The OECD guidelines for Responsible Business Conduct (RBC) already stated it, but now the European Parliament is also convinced. If an organization has a trade relationship with another organization in a RBC-risk country, it is mandatory to take measures.
Globalization has brought many large and important developments. But we now know that quite a few abuses have also arisen. With the voluntary RBC guidelines for international business that were already adopted by the OECD countries more than 10 years ago, an attempt has been made to put an end to these abuses. Multinationals in particular have committed themselves to these guidelines. The Dutch government has now set the goal of having 90% of large companies operating internationally endorse the guidelines by 2023. The number of companies that endorse these guidelines in 2020 is 35%.
That low percentage was one of the reasons for submitting an initiative memorandum in the Dutch Parliament House in 2020, aiming to make CSR / RBC mandatory for businesses. The minister endorses the memorandum’s conclusions and foresees an EU approach. And now that the European Parliament passed the resolution “Corporate due diligence and corporate accountability” in March 2021, the outlines are becoming increasingly clear. Add to this that the new EU Taxonomy for sustainable entrepreneurship has named the OECD guidelines (minimum safeguards) as 1 of the 3 core components, and we know that the non-binding nature of CSR will disappear.
It is important to understand that this is not only about multinationals, but that large SMEs will also have to deal with this. Every organization with international trade relations will have to perform a CSR risk analysis and take measures if necessary. The new regulations are currently being elaborated. It may take a year or more for it to take effect. For example, it remains to be determined how to deal with the proportionality issue. Suppose an organization has a trade relationship with an RBC risk country, but the trade value is <10% of the total turnover. What is expected of such an organization? The rules for this are still being developed. Part of the rules of the game will be the use of ‘Due Diligence’ of the Responsible Business Conduct (RBC): in other words, the control process.
Waiting for the new regulations?
The decision an organization must make is when to start. Changing regulations are not the only reason for doing responsible business. Of course, the moral assessment has to be made here, which will differ per organization. The vast majority of companies want their negative impact on people and the environment to be as low as possible. But there are also 3 financial reasons for doing more on CSR. Firstly, it will provide a better insight into the supply chain. Not only in terms of purchasing costs and selling prices, but also more insights of the local market. Imagine your organization buys a semi-finished product from an Asian manufacturer. Crucial for your end product. Better systematic insights into social, environmental and economic dependencies enables an organization to anticipate changes of any kind.
In addition, a CSR positioning is increasingly interesting, both in a B2B and a B2C market. This way of distinguishing attracts different types of customers, while existing customers feel reinforced about their choice. The green or social effects of a product or service are only credible if the CSR aspects are safeguarded.
The last reason relates to the bottom-line results. Organizations with Corporate Social Responsibility have a better long-term financial performance on average. So short-term expenditures make for a long-term profit. And that is what our client RVO, together with MVO Nederland, has now made even easier. There is a 50% subsidy for a risk analysis in the chain. And even the advice on the proposed measures receives this subsidy. Up to a maximum of € 10,000, the EMPACT advisory report is reimbursed. However, the organization may not be the owner of the foreign trading partner and belong to (large) SMEs. With this offer, RVO and MVO Nederland ensure that even short-term costs are limited, so that long-term costs can fall.
Interested? Send an email to email@example.com for a free of charge consult.