The OECD guidelines for CSR already stated it, but now the European Parliament is also convinced. If an organization has a trading relationship with another organization in a CSR risk country, it will be required to take action.
Globalization has brought about many great and important developments. But we now know that quite a few abuses have also occurred. The voluntary CSR guidelines for international business adopted by the OECD countries more than 10 years ago have tried to put an end to these abuses. Multinationals in particular have committed en masse to these guidelines. Meanwhile, the Dutch government has the goal of having 90% of large (SME) companies operating internationally subscribe to the guidelines by 2023. The number of companies subscribing to these guidelines by 2020 is 35%.
That was one of the reasons for the submission of an initiative note in the House of Representatives in 2020, for an obligation of IMVO. The minister agreed with the conclusions of the note and envisions an EU approach. And with the European Parliament adopting the resolution “Duty of Care and Corporate Accountability” in March 2021, the contours are becoming increasingly clear. Add to this that the new EU Taxonomy for Sustainable Business, has named the OECD guidelines (minimun safeguards) as 1 of 3 core components, and we know that the non-committal nature of IMVO will disappear. 
It is important to understand that this is not just about multinationals, but that (large) SMEs will also have to deal with this. Every organization with international trade relations will have to start performing a CSR risk analysis and take measures if necessary. Currently, the new regulations are being worked out. It could be a year or more before it comes into effect. For example, how to deal with the proportionality issue has yet to be determined. Suppose an organization has a trade relationship with an IMVO risk country, but trade value is <10% of total turnover. What is expected of such an organization? The ground rules for this are still being developed.
Waiting for the new regulations?
The consideration an organization must make is when to start. Changing regulations are not the only reason to adopt International Corporate Social Responsibility. Of course, there is the moral trade-off here, which will vary from organization to 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 business reasons to do more IMVO. First, it will provide a better understanding of the supply chain. Not just in terms of purchasing costs and selling prices, but especially more insight into the local market. Suppose your organization buys a semi-finished product from an Asian producer. Crucial to the final product. Better systematic understanding of the social, environmental and economic dependencies enables an organization to anticipate changes of any kind.
In addition, CSR positioning is increasingly interesting in both a B2B and B2C market. This way of differentiating attracts other types of customers, while existing customers feel confirmed for their choice. The green or social impacts of a product or service are only credible if there is an assurance of the CSR aspects.
The last reason relates to bottom-line results. Organizations that practice Corporate Social Responsibility on average have better long-term financial performance. So short term expenses create long term profits. And that is what our client RVO together with MVO Nederland has now made even easier. There is a 50% subsidy on a risk analysis in the chain. And even the advice on the proposed measures get this subsidy. Up to a maximum of € 10,000, Empact’s advisory report is reimbursed. However, the organization must not be the owner of the foreign trading partner and must belong to the (large) SME. With this offer RVO and MVO Netherlands ensure that even the short-term costs are limited so that the long-term costs can decrease.
Want to know more? Email martin.dejong@empact.nu for a no-obligation consultation.