Dutch company law can contribute to sustainability if those adversely affected by companies are given a role. This is the conclusion of research by legal scholar and attorney-at-law, Jaron van Bekkum. He has developed an idea to give those adversely affected access to the Enterprise Chamber through a societal enquiry proceeding.
Concern about the negative impact of businesses on people and the environment has, since 2020, led to a debate about whether Dutch company law should also be used to reduce that impact. Van Bekkum: ‘The debate quickly became polarised between outspoken supporters and opponents, resulting in a stalemate. My research aims to take the debate a step further.’
No fundamental obstacle
Van Bekkum: ‘The research shows that there is no fundamental reason why Dutch company law cannot be used to limit the adverse effects of business activities. The question is, however, whether this can be effective through rules that seek to encourage directors, supervisory directors or shareholders to act sustainably of their own accord.’
One example is the proposal to add to the statutory duties of the board that it should pursue sustainable long-term value creation or socially responsible conduct. ‘Such a rule can only work effectively if the people within the company concerned are genuinely willing and able to do so. There is reason to doubt this,’ says Van Bekkum.
‘A more effective alternative would be to give those adversely affected themselves the opportunity to assert their interests before the Enterprise Chamber. This could be done on the basis of the principle of proportionality and within the established public-interest inquiry procedure,’ Van Bekkum argues.
Responsibility for negative externalities
The research also provides a clearer picture of the responsibility of companies and those who manage them for making the economy more sustainable. According to Van Bekkum, this responsibility is at least a negative one: ‘Companies should do as much as possible to prevent their business activities from having disproportionate adverse effects on others.’
Dutch company law can help give concrete form to this responsibility. Van Bekkum believes, however, that it would be unwise to use the term ‘sustainability’. ‘The term is unclear and far too broad in normative terms. A better approach would be to limit the responsibility within Dutch company law to preventing disproportionate negative externalities. This approach leaves entrepreneurial freedom as intact as possible. That is important for the production and distribution of wealth, while at the same time allowing the sharpest edges of entrepreneurial freedom to be moderated. It also prevents excessively high moral expectations being placed on companies.’
Research based on a literature review
The research was conducted on the basis of a literature review. It is not multidisciplinary in design, but it does contain multidisciplinary elements.