Commitment to OECD Guidelines for Multinational Enterprises by … · 2018-03-19 · According to...

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CommitmenttoOECDGuidelinesforMultinationalEnterprisesbyDutchstock

listedcompaniesFinalreport

AuthorVickyvanHeckAreportbyDutchAssociationofInvestorsforSustainableDevelopment(VBDO)CommissionedbyMinistryofForeignAffairsoftheNetherlandsDateOctober2016MoreinformationPleasecontactVickyvanHeck(ProjectManageratVBDO)[email protected]

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TableofContents

1. Managementsummary 32. Introduction 52.1 Backgroundoftheresearch 52.2 Goals/objectivesoftheresearch 62.3 Scopeoftheresearch 62.4 Processandtimelinesoftheresearch 62.4.1. VBDO’sOECDengagementactivitiesaroundAnnualGeneralMeetingsofDutchstocklistedcompanies 72.4.2. VBDO’sOECDengagementactivitiesduringbilateralmeetingswithDutchstocklistedcompanies 7

3. Results:CompanycommitmentandimplementationofOECDGuidelinesbyDutchstocklistedcompanies 83.1 OverviewofcompanycommitmenttotheOECDGuidelinesforDutchstocklisted

companies 83.2 ReasonsandbarrierstocommittotheOECDGuidelinesaccordingtoDutchstocklisted

companies 93.2.1 ReasonstocommittotheOECDGuidelines,accordingtoDutchstocklistedcompanies 93.2.2 BarrierstocommittotheOECDGuidelines,accordingtoDutchstocklistedcompanies 9

3.3 ImplementationoftheOECDGuidelinesbyDutchstocklistedcompanies 113.3.1 MostimportantelementsoftheOECDGuidelinesaccordingtoDutchstocklistedcompanies 113.3.2 ElementsthatrequireextraattentionaccordingtoDutchstocklistedcompanies 11

3.4 FeedbackofinterviewedcompaniesfortheNCP 113.4.1 FeedbackrelatedtothecommunicationabouttheOECDGuidelines 123.4.2 FeedbackrelatedtothecontentoftheOECDGuidelines 13

4. Conclusions&recommendations 144.1 Conclusions 144.2 Recommendations 144.3 Opportunitiesforfollow-upofthisresearch 16

AppendixI:Detailedresultspercompany 19AppendixII:Interviewguide 24AppendixIII:LettersendpriortoAGMengagement 26AppendixIV:BackgroundOECDGuidelinesforMultinationalEnterprises 29ContentoftheOECDGuidelines 29BenefitsandopportunitiesformultinationalsofcommittingtotheGuidelines 31

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1. Managementsummary

Objectivesoftheresearch

TheDutchAssociationofInvestorsforSustainableDevelopment(VBDO)receivedinSeptember2014theassignmentoftheMinistryofForeignAffairsforaresearchamongDutchstocklistedcompaniestoassesscompanycommitmenttotheOECDGuidelines(“theGuidelines”).Thegoalofthisproject istohelptheDutchgovernmenttofulfil itsambitiontoincreasethepercentageofcompanies publicly committing to theOECDGuidelines, to 90%, by providing insight inmaindriversandbarrierstocommitandincreasingawareness.

Overallresults

VBDO’sengagementresultsshowthatthereisstillawaytogotomeettheambitionleveloftheDutchgovernment.Nevertheless,iftheOECDGuidelinesandtheiraddedvalueareexplained(asintheconductedinterviews),significantprogresscouldbemade.Currently,18companies(30%)commit to the Guidelines. Due to VBDO’s engagement, 9 companies have expressed theywillcommitinthefuture,andanother15companiessaidtheymightcommitinthefuture.Thismakesitamorepromisingtotalof42companies(70%)thatcommitandmightcommitinthefuture.

ThecompaniesthatpubliclycommittotheOECDGuidelinesare:

AalbertsIndustries BallastNedam ShellAegon BAMGroep TelegraafMediaGroupAirFrance-KLM DSM UnileverAirbusGroup KPN VopakAkzoNobel Rabobank WessanenASML SBMOffshore WoltersKluwer

ReasonsandbarrierstocommitaccordingtoDutchstocklistedcompanies

Companies that do commit understand the value for their international operations. ThemostimportantbarriertocommittotheOECDGuidelinesaccordingtotheinterviewedcompaniesistheperceivedlimitedaddedvalueofapubliccommitment;inparticular,ontopofotherguidelinesthattheyalreadycommittoandapply(e.g.UNGlobalCompact,ILOCoreLabourStandards,UNGuidingPrinciplesonBusinessandHumanRights,UNPrinciples forResponsible Investment).StakeholdersdonotaskcompaniesforcommitmenttotheGuidelinesinmostcases.Inaddition,the process of committing to the Guidelines is unclear for the interviewed companies andcompaniesarereluctanttotheworkloadofaself-assessment.

FeedbackfortheNationalContactPoint(NCP)

Almosthalf(46%)oftheinterviewedcompaniesisfamiliarwiththeNCP.CompaniesrecognisethattheNCPcouldplayanimportantroleinmakingtheOECDGuidelinesmoreknownandmorepractical for application by companies. Companies would expect pro-active and directcommunicationwiththem.Theyalsomentionsharingknowledgeandgoodpracticesperindustryiscrucial.Inaddition,theNCPcouldplayaroleinexplainingtheaddedvalueandcontentoftheGuidelines(especiallyontopofotherguidelines),accordingtotheinterviewees.

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RecommendationstoraisecommitmentofcompaniestotheOECDGuidelines

Basedontheinterviewresults,ontheVBDOwouldrecommendto1)raiseawarenessfortheOECDGuidelines; 2) make the added value of commitment clear to companies; and 3) make

implementation as practical as possible for companies. More specifically, the VBDO wouldrecommendthefollowing,dividedinquickwinsandlongertermactions:

Quickwins Longer-termactionsRaiseawareness

-LetaMinisterorMinister-Presidentmakeastatement about the added value of theGuidelinesandcommitmentbycompanies;

- Gather ambassadors that promote theGuidelines: a mixed group of influential personsfromthegovernment,companies,NGOsetc.;

-Senta letter(byaMinistry) totheBoardofManagement of all companies that shouldcommit. In this letter the added value of acommitment and the process of commitmentshouldbeexplained;

-Follow-upthesentletterbyaphonecalltothecompanies to ask if the information is clear,possibly followed-upby an interviewaboutwhatnext steps (of commitment and implementation)are.

- Involve the employer organisation (VNO-NCW) to promote the Guidelines amongcompanies.

Maketheaddedvalueofcommitmentclear

-PublishalistofcompaniesthatcommittotheOECDGuidelinesonthe(NCP)website;

-MakeclearhowtheOECDGuidelinesrelatetootherguidelinesandwhatthedifferencesare(startingwithUNGlobalCompact,ILOCoreLabourStandards,UNGuidingPrinciplesonBusinessandHumanRights,UNPrinciplesforResponsibleInvestment).Thiscouldbeaninitialhigh-levelassessment.Thiscouldatalaterstagebefollowed-upbyadetailedassessmentandalsoincludeothersubjects,suchastheSustainableDevelopmentGoals.

-UpdatetheNCPwebsitewiththeaddedvalueof the Guidelines and information whatcompanies should do to commit to the OECDGuidelines (e.g.what do they have to publish,complyorexplain).

Makeitaspracticalaspossible

- Include indicators of the Guidelines in theTransparencyBenchmarkassessmentformorealignment.

-Organisean(bi-annual)event:forcompaniestoshare knowledge and best practices; for theMinistry to gain information to make guidancemore practical. Invite frontrunners on the OECDGuidelinesthatshareexamples.Theeventshouldbe sector/theme specific and interactive. Worktogether with organisations that have sectorspecific/contentspecificknowledge;

- Make clear what is expected from a self-assessment,includingexamples;

-Makeanoverviewof thesteps thatacompanyshouldtaketoimplementtheOECDGuidelines;

- Gather assessment and implementation bestpracticesofcompaniesandpublishthem;

- Create a disclosure platform for companies touploadtheirself-assessments.

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2. Introduction

2.1 Backgroundoftheresearch

Responsible business conduct is an often cited, but equally often, highly ambiguous concept.AccordingtotheOECD,responsiblebusinessconductinvolves“respectingrightsofstakeholders,creatingnewvalue,andprotectingexistingvaluethroughriskandreputationmanagement.”1Theconceptthereforegoesbeyondavoidingdoingharm;itisaboutensuringapositivecontributiontoallstakeholders.

Thewaymultinationalenterprises(MNEs)conducttheirbusinessiskeytobuildingasustainableglobaleconomy.ThisisbecausetheactivitiesofMNEsspanmultiplecountriesandmanycultural,legal, and regulatory environments. This complexity, coupled with the intensely competitivenatureofinternationalbusiness,presentsMNEsandtheirstakeholderswithuniqueandspecificchallenges. In environments where regulatory, legal, and institutional frameworks areunderdevelopedorfragile,someMNEsmayneglecttheappropriateprinciplesandstandardsofconductinanattempttogainunduecompetitiveadvantage.Yet,anincreasingnumberofMNEsare responding by committing to responsible business practices, promoting dialogue, andengagingwithstakeholders.2

TheOECDGuidelinesforMultinationalEnterprises(or“theGuidelines”)isaleadinginstrumentforthepromotionofresponsiblebusinessconductinaglobalcontext.Theyareacomprehensiveset of recommendations addressed by governments to MNEs operating in or from adheringcountries.Morespecifically,theGuidelinesprovidevoluntaryprinciplesandstandardsinareassuchasemploymentandindustrialrelations,humanrights,environment,informationdisclosure,combatingbribery,consumerinterests,scienceandtechnology,competition,andtaxation.3TheGuidelineswereoriginallyadoptedin1976andwerelastreviewedinMay2011,withtheactiveparticipationofbusiness,labour,NGOs,non-adheringcountriesandinternationalorganisations.4

AsofMay2011,42OECDandnon-OECDcountrieshavecommittedtopromotingtheGuidelines,including the Netherlands.5Adhering countries are obliged to set up National Contact Points(NCPs) that are tasked with furthering the effectiveness of the Guidelines by undertakingpromotionalactivities,handling inquiries,andprovidingamediationandconciliationplatformforresolvingissuesthatarisefromtheallegednon-observanceoftheGuidelines.ThismakestheGuidelines theonly internationalcorporateresponsibility instrumentwithabuilt-ingrievancemechanism.6FormorebackgroundinformationontheOECDGuidelines,werefertoappendixIV.

ThewideadoptionoftheGuidelinesintheNetherlandsisapriorityfortheDutchgovernment,whichhassettheambitionthat90%ofthelargestDutchcompanies7committotheGuidelines.8The Association of Investors for Sustainable Development (VBDO) conducted the first (desk)researchonthecommitmentofDutchstocklistedcompaniestotheGuidelinesin2013overthe 1 OECD. (2013). OECD Guidelines for Multinational Enterprises: Responsible Business Conduct Matters. Available at: http://mneguidelines.oecd.org/responsible-business-conduct-matters.htm

2 Ibid. 3 http://www.oecdguidelines.nl/oecd-guidelines/a/all-about-the-oecd-general-information 4 https://mneguidelines.oecd.org/about/ 5 OECD. (2011). OECD Guidelines for Multinational Enterprises - 2011 Edition. Available at: http://mneguidelines.oecd.org/text/ 6 OECD. (2013). OECD Guidelines for Multinational Enterprises: Responsible Business Conduct Matters. Available at: http://mneguidelines.oecd.org/responsible-business-conduct-matters.htm 7 Companies that meet at least two of the following three criteria: (1) they have more than 500 employees; (2) their total assets exceed €20 million, and; (3) their net turnover exceeds €40 million. This concerns some 600 Dutch companies. 8 Beleidsnota “MVO loont”, 23 June 2013.

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reporting year of 2012, based on theAnnualReports of 66Dutch stock listed companies.9InSeptember2014,theAssociationofInvestorsforSustainableDevelopment(VBDO)receivedtheassignmentfromtheMinistryofForeignAffairstofollow-upthisresearchbyidentifyingcurrentcommitmentsandimplementationoftheOECDGuidelinesbyDutchstocklistedcompaniesandcomingupwithpossibleimprovements.

2.2 Goals/objectivesoftheresearch

The project aims to help the Ministry of Foreign Affairs fulfil its ambition to increase thepercentageofcompaniespubliclycommittingtotheOECDGuidelines,to90%.Morespecifically,theprojectaimsto:

§ Raise awareness of the importance and applicability of the Guidelines among thecompaniesinscope;

§ Provide an insight into the main drivers or barriers for companies to commit to theGuidelines;

§ IdentifypotentialbarrierstotheimplementationoftheGuidelinesbythecompaniesinscope;

§ PromoteabetterintegrationoftheGuidelinesintobusinessconduct.

2.3 Scopeoftheresearch

VBDOandtheMinistryofForeignAffairshavecompiledalistof50companiesendof2014,whichmeetatleasttwoofthefollowingthreecriteria:morethan500employees,and/ortotalassetsexceeding€20million,and/ornetturnoverover€40million.Intotal60companiesareincludedinthedeskresearch,ofwhich46areinterviewed.

2.4 Processandtimelinesoftheresearch

TheprocessofresearchoncompanycommitmenttotheGuidelinesoverthereportingyear2014isdepictedinfigure3.1below.Thisprocessisfurtherexplainedinthenextparagraphs.

Figure1.OverviewofVBDO’sengagementactivitieswithcompaniesontheOECDGuidelines

9 http://www.goed-geld.nl/assets/Uploads/VBDOProjectnulmetingOESOrichtlijnen4.pdf

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2.4.1. VBDO’sOECDengagementactivitiesaroundAnnualGeneralMeetingsofDutchstocklistedcompanies

The following stepswere taken regarding the firstphaseof theproject: engagementactivitiesaroundAnnualGeneralMeetings(AGMs)ofDutchstocklistedcompanies.

Step1:VBDOhassentapersonallettertotheBoardofDirectorsofallselectedcompanieswiththeofficialannouncementthattheOECDGuidelineswillbeaddressedduringtheAnnualGeneralMeetings(AGM)ofShareholdersoftherespectivecompanies(seeappendixIV).

Step2: VBDOhas analysed the current extentof commitment to theGuidelinesby respectivecompanies on the basis of publicly available information. VBDO formulated specific,material,company-relatedandconstructivequestionsaboutcommitmenttotheGuidelinesinpreparationfortheAGM.

Step3:VBDOhassharedtheresultsoftheresearchandtheGuidelinesrelatedwrittenquestionswiththecompaniesinscope.

Step4:VBDOhasvisitedtheAGMsofthecompaniesinscopeandenteredintodialoguewiththeBoardofDirectorsoftherespectivecompaniesontheformulatedquestions.

Step5:VBDOhasmonitoredandreportedtheresultsinadraftreportofJune2015totheMinistryofForeignAffairs.

2.4.2. VBDO’sOECDengagementactivitiesduringbilateralmeetingswithDutchstocklistedcompanies

BasedontheresultsoftheengagementinwritingandduringAGMs,VBDOhasengagedwith46companiesbilaterallytodiscusstheimplementationoftheOECDGuidelinesandelaborateonthecommitments made during the AGMs. The aim is to raise awareness for the Guidelines andsupportthecompaniesatimprovingtheperformanceand/orcommitmenttotheGuidelines.Thestepstakeninthisprocessaredescribedbelow.

Step6: VBDO contacted the companies and sent the interviewguide (see appendix II) beforeconductingtheinterview.Companieswererequestedtoinviteaboardmembertothemeeting,ifpossible.

Step7:VBDOhasenteredintoengagementwithcompaniesinscopetoincreaseawarenessaboutthe OECD Guidelines and to encourage commitment and implementation of the Guidelines.Furthermore, during these meetings, VBDO investigates barriers for commitment andimplementationoftheGuidelinesaswellasfeedbackfortheDutchNationalContactPoint(NCP).

Step8:VBDOsentasummaryofthemeetingstothecompaniestoverifycorrectrepresentationofwhatisdiscussedinthemeetings.

Step9:VBDOhasreportedtheresultsinthisfinalreport.

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3. Results:CompanycommitmentandimplementationofOECDGuidelinesbyDutchstocklistedcompanies

Thefollowingparagraphsarebasedondeskresearchandtheresultsderivedfromtheinterviewswithcompanies.Formoredetails,seeappendixIforthemainresultspercompany.

3.1 Overviewof companycommitment to theOECDGuidelines forDutchstock listedcompanies

Figure3belowdepictstheamountofcompaniesreferringtotheOECDGuidelinesintheirannualreport,sustainabilityreportand/orintegratedreportinreportingyear2014.Ascanbeseeninthefigure,in2014morecompanies(47%)inthescopehavereferredtotheGuidelinesthanin2012(26%).Itshouldbenotedthatthescopebetween2012and2014haschangedslightlytoremain within the policy scope of the Ministry of Foreign Affairs (respectively 54 vs 60companies).Forourresearchin2012werefertotheearlierdeliveredreport.

Figure3:CompaniesthatrefertotheOECDGuidelinesinpubliclyavailableinformationover2012

and2014

FromthecompaniesthatrefertotheOECDGuidelinesinpubliclyavailableinformation,notallcompaniescommittotheGuidelinesaswell.CompaniesusedifferentkindsofwaystorefertotheGuidelines,e.g.thattheysupporttheGuidelines,basedtheirCodeofConductorotherpoliciesontheGuidelines,basedanagreementwithsuppliersontheGuidelines.Onlyapartofthecompaniesexplicitlymentionsthey‘commit’totheGuidelines.Inaddition,intheinterviewswefoundthatsomecompaniesdocommittotheGuidelines,however,donotrefertotheGuidelinespublicly.From the interviews (and fornot interviewed companiesbasedonour interpretationof theirpubliclyavailableinformation),resultsthat18companies(30%)committotheOECDGuidelineswhile28companies(47%)referredtoitinpubliclyavailableinformation.

Intheinterviews,weaskedifcompaniesthathavenotcommittedyet,werewillingtocommitinthe future.Ninecompanies indicated theywould,and15companies theymightcommit in thefuture (see appendix I). It would be valuable to track this progress and the effect of ourengagement.

26%47%

74%53%

0%

20%

40%

60%

80%

100%

120%

CompaniesreferringtotheOECDGuidelinesover2012and2014

no

yes

2012 2014

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3.2 ReasonsandbarrierstocommittotheOECDGuidelinesaccordingtoDutchstocklistedcompanies

3.2.1 ReasonstocommittotheOECDGuidelines,accordingtoDutchstocklistedcompanies

Dutch stock listed companies commit to the OECD Guidelines for several reasons. SeveralcompaniesmentionthattheGuidelinesareagoodstartingpointfortheircodeofconduct,sincetheycoverallrelevanttopics.AfewcompaniesmentionthattheGuidelinesarerelevantsincethecompanyoperatesinaninternationalenvironmentorthatthecompanyworkswithinternationalpartnersthatstimulatecommitmenttotheGuidelines.

Anotherlargepartofthecompaniesmentionsthat(mostof)theirpoliciesalreadycomplywiththe OECDGuidelines, since they adhere to Dutch legislation. Therefore, it is a small step to a(public)commitment.UnderstandingofthecontentandrelevancyoftheGuidelines(asexplainedinVBDO’sengagementmeetings),madeseveralcompaniesawareof theaddedvalueofaself-assessmentanda(public)commitmenttotheGuidelines(seeappendixI).

AfewcompanieswerealreadypubliclycommittingtotheGuidelinesduetomoreinternationaloperations in thepast and continued todo so,whereas theywere currently less awareof the(renewed)contentoftheGuidelines.Onecompanyspecificallymentionedthattheycommitsincethey aspire to be a frontrunner on sustainability. Some companies also ask their suppliers tocommittotheGuidelines.CompaniesstressthataskingtheirsuppliersforcommitmentismostrelevantiftheyworkwithsuppliersoutsideEuropeorNorth-America.

3.2.2 BarrierstocommittotheOECDGuidelines,accordingtoDutchstocklistedcompanies

Companies experience several barriers to (publicly) commit to theOECDGuidelines.Wehavedivided thosebarriers into two categories:barriers in theprocessof committingandbarriersregarding the content of the Guidelines. Company namesmentioned are examples and not acompletelistofallthecompaniesthatmentionedthebarrier.

Barriersintheprocessofcommitting

- UnfamiliaritywiththeprocessofcommitmentortheGuidelinesthemselves

One of themain reasons companies do not (yet) commit to the Guidelines is that they wereunaware or unfamiliarwith them. 12 companiesmentioned that therewere not aware of theGuidelinesbeforeVBDO’s(requestforan)intervieworAGMquestions.Inaddition,forsomeofthecompaniesitwasunclearthattheycouldcommittotheGuidelinesorhowtheycouldcommittotheguidelines(e.g.wheretomakeitpublic,dotheyhavetopayasubscriptionfee,aretherereportingrequirements,whatdoyouhavetodoshowyourcommitment).

- Self-assessmentworkload

Severalcompaniesmentionthattheyfirsthavetocarryouta(self-)assessmentbeforetheycanorwantto(publicly)committotheGuidelines.Someofthecompaniesconsideranassessmenttoomuchworkloadfortheirsustainabilitydepartment,sincetheyhavelimitedcapacityand/orotherpriorities.Inaddition,severalcompaniesmentionthatitisnotclearwhatandtowhatextenttheyhave toassess if they complybefore they can (publicly) commit to theGuidelines. In theinterviewsquestionswereraisedaboutauditingapubliccommitmentandhowmuchinformationneeds tobepublished (e.g.onlycommitment,oralso thesubjectsonwhich theydoordonotcommit, comply or explain). Some companies explained that theywere still in the process of

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conducting this assessment in relation to implementing a new sustainability strategy andthereforewillcommitinthefuture.

- Convincingseniormanagement

Senior management (including the board) has to approve a public commitment. Severalcompaniesstillwereintheprocessofconsideringcommitmentbyseniormanagement.Othersstillneededto‘buildthecase’toconvinceseniormanagement.Thiscanbeabarrieriftheaddedvalueofacommitmentcannotbeclearlyexplainedtoseniormanagement(seebelow).

- Noclearaddedvalueofapubliccommitment

Notall companiesunderstoodtheaddedvalueofcommittingpublicly to theOECDGuidelines.Somecompaniesdidnotsee theaddedvalueof thecontentof theGuidelines (seebelow)andthereforedidnotseewhatapubliccommitmentwouldaddfortheirshareholdersand/orotherstakeholdersandfortheirowncompany.OthersthatwereawareoftheGuidelines,e.g.byusingthemfordraftingthecodeofconductorwhentheyalreadybasedtheirpoliciesontheGuidelines,did not see the need of a public statement about theGuidelines in their annual report. A fewcompanieswerereluctanttopubliclycommitsincepossiblelegalissuescouldarise.

BarriersrelatedtothecontentoftheOECDGuidelines

- NoclearaddedvalueoftheGuidelines

Eight companies mentioned specifically that they did not see the added value of the OECDGuidelines.SeveralcompaniesmentionedthatwewerethefirststakeholderaskingaboutcommittotheGuidelines,whichraisedthequestionforthemifcommitmentisrelevantforstakeholders.CompaniesthatalreadycommittoUNGlobalCompact,ILOCoreLabourStandards,UNGuidingPrinciplesonBusinessandHumanRightsdonotalwaysseetheaddedvalueofcommitmenttoanothersetofguidelines.TheinterviewedfinancialinstitutionsmentionedthattheGuidelinesarenoteasy toalignwith their corebusinessandmost institutionsarealreadycommitting toUNGlobal Compact and theUNPrinciples for Responsible Investment,which specifically addressassetmanagers.Inaddition,onecompanyfromanothersectormentionedthattheaddedvalueoftheGuidelineswasnotclearinrelationtotheircorebusiness.SeveralcompaniesunderstoodthattheGuidelinesprimarilyapplytointernationaltradeandthereforeconcludedtheywerenotorlessrelevantforthem,sincetheiroperationsandsuppliersarelargelynationalorEuropean.

- (Possibly)notabletomeettherequirementsintheGuidelines

AfewcompaniesexperiencedabarriertocommitregardingtherequirementsintheGuidelines.Thetaxrequirementsandwhatwasmentionedby‘thespiritofthelaw’werequestionedseveraltimes.Twocompaniesspecificallymentionedtheywouldnotcommitifthetaxchapterrequiredcountry-by-country(orevenregional)taxreporting,sincetheywereafraidofhavingtodisclosecompetitivesensitiveinformation.OnecompanymentionedthattheGuidelinesrequiredthemtodoanassessmentofsecond-tiersuppliersandbeyondandthatthecompanyisnotyetcapableofmaking such an assessment for every product. Of course, these obstacles depend on how theGuidelines are interpreted per company. In addition, another company mentioned that it isimportantforthemtosettheirownstandardswithinthescopeofthe(broad)Guidelines.SomecompaniesmentionedthattheGuidelinesareambiguous;itwasnotcleartothemwhatcertaintermsmeaninrelationtotheircorebusiness.

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3.3 ImplementationoftheOECDGuidelinesbyDutchstocklistedcompanies

3.3.1 MostimportantelementsoftheOECDGuidelinesaccordingtoDutchstocklistedcompanies

ElementsintheguidelinesthataremostimportantaccordingtotheinterviewedcompaniesaretheEnvironment,SupplyChain,Consumer interest,HumanRights,Employmentand industrialrelationsandHealthandSafetyatwork.Companiesthatmentionelementsasmostimportantforthem,largelyalsotakethemostactionontheseelements,sincetheyaremostrelatedtotheircorebusiness.

3.3.2 ElementsthatrequireextraattentionaccordingtoDutchstocklistedcompanies

TheelementsSupplyChain,HumanRightsandTaxationaremostmentionedbytheinterviewedcompaniestorequireextraattentionbythem.Remarkableisthatsupplychainandhumanrightsare as well very often mentioned as most important elements (not necessarily by the samecompanies).

FortheelementSupplyChain,largemultinationalproductionorretailcompaniesfindithardtogo back far into the supply chain, meaning, not only assessing their first tier suppliers onsustainability,butalsoknowingandassessingtheirsuppliersinsecondtierandbeyond.ThisisrelatedtothetopicofHumanRights;companiesfindithardtogobackfurtherinthesupplychaintoassessifhumanrightsarerespected.

Regardingtax,companiesfinditoftenunclearwhatthereportingrequirementsoftaxintheOECDGuidelinesexactlyareandwhatthemeaningisofactingaccordingto ‘thespiritofthelaw’.Asmentioned before, companies are afraid to disclose information publicly that might becompetitivesensitive(e.g.country-by-countryreporting).

3.4 FeedbackofinterviewedcompaniesfortheNCP

IneachinterviewweaskedifcompanieswerefamiliarwiththeNCPandiftheyhadfeedbackforthe NCP. Of the interviewed companies, 21 companies (46%) are familiar with the NCP.Remarkable is that thegroupof thecompaniesthatareunfamiliarwiththeNCP,also includescompaniesthatdocommittotheGuidelines(seeappendixI).

ThreecompaniesthatarefamiliarwiththeNCPalsohaveexperiencewiththedisputeresolutionmechanismoftheNCP.OnecompanymentionedspecificallythattheyarefamiliarwiththeNCPdue to their subscription to the SustainableDevelopmentGoals (SDGs) inwhich theNCPwasinvolved.SomecompanieshaveheardoftheNCP,butnotintheroleasapromoteroftheOECDGuidelinesornevercheckedtheNCPwebsite.

A large part of the interviewed companies, eight in total,mentioned that they do not requireadditionaleffortsfromtheNCP.Mostofthesecompaniesdonotrequireextraguidanceandarefinewiththecurrent(perceived)backgroundroleoftheNCP.AdditionalpositivefeedbackfortheNCPisthatsomecompaniesmentionedthatthewebsitewasinformative.

Companies have several points of additional feedback for the NCP, we have divided them infeedbackregardingthecommunicationabouttheGuidelinesandthecontentoftheGuidelines.Thepointsaresummarizedbelow.

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3.4.1 FeedbackrelatedtothecommunicationabouttheOECDGuidelines

- Be more visible in promoting the Guidelines and communicate actively and directly to

companies

Several companies advise the NCP to further promote the Guidelines and be more visible inpromotingthemtowardscompanies.Companiesadvisetocommunicatemoredirectlytowardscompanies, by using different channels than only thewebsite. Forms of communication couldincludeletterstotheBoard,e-mailandconferences.OnecompanymentionedforexamplethatabiannualconferenceontheGuidelineswouldbehelpful(similartotheGRIconferenceontheirmethodology).

Moreover,severalcompaniesmentionedthatinformationonthewebsiteshouldincludealistofcompaniesthatpubliclycommittotheGuidelines(tobeusedaspositiveexamplesandcreateanadditionalincentiveforpeerstocommit).Inaddition,thewebsiteshouldinformcompaniesaboutwhichactionstotaketobeabletopubliclycommittotheGuidelines.

Content of communication should focus on awareness raising, by explaining the relevance,contentandprocessofcommitmenttotheGuidelinesinthefirstplace.Also,itshouldbemadeclear to companies what the function of the NCP is and that this (should) include helpingcompanieswithquestionsabouttheGuidelines,includingoncommitmentandimplementation.Afewcompaniesmentionthat theNCPshould focusonthepositivesideandaddedvalueof thecommitment.Notonlythelargelistedcompaniesshouldbetargeted,butalsosmallandmediumenterprises (SMEs). A next step would be to provide specific sector guidance and events asexplainedinthenextpoint.

- SharebestpracticesperindustryregardingtheGuidelines

Developingasectoralapproachandsharingbestpracticesforspecificindustriesisatopicthatresonateswellattheinterviewedcompanies.Inthisway,therelevanceoftheGuidelinesincreasesforcompaniesonapracticallevel.SeveralcompaniesaskforexamplesofhowcompliancytotheGuidelines is measured/reported on. Sector related comparisons and guidance would createrelevantlearningsandsuggestionsforfurtherimprovement.Forexample,acompanymentionedthatitwouldbemostrelevantforthemtoholdameetingwithcompaniesintheirsectortodiscusshowtheGuidelinesaffecttheiroperations.

- CooperatetohelpcompaniestoimprovetheirperformanceontheGuidelines

Severalcompaniesaskedformorecooperation,onseverallevels:- Operatemoreonapartnerlevelwithcompanies- Worktogetherwithotherorganizationsthatcarryoutsimilaractivities- Facilitatethedialoguebetweengovernmentandcompanies- Better coordinate between the activities of the variousministries regarding theOECD

Guidelines- Startmoreinternationalinsteadofnationalaction- Setupapublicgrievancemechanismthatcompaniescoulduse

- Furtherimproveresolutionmechanism

ThreecompaniesalreadyhaveexperiencewiththeresolutionmechanismoftheNCP.OneofthemadvisestheNCPtomakeexplicitchoicesinwhichdialoguestofacilitate.Anothercompanythinksthattheresolutionmechanismcouldbeusedmoreoftenasameansofarbitration.

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3.4.2 FeedbackrelatedtothecontentoftheOECDGuidelines

- AssistintheexplanationoftheGuidelines

Firstly,companiesaskforassistanceintheexplanationoftheGuidelines.Theywouldliketoknowmoreaboutthecontent,underlyinggoalsandapplicabilityoftheGuidelines(inrelationtotheiroperations). An easy to understand compact version of the guidelines could be helpful fordissemination to suppliers and contractors. The subject ‘tax’ is for several companies animportanttopicandtheywouldliketoknowwhattheGuidelinesexpectonthissubject,especiallyfortransparencyinreporting.

- Explaintherelationtootherguidelines

Secondly, the relationwith other guidelines is a point of feedback that several companies areconcernedwith.Firstofall,companiesasktoexplaintheaddedvalueofapubliccommitmentontopofexistingguidelinesandinrelationtotheirbusiness.Also,companiesaskforanexplanationofhowtheGuidelinesalignwithotherinitiatives/guidelinesandexternalreporting.ExamplesoftheseotherguidelinesincludeUNGlobalCompact,UNGuidingPrinciplesonBusinessandHumanRights,ILOCoreLabourStandards,theTransparencyBenchmark,GlobalReportingInitiative,UNPrinciplesforResponsibleInvestmentandalsotheinternationalCSR("iMVO")sectorcovenantsandthe"MVOprestatieladder"arementioned.

Inabroaderperspective,onecompanyasksforguidanceonwhatitmeanstobea‘goodcorporatecitizen’todayinrelationtoincreasingnumberofresponsibilitiesexpectedfromcompanies.Onecompany mentions that the OECD Guidelines should become the global standard instead ofadheringtoallkindsoflocalrulesandregulationsandseesarolefortheNCPstoplayinthis.Thispointoffeedbackisrelatedtotheearlierdiscussedbarrierofapubliccommitmentduetolessaddedvalueofapubliccommitmentinrelationtootherguidelines.

- AssistcompaniesintheimplementationoftheGuidelines

Thirdly,companiesaskforwhattheyshoulddotobeabletocommittotheGuidelinesandhowtheGuidelines shouldbe implemented. Several companiesask for assistance in theprocessofcomparingtheirinternalcorporatepolicywiththeGuidelines.Implementationguidanceshouldbemadespecifictothecorebusiness(e.g.assetmanagementforfinancialinstitutions).

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4. Conclusions&recommendations

4.1 Conclusions

Ourengagementresultsderived that there isstillaway togobefore theambition levelof theDutchGovernmentof90%commitmentoflargeDutchcompaniestotheOECDGuidelines(“theGuidelines”)ismet.Fromthe60companiesinourscope,only18commitatthismomenttotheGuidelines.Due toourengagement,wemade12companiesaware that theGuidelinesexist,9companieshaveexpressedtheywillcommitinthefuture,andanother15companiessaidtheymight commit in the future. In addition, our interviews contributed to the explanation of theGuidelines,includingtheiraddedvalue,toalargepartoftheinterviewedcompanies.Thismeansactionisrequiredandalsothatactionundertaken,suchastheinterviewsconducted,mayhaveasignificanteffect.

Companies that do commit understand the value for their international operations and thatrequirementslinktoother(alreadymet)legislationandguidelines.ThemostimportantbarriertocommittotheOECDGuidelinesaccordingtotheinterviewedcompaniesistheperceivedlimitedaddedvalueofapubliccommitment, inparticularontopofotherguidelinesthattheyalreadycommittoandapply(e.g.UNGlobalCompact,ILOCoreLabourStandards,UNGuidingPrinciplesonBusinessandHumanRights,UNPrinciplesforResponsibleInvestment).Stakeholdersdonotask companies for commitment to the Guidelines in most cases. In addition, the process ofcommitting to the Guidelines is unclear for the interviewed companies and companies arereluctant to the workload of a self-assessment. Explaining the upside of these barriers in aninterview helped companies to better understand what a commitment could add for them.Therefore,thiscouldbeafirststeptoreachthe90%ambitionlevel.

TheelementsoftheOECDGuidelinesarerecognisedasvaluable,especiallyEnvironment,SupplyChain,Consumer interest,HumanRights,Employmentand industrial relationsandHealthandSafetyatwork.SupplyChain,HumanRightsandTaxareelementsthatrequiremoreattentionaccording to the companies in scope, due to thedifficultyof their content andapplicability inpractice.Overall,companiesrecognisethevalueofOECDGuidelinesasarelevantbasisor‘check’fortheirCodeofConduct.

Only46%oftheinterviewedcompaniesisfamiliarwiththeNCP.CompaniesrecognisethattheNCPcouldplayanimportantroleinmakingtheOECDGuidelinesmoreknownandmorepracticalforapplicationbycompanies.Firstofall,pro-activeanddirectcommunicationtocompaniesismentionedtocreatemoreawarenessoftheGuidelines.Sharingknowledgeandgoodpracticesperindustryiscrucialtoalargepartofthecompanies.Also,theNCPcouldplayaroleinexplainingtheaddedvalueandcontentoftheGuidelines(especiallyontopofotherguidelines),accordingtotheinterviewees.

4.2 Recommendations

Basedontheinterviewresults,onoverallwewouldrecommendthefollowing:

- Raiseawareness.OurresearchshowsthatalargepartofthecompanieswasnotawareoftheOECDGuidelines.Awarenessraising, includingknowledgesharing,shouldbethefirststeptoraisecompanycommitment.Thiscouldbedonebydirectlycommunicatingtocompanies and working together with organisations that are in direct contact withcompanies,suchasemployerorbranchorganisations.

- Make theaddedvalueof commitment clear. Companiesneed a clear answer to thecrucialquestionforthem:“Whatisinitforme?”.Makingtheaddedvalueandbenefitsof

15

(committing to) the Guidelines clear and creating external pressure to commit, willcompanieshelptomakecommitmenttotheGuidelinesapriority.

- Makeitaspracticalaspossibleforcompanies.Companiessearchforimplementationexamples,goodpracticesandtoolsrelatedtotheircorebusinessthathelpthemtocommitand implement the Guidelines. Making the process towards commitment andimplementation clear and providing them with relevant sector examples would helpacceleratingtheprocessofcommitment.

Basedontheseoverallrecommendations,wewouldrecommendtostartwiththefollowingquickwins:

Raiseawareness

- Let a Minister or Minister-President make a statement about the added value of theGuidelinesandcommitmentbycompanies;

- Senta letter (byaMinistry) to theBoardofManagementof all companies that shouldcommit.Inthislettertheaddedvalueofacommitmentandtheprocessofcommitmentshouldbeexplained.

- Involve the employer organisation (VNO-NCW) to promote the Guidelines amongcompanies.


- PublishalistofcompaniesthatcommittotheOECDGuidelinesonthe(NCP)website;- Update theNCPwebsitewith the added value of theGuidelines and informationwhat

companiesshoulddotocommittotheOECDGuidelines(e.g.whatdotheyhavetopublish,complyorexplain).


- IncludeindicatorsoftheGuidelinesintheTransparencyBenchmarkassessmentformorealignment.

Tofollowupthesequickwins,wesuggesttotakethefollowingstepsonalongerterm:

Raiseawareness

- Gather ambassadors for promoting the Guidelines, that comprises a mixed group ofinfluentialpersonsfromthegovernment,companies,NGOsetc.;

- Follow-upthesentletterbyaphonecalltothecompaniestoaskiftheinformationisclear,possibly followed-up by an interview about what next steps (of commitment andimplementation)are.


- MakeclearhowtheGuidelinesarerelatedtootherguidelinesandwhatdifferencesarewith the OECD Guidelines (starting with the UN Global Compact, ILO Core LabourStandards, UN Guiding Principles on Business and Human Rights, UN Principles forResponsibleInvestment).Thiscouldbeaninitialhigh-levelassessment,ata laterstagefollowed-up by a detailed assessment. Other subjects, such as the SustainableDevelopmentGoals,couldalsobeaddedatalaterstage.

16


- Organisean(bi-annual)eventforcompaniestoshareknowledgeandbestpracticesandfor the Ministry to gain information to make guidance more practical. Invite a fewcompanies that are frontrunner on the OECD Guidelines and that arewilling to sharespecificexamples.TheeventorpartsoftheeventshouldbesectorspecificandonselectedelementsoftheGuidelinesandasinteractiveaspossible.Inorganisingsuchaneventwerecommendtoworktogetherwithotherorganisationsthathavesectorspecific/contentspecificknowledge,forexampletofacilitatebreak-outsessions;

- Make clearwhat is expected from a self-assessment, including some examples of self-assessmentsofcompanies;

- Make an overview of the steps that a company should take to implement the OECDGuidelines;

- Gatherassessmentandimplementationbestpracticesofcompaniesandpublishthemonthewebsite(anonymousifrequired);

- Createadisclosureplatform forcompanies toupload their self-assessmentsandcheckthoseassessments;

- Askfeedbackontheresolutionmechanismtofurtherimprovethismechanism.

In the process of taking these actions, we recommend to work together with stakeholders,includingcompanies,branchorganisations,NGOsasmuchaspossibletochecktherelevancyandapplicabilityoftheimplementationofsuggestedactions.

4.3 Opportunitiesforfollow-upofthisresearch

TheresearchdoneinthisreportwasthefirstengagementresearchconductedspecificallyontheOECDGuidelines.Therefore,thereareseveralopportunitiesforfollowing-upthisresearch.TheVBDOiswillingandwellpositionedtohelpwithfollow-upresearchaswellasimplementationoftheabovementionedrecommendations.Webelievethatwearewellpositioned,duetoourexperienceandnetwork,toassisttheMinistryofForeignAffairsonthefollowingaspects:

- Continue tomeasure if andhowtheOECDGuidelinesareappliedbyDutchstock listedcompaniesinthecomingyearsbasedonpubliclyavailableinformationandengagement,tobeable tomeasure if awarenessandcommitment is growingand if theundertakenactionshavetheexpectedresults;

- Assestheprocessofself-assessmentoftheOECDGuidelinesbycompaniesinmoredepth:what do companies need, what are existing good practices and how should a self-assessment look like. This will support theMinistry of Foreign Affairs and/or NCP insettingupmostrelevantguidanceandgoodpracticesfortheseself-assessments;

- Create an overview of the steps for implementation that companies should follow toimplementtheGuidelines;

- Conductin-depthsectoranalysis,togaininsightintothesectorrelevantsubjects,barrierstocommitanddifficultiesinimplementation.Thiswouldhelpinmakingguidancemorepracticalandapplicableforcompanies.TheVBDOisespeciallywellpositionedtodothisforthefinancialsector;

- Conduct in-depthcontentresearchonhowcompanies implementspecificaspectsof theGuidelines,e.g.specificallyifthosearerelatedtoVBDO’sprioritythemes(naturalcapital,businessandhumanrights(inthesupplychain),responsibletax);

- Compare or benchmark companies in a specific industry or on specific elements of theGuidelinestohelpcompaniesgaininsightintowheretheirpracticescouldbeimproved.Fromabenchmark,a‘winner’couldbeusedasambassadorandtostimulatethe‘racetothetop’;

17

- StimulateinvestorstotaketheOECDGuidelinesintoaccountintheirinvestmentsdecisionsandinengagementwithcompanies;

- Co-organiseconferencesandevents,especiallythoserelatedtoVBDO’sprioritythemesandthefinancialsector;

- Facilitate roundtables inwhich companies speak confidentially aboutdifficulties in theimplementationoftheGuidelines;

- HelpsearchingfortherightambassadorsoftheGuidelines,sincetheVBDOhavearelevantnetworkamongawiderangeofstakeholders.

Wearegladtopresentthisreportandtodiscusstheopportunitiesforfurtherresearchinmoredetail.

19

AppendixI:Detailedresultspercompany

Company AGMvisitVBDO2015 OECDmeeting OECDmeetingdate Reportsacc.toGRI

in2014

MentionstheOECDguidelinesinpubliclyavailableinformation(2014)

Doesthecompanycommit?(interview)

AalbertsIndustries 1 yes 08-10-15 no yes yes

AccellGroup1 yes 21-10-15 GRIG3/3.1 no no

Acomo yes 19-11-15 no no no

Aegon1 yes 28-09-15

GRIG4comprehensive yes yes

Ahold 1 yes 28-09-15 GRIG3/3.1 no noAirFrance-KLM 1 no - GRIG4core yes yesAirbusGroup yes 15-02-16 GRIG4core yes yesAkzoNobel 1 yes 22-10-15 GRIG4core yes yesAMG(AdvancedMetallurgicalGroup) 1 yes 04-12-15 GRIG3/3.1 no noAperam 1 yes 23-10-15 GRIG4core no noArcadis 1 yes 10-11-15 GRIG4core no noArcelorMittal 1 yes 01-12-15 GRIG4core no no

ASMInternational1 no 04-12-15 no no no

ASML 1 yes 12-11-15 GRIG4core yes yesBallastNedam 1 yes 19-11-15 GRIG3/3.1 yes yes

20


in2014



BAMGroep1 yes 19-10-15


BESemiconductorIndustries no - no no no

BeterBed yes 17-11-15 GRIG4core no no

BinckBank yes 18-12-15 GRIG3/3.1 no noBoskalis 1 no - GRIG3/3.1 no noBrunel no - no yes noCorbion 1 yes 07-10-15 GRIG4core yes noCrownvanGelder yes 13-11-15 GRIG3/3.1 no noDeltaLloyd 1 yes 28-09-15 GRIG4core no no

DSM1 yes 24-11-15


Fugro 1 yes 21-03-16 no yes noGemalto 1 no - GRIG4core no noHeijmans 1 yes 06-11-15 GRIG4core yes noHeineken 1 yes 07-12-15 GRIG4core no noHollandColours yes 28-01-16 GRIG4core no noImtech 1 no - GRIG4core no no

ING1 yes 02-10-15

GRIG4comprehensive yes no

KASBank 1 yes 22-03-16 no no no

21


in2014



Kendrion yes 10-03-16 GRIG4core yes no

KoninklijkeTenCate1 no - GRIG3/3.1 no no

KPN1 yes 17-11-15


MacintoshRetailGroup 1 no - GRIG3/3.1 yes noNationaleNederlanden 1 yes 15-02-16 GRIG4core no noNutreco 1 yes 10-02-16 GRIG4core no noOCI 1 no no no noOrdina 1 yes 25-02-16 GRIG3/3.1 no no

Philips1 no -

GRIG4comprehensive no no

PostNL1 yes 30-09-15


Rabobank1 yes 28-01-16


Randstad1 yes 01-12-15 no no no

RELXGroup 1 yes 14-10-15 GRIG3/3.1 no noSBMOffshore 1 yes 01-10-15 GRIG4core yes yesShell 1 yes 11-03-16 GRIG3/3.1 yes yesSligro 1 yes 09-02-16 GRIG3/3.1 no no

22


in2014



TelegraafMediaGroup 1 yes 18-01-16 GRIG4core yes yesTKHGroup 1 yes 19-02-16 GRIG4core yes noTNTExpress 1 no - GRIG4core no noUnilever 1 yes 05-02-16 GRIG3/3.1 yes yesUSGPeople 1 no - no no no

VanLanschot1 yes 11-02-16


Vastned yes 05-02-16 no no no

Vopak1 yes -


Wereldhave 1 yes 12-11-15 no no noWessanen 1 no - GRIG4core yes yesWoltersKluwer 1 yes 06-10-15 GRIG4core yes yes

Totalscope:60 50 46 48 28 18Percentages 77% 80% 47% 30%

24

AppendixII:Interviewguide

Interviewguide,October2015–April2016

Interviewobjectives

• RaiseawarenessofOECDGuidelinesamongcompaniesinscope

• IncreasenumberofcompaniesthatpubliclycommittoOECDGuidelines

• Understandcompanyreasonsto(not)committoOECDGuidelines

• IdentifymainbarriersforcompaniestoimplementOECDGuidelines

• ImproveperformanceonOECDGuidelinesofcompaniesinscope

Results

TheresultsofthisinterviewwillbeusedforareportoncompanycommitmenttotheOECD

Guidelines.Intotalwewillinterview50Dutchpubliclylistedcompanies.Wewillpublishashort

summaryofyourresponses(50-100words),forwhichwewillaskyourpermissioninadvance.

Questions

Companiesarecategorisedinto3groups:

1. CompaniesthatdonotpubliclycommittotheOECDGuidelines

2. CompaniesthatrecentlystartedtocommittotheOECDGuidelines

3. CompaniesthatpubliclycommittotheOECDGuidelinesatleastfrom2012onwards

CommitmenttoOECDGuidelines

QuestionsforcompaniesthatdonotpubliclycommittotheOECDGuidelines

• AreyoufamiliarwiththeOECDGuidelinesforMultinationalEnterprises?Andyour

BoardofManagement?

• IsitcorrectthatyoudonotpubliclycommittotheOECDGuidelines?Couldyouexplain

why?Doyouexperienceanybarrierstocommit(internallyandexternally)?

• WhatwouldbeanincentiveforyoutostarttopubliclycommittotheOECDGuidelines?

• AreyouplanningtocommittotheOECDGuidelinesinthenearfuture?


QuestionsforcompaniesthatrecentlystartedtocommittotheOECDGuidelines

• IsitcorrectthatyoustartedtocommittotheOECDGuidelinesforMultinational

Enterprisesinthepasttwoyears?Couldyouexplainyourmotivationtodothisatthat

particulartime?

• HowdoyousubstantiateyourcommitmenttotheOECDGuidelines?

• Didyouexperienceanybarrierstocommit(internallyandexternally)?

• Whatwastheeffectofyourcommitment?Didyoureceiveanyfeedback?


QuestionsforcompaniesthatpubliclycommittotheOECDGuidelinesatleastfrom2012onwards

25

• IsitcorrectthatyoucommittotheOECDGuidelinesforMultinationalEnterprises?Do

yourecallyourmotivationtodothisatthatparticulartime?

• HowdoyousubstantiateyourcommitmenttotheOECDGuidelines?

• Didyouexperienceanybarrierstocommit(internallyandexternally)?

• Whatwastheeffectofyourcommitment?Didyoureceiveanyfeedback?

ImplementationofOECDGuidelines

Questionsforallcompaniesinscope

• WhatdoyouconsidertobethemostimportantelementsoftheOECDGuidelinesgiven

yourspecificbusinesscontext?

• OnwhichelementsoftheOECDGuidelinesdoyouconsideryourselfafrontrunner?And

whichelementsrequiremoreattention?

• HowdoyouimplementtheOECDGuidelinesinyourbusinessoperations?Andinyour

valuechain?

Prompts:policies,duediligence,training,leverage• Doyouhaveanybestpracticesthatyouwouldliketoshareinrelationto

implementationoftheOECDGuidelines?

• [Toinclude:company-specificquestionsregardingitsperformanceontheOECD

Guidelines,basedonVBDOresearch,Vigeocompanyprofiles,andRepRiskdatabase]

NationalContactPoint

Questionsforallcompaniesinscope

• AreyoufamiliarwiththeNationalContactPointOECDGuidelines?Andtheirwebsite

(www.oesorichtlijnen.nl)?

• DoyouhaveanyfeedbackfortheNCP(e.g.,regardingtheirvisibility,website,activities,

etc.)?

• WhatwouldhelpyoumostinadheringtotheOECDGuidelines?

• DoyouhaveanyadviceforNCPandVBDOtopromotecompanycommitmenttothe

OECDGuidelines?

26

AppendixIII:LettersendpriortoAGMengagement

Utrecht,01December2014

Reference:112/2014

Re :EngagementVBDOAGM2014and2015

DearSir,dearMadam,

EarlierthisyeartheAssociationofInvestorsforSustainableDevelopment(VBDO)engagedwith

yourcompanyinwritingorontheoccasionofyourAnnualGeneralMeeting(AGM).TheVBDO

addressedanumberofmaterialsustainabilityissues,withparticularfocusonyourcompany’s

performanceregardinghumanrights,circularityandtaxgovernance.

WiththisletterweinformyouoftheresultsofyourengagementwiththeVBDOduringtheAGMof

2014,aswellasoftheprioritythemestheVBDOhasselectedfor2015.Attheendoftheletterwe

suggestanumberofpossibilitiestointensifythecollaborationwiththeVBDO.

1. ResultsofVBDO’soverallAGMengagementprocessin2014

WewouldliketothankyoufortheconstructivedialoguetheVBDOhadwithyourcompanyduring

thedialogueorAGMin2014.EachyeartheVBDOissuesareportwiththeoverallresultsoftheAGM

season.InJunethisyearthereport“SustainabilityPerformanceofDutchStockListedCompanies

2014”waspublished,whichprovidesinsightsintothesustainabilityperformanceofDutchlisted

companiesonanoverall-,sector-,andcompanybasis.Youwillfindthisreportinattachment2.

2. VBDO’sprioritythemesfor2015

TheVBDOwillenterintoengagementwithyourcompanyinwritingorduringtheAGMin2015.

Duringthisprocess,themostmaterialsocial,economic,environmentalandgovernance

sustainabilityissuesinyoursectorandwithregardtoyourcompanywillbeaddressed.ThisyeartheVBDOwillspecificallyfocusontheimplementationofthe“OECDGuidelinesforMultinationalEnterprises”(attachment3).Moreover,whereverrelevant,theVBDOwillfocusonthreeprioritythemes,whichareoutlinedbelow.

A. Humanrightswithspecificfocusongrievanceandremediationmechanisms

VBDO’sfirstprioritythemein2015willbe“Humanrightswithspecificfocusongrievanceand

remediationmechanisms”.In2011,twoimportantguidelinesonhumanrightswerelaunched:the

UNGuidingPrinciplesonBusinessandHumanRightsandtherevisedOECDGuidelines.These

guidelinesclearlystatethatcompaniesbeartheresponsibilitytorespecthumanrights.Sincea

numberofyears,theVBDOhasengagedwithcompaniesandinvestorsonthistopic.Nextyear

specificattentionwillbepaidtogrievanceandremediationmechanisms:complaintandremedy

processeswhichcanbeusedbyindividuals,workers,communitiesand/orcivilsociety

organisationsthatmaybeadverselyimpactedbyyourbusinessoperations.

B. Circularity

VBDO’ssecondprioritythemein2015willbe“Circularity”.Initsreport“Vision2050”,theWorld

BusinessCouncilforSustainableDevelopmenthasformulatedzerowasteasamaingoalforthe

worldin2050.TheVBDOencouragesyoutoadoptthisgoalforyourcompany,andtosetambitious

targetsforthecomingyears.Duringourengagementin2015,theVBDOwilladdresstheprogress

yourcompanyhasmadeinthatregard,forexampleonincreasedre-usability,productlifetime

extensionandwaysinwhichyourcompanyinfluencesothercompaniesinthevaluechainto

improvetheircircularperformance.

C. Goodtaxgovernance

VBDO’sthirdprioritythemein2015willbe“Goodtaxgovernance”.Asmanyotherinstitutions,the

27

VBDOisconvincedthatacompany’staxpolicyshouldbeanintegralpartofitscorporatesocial

responsibilitystrategy.Thisissubstantiatedinthereport“Goodtaxgovernanceintransition:

TranscendingthetaxdebatetoCSR”(April2014).Duringourengagementin2015,theVBDOwill

addresstheprogressinyourcompany’sresponsibletaxstrategyandperformance,forexampleon

howyourcompany’staxpaymentsbycountrycomparetoyourcompany’sactivitiesbycountry.

3. CollaborationwiththeVBDO

AlthoughcompaniesoutsidethefinancialsectorcannotbecomeadirectmemberoftheVBDO,there

areanumberofoptionstocooperatetogether,andprofitfromtheexperienceandnetworkthatwe

have.

A. VBDOBusinessPartnership

TheBusinessPartnershipwithVBDOoffers,amongstotherservices,regularadviceonimproving

yourcompany’ssustainabilityperformancefromtheperspectiveoftheresponsibleinvestor,aswell

astheuseofVBDO’sknowledge,networkandexperience.ThePartnershipisexclusivelyofferedto

companiesthatarenoteligibletobecomeaVBDO-member.ThePartnershiphasdifferent

advantagesthatvarybycompanysize,suchasthepossibilitytosetupacallwithaselectednumber

ofanalystsandfundmanagersacrosstheglobe.AEXandmidcapcompanieshaveadditional

advantages.Moreinformationisprovidedinattachment4.

B. (Multi-)stakeholderengagementprocesses

VBDOhasanextensivetrackrecordinorganising(multi-)stakeholderengagementprocessesfor

andwithstocklistedcompanies,suchasKPN,Ordina,BAM,associationssuchasVNCIandfinancial

institutionssuchasABNAMRO.Withastakeholderdialogue,theVBDOfacilitatestheinvolvement

ofall,oraselectionof,materialstakeholdersinthedevelopmentandimplementationofthe

sustainabilitypolicyofacompany.Thus,acompanycanutilisetheexpertiseandexperienceofits

stakeholdersforamultitudeofpurposes.Furthermore,stakeholderdialoguesareanessential

requirementtocomplywiththelatestGRI-4reportingstandard.VBDOcanalso(partially)execute

theorganisationofastakeholderdialogue,e.g.bymeansofpreparatoryresearch.Moreinformation

isprovidedinattachment5.

C. YourcontributiontotheVBDO

Withthemissiontomakecapitalmarketsmoresustainable,theVBDOhasnearly20yearsof

experiencewithresearchoncorporatesustainabilitybyandforcompanies.TheVBDOinitiatesand

identifiesnewsustainabilitytrends,publishesreportsandbestpracticesonresponsiblesupply

chainmanagement,goodtaxgovernanceandhumanrights.Thankstothesupportofour

institutionalmembers,theVBDOisabletodocontinuetheseactivities.Ifyouwouldalsoliketo

supportVBDO’smission,youareinvitedtomakeadonationtothe‘VBDOInnovatiefonds’(VBDO

InnovationFund),NL13INGB0006890957,INGBank,attn:‘BijdrageInnovatiefonds’.

Shouldyouhaveanyfurtherquestions,pleasedonothesitatetocontactus.

Welookforwardtoourcontinuedcollaboration.

Sincerely,

GiuseppevanderHelm

ExecutiveDirectorVBDO

[email protected]

28

DonGerritsen

ProjectManagerSustainability&ResponsibleInvestment

[email protected]

Attachments:

1. VBDO’sAGMletter2015

2. Report“SustainabilityPerformanceofDutchStockListedCompanies2014”

3. OECDGuidelinesforMultinationalEnterprises–2011edition

4. VBDO’sBusinessPartnership

5. VBDO’s(multi)stakeholderengagementprocess

29

AppendixIV:BackgroundOECDGuidelinesforMultinationalEnterprises

ContentoftheOECDGuidelines

Responsiblebusinessconduct isanessentialpartofanopen international investmentclimate.

The activities ofmultinational enterprises (MNEs) spanmultiple countries andmany cultural,

legal, and regulatory environments, which, together with the very competitive nature of

internationalbusiness,presentMNEsandtheirstakeholderswithuniqueandspecificchallenges.

Inenvironmentswhere regulatory, legal, and institutional frameworksareunderdevelopedor

fragile,someMNEsmayneglecttheappropriateprinciplesandstandardsofconductinanattempt

togainunduecompetitiveadvantage.However,moreandmoreenterprisesarerespondingby

committing to responsible business practices, promoting dialogue, and engaging with

stakeholders.1011

Aleadingglobalinstrument

OECD Guidelines for Multinational Enterprises (“the Guidelines”) is a leading international

instrument for thepromotionofresponsiblebusinessconduct inaglobalcontext, towhich42

OECDandnon-OECDcountriescommit.TheGuidelineswerefirstadoptedin1976andhavebeen

updatedfivetimessince.ThelastreviewandupdateoftheGuidelinestookplaceinMay2011.

TheGuidelinesareuniquebecausetheyarethemostcomprehensivesetofgovernment-backed

recommendations and expectations on responsible business conduct in existence today to aid

MNEsoperatingin,orfrom,adheringcountries.12

Aholisticapproachtosocietalprogress

Another feature of the Guidelines and their important contribution in the field of global

responsiblebusinessconductisthattheyaddressinaholisticmannerthetwosidesofthesame

coin. On one hand MNEs can have an undeniable positive contribution to economic,

environmental,andsocialprogressinhomeandhostcountries.Simultaneously,MNEactivities

may give rise to difficulties between the host societies and the interests of enterprises. The

Guidelinesaredevelopedincloseconsultationwithawidevarietyofstakeholders,thusensuring

thattheinterestsofallpartiesareincorporated.13

Integrationofhumanrights

Besides, the Guidelines are the first international instrument to integrate the corporate

responsibilitytorespecthumanrightsassetoutintheUN’sGuidingPrinciplesonBusinessand

HumanRights.TheGuidelinesarealsothefirstinternationalcorporateresponsibilityinstrument

to incorporate risk-based due diligence into major areas of business ethics. Moreover, being

alignedwithinternationalprinciplesandstandards(also,suchasILOconventions),theGuidelines

aboveallpromoteuniversalvalues.Assuch,theyshouldbeofinteresttoallenterprises,wherever

they originate or operate, aswell as to non-adhering countries. Also small andmedium-sized

10OECD (2013), OECD Guidelines for Multinational Enterprises - Responsible Business Conduct Matters. Available at: http://mneguidelines.oecd.org/responsible-business-conduct-matters.htm 11 OECD (2011), OECD Guidelines for Multinational Enterprises, OECD Publishing. http://dx.doi.org/10.1787/9789264115415-en 12 OECD (2011), OECD Guidelines for Multinational Enterprises, OECD Publishing. http://dx.doi.org/10.1787/9789264115415-en 13 OECD (2013), OECD Guidelines for Multinational Enterprises - Responsible Business Conduct Matters. Available at: http://mneguidelines.oecd.org/responsible-business-conduct-matters.htm

30

enterprisesareencouragedtoobservetheGuidelinestothefullestextentpossible,despitethe

limitationwhichmayoccurduetosmallercapacities.14

Activeimplementation

Lastbutnot least, theactiveway inwhichtheGuidelinesare implementeddistinguishesthem

from other international corporate responsibility instruments. In order to ensure that the

Guidelinesremainattheforefrontoftheglobalresponsiblebusinessconductagendaandisthe

leadingtoolintheever-changinglandscapeoftheglobaleconomy,theyhavebeenupdatedfive

timessince1976whentheywereoriginallyadopted(mostrecenttime–2011).Tofacilitatethe

implementationoftheGuidelinesbyMNEsNationalContactPoints(NCP)havebeenestablished,

whichalsoprovideamediationandconciliationplatformforresolvingpractical issues.Having

NCPmakestheGuidelinestheonlyinternationalcorporateresponsibilityinstrumentwithabuilt-

ingrievancemechanism.1516

Thewebsitemneguidelines.oecd.orgprovidesaccesstoinformation,toolsandresourcesrelating

to the promotion and implementation of the Guidelines and a specific instances database

(launchedin2013)whichprovidesinformationaboutthenatureandstatusofspecificinstances

submittedtoNCPs.

Responsiblebusinessconductthemescovered

TheGuidelinescoverthefollowingaspectsofaresponsiblebusinessconduct:

- Generalpolicies:thischaptercontainsspecificrecommendationstoenterprisesintheformofgeneralpoliciesthatsetthetoneandestablishaframeworkofcommonprinciplesforthe

subsequentchapters. It includes importantprovisionssuchas implementingduediligence,

addressingadverseimpacts,engagingstakeholders,andothers.

- Humanrights:Enterprisescanhaveanimpactoneveryaspectofinternationallyrecognisedhumanrights,thereforeitisimportantthattheymeettheirresponsibilities.Thisnewchapter

of the Guidelines draws on and is aligned with the UN “Protect, Respect and Remedy”

FrameworkandtheGuidingPrinciplesonBusinessandHumanRightsthatoperationalisethat

framework.

- Employmentandindustrialrelations:thischapterfocusesontheroletheGuidelineshaveinpromotingobservanceamongMNEsoftheinternationallabourstandardsdevelopedbythe

ILO.

- Environment: this chapter provides a set of recommendations for MNEs to raise theirenvironmental performance and help maximise their contribution to environmental

protectionthroughimprovedinternalmanagementandbetterplanning.

- Combatingbribery,bribesolicitationandextortion:enterpriseshaveanimportantroletoplayincombatingthesepractices.TheOECDisleadingglobaleffortstoleveltheplayingfield

for international businesses by fighting to eliminate bribery. The recommendations in the

GuidelinesarebasedontheextensiveworktheOECDhasalreadydoneinthisfield.

- Consumerinterests:TheGuidelinescallonenterprisestoapplyfairbusiness,marketing,andadvertising practices and to ensure the quality and reliability of the products that they

provide.

14 Ibid. 15 Ibid. 16 OECD (2011), OECD Guidelines for Multinational Enterprises, OECD Publishing. http://dx.doi.org/10.1787/9789264115415-en

31

- Science and technology: this chapter recognises that MNEs are the main conduit oftechnologytransferacrossborders.Itaimstopromotetechnologytransfertohostcountries

andcontributiontotheirinnovativecapacities.

- Competition:itisimportantthatMNEscarryouttheiractivitiesinamannerconsistentwithallapplicablecompetitionlawsandregulations,takingintoaccountthecompetitionlawsof

alljurisdictionsinwhichtheiractivitiesmayhaveanti-competitiveeffects.Enterprisesneed

torefrainfromanti-competitiveagreements,whichunderminetheefficientoperationofboth

domesticandinternationalmarkets.

- Taxation:TheGuidelinesare the first internationalcorporateresponsibility instrument tocovertaxation,contributingtoanddrawinguponasignificantbodyofworkontaxation.This

importantchaptercoversfundamentaltaxationrecommendations.17

ThelastfouraspectsarecoveredbynoothercorporateresponsibilityinstrumentthantheOECD

GuidelinesforMultinationalEnterprises.

BenefitsandopportunitiesformultinationalsofcommittingtotheGuidelines

Equippingenterpriseswithnecessaryknowledge

By implementationof theGuidelinesmultinational enterprises canensure coherencebetween

economic,environmentalandsocialobjectivessincetheGuidelinesofferclearerunderstanding

and convergence onwhat constitutes responsible business conduct,which is echoed in other

international standards. 18 The Guidelines provide enterprises with best practices policies

spanningacrossmostdiverseaspectsofbusinessconductandethics,andtheycomplementand

reinforceprivateeffortsofenterprisestodefineandimplementresponsiblebusinessconduct19-

followingtheGuidelinescanformasolidbasisforcompanysustainabilitystrategyandprovide

structuretoCSRstrategy.

Favourabletoriskmanagement

ByadheringtotheGuidelinesenterprisescanbetteravoidandbeproactiveregardingESGrisks

related to human rights, transparency, environment and many others mentioned in the

Guidelines.20Furthermore, responsible business conduct based on the Guidelines presents an

improvedabilitytoattractfinancing,sinceinvestorsmayseetheenterprisetobelessrisky.For

example,companiesarerequestedtosignadocumentreferringtotheOECDGuidelinespriorto

Dutchinternationaltrademissions.

Increasedtransparencyandtrustworthiness

Inaddition,theGuidelinesstipulategoodtaxgovernanceandensuringstable,

transparent,non-distortiveframeworksfortaxationatbothdomesticandinternational

levelsalsoisessentialforattractinginvestment.21

17 OECD (2013), OECD Guidelines for Multinational Enterprises - Responsible Business Conduct Matters. Available at: http://mneguidelines.oecd.org/responsible-business-conduct-matters.htm 18 Ibid. 19 OECD (2011), OECD Guidelines for Multinational Enterprises, OECD Publishing. http://dx.doi.org/10.1787/9789264115415-en 20 OECD (2013), OECD Guidelines for Multinational Enterprises - Responsible Business Conduct Matters. Available at: http://mneguidelines.oecd.org/responsible-business-conduct-matters.htm 21 BIAC, 2015. International taxation and BEPS. Available at: < http://biac.org/focus-areas/international-taxation/ >

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