'Sustainable Trade: Taking Responsibility'
Speech by the Netherlands Minister for Foreign Trade, Frank Heemskerk, at the 'Accelerating Sustainable Trade' Conference, Haarlem, 2 November 2009
Your Excellency, ladies and Gentlemen,
I'm glad to see so many of you have gathered here today around a common goal: accelerating sustainable trade.
It's also good to see so many new faces. Not only the "usual suspects". To seriously accelerate sustainable trade, we need to increase the number of people and organizations involved. We have many companies who excel in sustainability. But we also need to convince more mainstream companies - both large and small.
Corporate social responsibility - or CSR - is not a hype, nor my hobby horse. The crisis has made it painfully clear what happens when the short-term profit motive wins out over responsible and sustainable trade.
There are four main topics I want to discuss today with you:
- Firstly, the importance of Corporate Social Responsibility;
- Secondly, what my government is doing;
- Thirdly, what individual companies can do;
- And I will end with a plea to our social partners to help mainstream companies speed up CSR.
CSR: Protection, respect and access to remedies
Ladies and Gentlemen,
You cannot lay the responsibility for fair trade exclusively at the feet of companies. Government and civil society also bear part of the responsibility. But who is responsible for what? To clarify things I'd like to refer to Professor John Ruggie, the United Nations' special representative on business and human rights.
John Ruggie takes a three-tier approach:
- states have the duty to PROTECT,
- companies have the duty to RESPECT,
- and victims of abuses must have ACCESS to REMEDIES.
Protection, respect and access to remedies. I think the Ruggie approach must be broadened. It is a useful framework when talking about CSR.
New initiatives by the Dutch government
Let me turn to three new initiatives by the Dutch government to fulfill its "duty to protect". First, the Dutch government would like to set a good example by being an international leader and requiring government procurement to be 100 percent sustainable starting in 2010. The government has an important role as a purchaser.
Secondly, I am currently investigating whether Dutch parent companies can be held legally responsible in the Netherlands for violations of internationally recognized human rights, labor and environmental standards by their foreign subsidiaries. To give you a concrete example: can Indian, Nigerian or Columbian victims of international human rights violations take legal action in Dutch courts? I am not saying that it should be able to. But I do think it's important to look into this question and explore international best practices.
Thirdly, the government can give guidance and information to companies. In the case of child labor, we look at a list prepared by the Americans of high-risk products. These are products where it is very probable, depending on their country of origin, that the product was made using child labor or other forced labor. I am looking at how to translate that US best practice to the Dutch situation. And with that I do not mean only translate -- that would be very easy - but adapt the list to the Dutch situation in order to provide more guidance to companies.
The government also helps companies to implement CSR via the CSR Netherlands organization - MVO Nederland -- and the Sustainable Trade Initiative, for example.
What can companies do?
So the Dutch government is doing a lot, but the companies themselves must ensure that they practice CSR and embed supply chain responsibility in their business practices.
Let me be very clear. The Dutch business community has a very good reputation internationally for CSR. And rightly so. I often proudly mention to people both at home and especially abroad that Triodos Bank has been named the world's most sustainable bank; that KLM, Unilever, AkzoNobel and Philips all top the Dow Jones Sustainability Index. I am very proud that Dutch multinationals head 4 out of 19 sectors; and several members of Global Compact Netherlands are examining ways to make their companies "John Ruggie-proof."
Not only multinationals, also small and medium-sized enterprises, and sector organizations such as the Dutch Procurement Management Association, or 'NEVI', are also taking steps towards sustainable enterprise. NEVI has literally put CSR on the map for its members by jointly creating an imaginary roadmap to sustainable behavior - 10,000 copies of which have already been distributed.
Let me be clear again: I don't expect small or medium-sized enterprises to change the world. They do not have to behave like NGO's or political parties - the government has to play that role --, but I do expect them to think about the impact of their business activities and the - most likely small - steps they can take.
Supervisory boards also play an important role in CSR. Board members have not only a supervisory role, but also a driving role - particularly when it comes to CSR.
I am working on a practical guide describing how they can link Executive Board remuneration, bonuses, to company performance on sustainability - in other words, a long-term focus. One of the pioneers in this area is AkzoNobel, where all management remuneration is tied to the company's position on the Dow Sustainability Index! In the Netherlands, some people have protested against high bonuses. I fully support a high bonus if it is linked to sustainability. And I am very happy that Hans Wijers and his team do get bonuses for being a global leader in sustainability.
There is more mainstream business can do
Ladies and Gentlemen,
As you can see, a lot of Dutch companies are already doing a great deal. But the mainstream can and should do more.
We have chosen not to lay down CSR in law. But that choice cannot be seen separately from the agreements made by employers and employees in the Social and Economic Council of the Netherlands (the SER) to give CSR international a real push. This initiative was in response to the urgent pleas for a law on openness about supply chains. For the Dutch audience, the WOK (Wet Openbaarheid Ketens).
The taking up of the challenge by the employers and the employees' organizations was and is essential. Because despite the excellent results of the frontrunners, Dutch companies score an average of just 1.7 on a scale of 1 to 10 in providing information about their supply chains. This means that many companies either have inadequate knowledge about their supply chain, or do not inform society about what happens in their supply chain. This can and must be improved. I don't know about you, but my father and mother would NOT have been very happy if I had come home from school with a 1,7 … And this figure comes from an independent source, the transparency benchmark.
I had and still have a great deal of admiration for the SER Initiative. I know the first SER progress report was published less than a year after the initiative. But still, it has been disappointing. I still cannot see either any concrete ambition or actual progress from reading the report. There is no plan of action. There are no concrete objectives. This means that the first SER progress report left me disappointed. Unfortunately, the added value of the SER initiative remains unclear.
I believe that the initiative can be deepened by a more open dialogue with stakeholders such as NGOs to involve civil society in the initiative.
I want the social partners themselves to keep the initiative. That is why I am asking them to put forward a plan of action.
Conclusion
Ladies and Gentlemen,
We all realize that CSR and responsible supply chain management are essential. We all realize we need to accelerate sustainable trade now. I want to add a more personal argument as minister for Foreing Trade: if we don't, we risk endangering public support for open borders and free trade.
Even in the Netherlands, the support for open borders and globalization is decreasing. But protectionism is wrong. International trade is by far the most important factor for economic recovery. It is the key to future prosperity and the surest way out of poverty.
So if we want to increase support for globalization, we need to make clear not only what goods are produced, but also how they are produced. We need to show that international trade and foreign investments do not lead to a race to the bottom. On the contrary, they often lead to higher international standards. And that helps us gain public support for globalization.
I am very enthusiastic about the many positive initiatives and results that companies are showing in embedding CSR in their business activities internationally. We do have many frontrunners. But there are still many companies that can and must do more to fulfill their duty to respect.