Netherlands Proposal for a Responsible and Sustainable Business Conduct Act

Governmental Agency: Dutch Government
Jurisdiction: Netherlands
Ref no: 35 761
Status: IN REVIEW

In March 2021, the Netherlands proposed an Act for Responsible and Sustainable Business Conduct. The amends were based on the release of the EU Corporate Sustainability Due Diligence Directive as well as due to changes proposed through the Dutch parliamentary process.

The bill intends to impose a due diligence duty of care on all EU established companies know or reasonably can suspect that its activities or its business relationships' activities may have adverse impacts on human rights or the environment in countries outside the Netherlands. Where adverse impacts are identified, the company must:

- Take all measures that can reasonably be requested from it to prevent such impacts;
- Where impossible, mitigate or reverse these impacts as much as possible, and, where necessary, remedy such impacts; and
- Where the impacts cannot sufficiently be mitigated, terminate the activities (as can reasonably be requested by the company).

Key social and environmental impacts forming part of the duty of care include restriction of the freedom of association and collective bargaining, discrimination, forced labour, child labour, climate change, environmental damage, unsafe working conditions, violation of animal welfare regulations, slavery and exploitation.

Companies that know or reasonably suspect their activities, or those of supply chain partners, might have negative impacts on human rights or the environment in countries outside the Netherlands would be required to take measures to prevent those impacts, offer remediation if they are unable to do so, or end the offending activities. If implemented, the bill would be phased in over a 12-month period.

• Which Businesses Will Be Impacted?

  Under the proposed legislation, companies that meet two of three threshold conditions:
  
  1) a balance sheet of at least €20 million
  

  2) a net turnover of at least €40 million

  3) an average employee count of 250 or more
  
  would be required to implement robust due diligence policies.

  For those obligated businesses, the implementation and operation of all necessary systems to monitor, address & report on corporate responsibility are likely to result in increased costs - in particular for those smaller entities that may not already have such systems in place. Those that do not comply with the legislative requirements may result in penalties. Equally, for those who, through these measures, are found to have issues with regard to their corporate social responsibility, there may be additional reputational issues.

• Latest Update

  As of February 2024, the bill remains in the proposal stage, with the most recent amendments to its language being made in January 2022.

Further Information | Legislation Site