinessEurope and VNO-NCW claim BusinessEurope response to EU consultation on Sustainable Corporate Governance (2021), p. 19; VNO-NCW, 23 February 2021. to endorse. The OECD Guidelines See OECD Guidelines for Multinational Enterprises (2011), p. 24, paragraph 17. expect companies to map the risks of human rights violations and environmental damage in their entire value chain, precisely because these violations usually occur further down the chain. Here too, VNO-NCW’s message in the Netherlands differs from that of BusinessEurope in Brussels. In September 2020, VNO-NCW voted in favour SER (2020), “Samen naar Duurzame Ketenimpact”, p. 39; VNO-NCW (18 September 2020). of the SER advisory report on RBC legislation, which emphasised the importance of the ‘broadest and deepest possible application of [the OECD] Guidelines and companies’ value chain responsibility’.

An effective lobby

VNO-NCW and BusinessEurope’s lobbying efforts are effective. VNO-NCW maintains close ties with Sigrid Kaag (D66 – the Dutch social liberal party), the Dutch Minister for Foreign Trade and Development Cooperation, responsible for deciding the government’s new position on RBC legislation For instance, Minister Kaag and the then chairman of VNO-NCW, Hans de Boer, regularly went on trade missions together to, for instance, Indonesia (March 2020), India (October 2019, with VNO-NCW vice-chairman Ineke Dezentjé Hamming), the United States (July 2019), Germany (March 2019), China (April 2018) and Vietnam en Malaysia (February 2018). Official meetings take place several times a year, and the Minister and VNO-NCW regularly participate in each other’s events (such as the presentation of VNO-NCW’s International Covid-19 Agenda for Action, the Ministry of Foreign Affairs’ ambassador conferences in 2018 and 2021, and the presentation of the AIV advisory report on human rights and the SDGs). in the summer of 2020. In its advisory report SER (2020), “Samen naar Duurzame Ketenimpact”, p. 6 , Working together for Sustainable Supply Chain Impact, the different member groups of the SER (employers, trade unions, independent experts (crown-appointed members)), collectively recommended that the government introduce RBC, but did stress that it would be ‘a political decision’ on whether such legislation were national or European. In its new RBC policy, published in October 2020, Minister Kaag took the position advocated by VNO-NCW. Although the Dutch government now, for the first time, openly favours Policy note “Van Voorlichten tot Verplichten. Een nieuwe impuls voor maatschappelijk verantwoord ondernemerschap.” (2020). RBC legislation, it also states that it has a ‘strong preference’ for European regulation on the matter. And while the Ministry of Foreign Affairs continues to work on the ‘building blocks’ of legislation, the Dutch Government has not taken any concrete steps to introduce new national legislation or implement the Child Labour Due Diligence Act, passed in 2019.

VNO-NCW also wields considerable influence See, for example, the parliamentary debate on RBC, 20 June 2019, p. 5, 24. on this issue in the Dutch Parliament. For years, the Dutch liberal party VVD was an outspoken opponent of binding rules for corporate accountability and asked the government to postpone policy evaluations that could potentially lead to more stringent corporate accountability rules. In the course of 2020, however, the party changed its position, in line with that of VNO-NCW. According to VVD MP Weverling ‘RBC rules and regulations are important’, but these should be implemented exclusively at a European level. Legislation in the Netherlands, he says, ‘clearly is only counterproductive’. During a Parliamentary debate Dutch Parliament, Parliamentary debate on RBC, 8 December 2020. in December 2020, MP Bouali of the social-liberal party D66, repeatedly emphasised the risk of creating a ‘patchwork’ of national regulations in Europe, a term commonly used by VNO-NCW VNO-NCW, 7 December 2020. (as in a publication issued the day before the debate, for example).

In the European Parliament, MEP Liesje Schreinemacher (Renew Europe/VVD) tabled several amendments to weaken the proposals for an EU Directive on Due Diligence in the Wolters report. These amendments – proposals to limit the responsibility of companies to the first tier of the supply chain and therefore adjust the definitions existing in international RBC standards – clearly reflect the position See, inter alia, Amendments (1 and 2) 232, 269, 300, 344, 402, 455, 517, 522, 553 to the Wolters draft report, 9 October 2020. of VNO-NCW and BusinessEurope. Schreinemacher See, inter alia, Amendments (1 en 2) 220, 221, 248, 252, 436. also wanted to limit the scope of future regulation to large companies only.

Photo: CC geerati@gmail.com via depositphotos

A two-faced lobby

VNO-NCW’s lobbying strategy is clear; the business group has wanted, for a long time, to prevent legislation, and now this approach has failed, it is pleading for European legislation as a way of delaying and weakening See Initiatieve Lieferkettengesetz, “Verwässern – Verzögern – Verhindern: Wirtschaftslobby Gegen Menschenrechte Und Umweltstandards”, July 2020. policy developments. This move appears to be strategic. By favouring legislation – although only at a European level – the organisation appears constructive, while ensuring that the Dutch government does not move towards national legislation. Meanwhile, VNO-NCW and BusinessEurope take a very different tone in Brussels, preventing or weakening that very same European legislation. While BusinessEurope is clearly opposed to legislation (asking, for example, for parliamentary votes to be postponed), VNO-NCW argues in favour of weakening future regulations, under the guise of ‘workability’. This two-faced lobby demonstrates that little has changed in VNO-NCW’s position. As far as the employers’ organisation is concerned, businesses must be hindered as little as possible, and human rights and the environment are secondary concerns. VNO-NCW’s new strategic vision VNO-NCW’s new strategic vision does not make any mention of RBC legislation. It only states that VNO-NCW will work with “frontrunners” on “due diligence in international supply chains in accordance with the OECD Guidelines” (p. 38). , Doing Business to Create Broad Welfare does not seem to mean much when it comes to corporate accountability.

In the coming months, politicians and policymakers in the Netherlands and the EU will face important decisions about the introduction of RBC legislation. The Dutch parliament and the Dutch government will also be considering whether to introduce legislation in the Netherlands. The European Commission has just announced it is delaying the publication of its proposal for an EU Directive until “after the summer”. It will then be clear how effective the business lobby has been.

About this article

This article was originally published in Dutch. For this article, SOMO analysed public lobbying statements made between 2017 and 2021 by VNO-NCW and BusinessEurope on corporate accountability legislation. In total, this comprised 24 letters, media statements, parliamentary hearings, articles published on the VNO-NCW and BusinessEurope websites and in other publications. SOMO submitted a draft version of this article to VNO-NCW and BusinessEurope to check and correct any factual inaccuracies. VNO-NCW and BusinessEurope responded, after which SOMO made the relevant adjustments. Shortly before publication of this article, VNO-NCW changed its position on RBC legislation, as stated on its website. The organisation’s former position can be found via archive.org (28 February 2021).