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Addressing Sector-Wide Risks Through Negotiated Covenants in the Netherlands

Shift is supporting the Dutch Ministries of Foreign Affairs and Economic Affairs as part of a process to engage leading Dutch business sectors in developing sector-based covenants to address “international CSR” risks.

July 2015

PARTNERS: Dutch Ministry of Foreign Affairs; Social and Economic Council of the Netherlands

UPDATES: Three agreements have now been signed as part of this process: garment and textile sector, March 2016 | banking sector, October 2016 | gold sector, June 2017

Shift is pleased to be providing expert support to the Dutch Ministries of Foreign Affairs and Economic Affairs as part of a process to engage leading Dutch business sectors in developing sector-based covenants to address “international CSR” (ICSR) risks. ICSR risks include risks to human rights (including labor rights), environmental impacts, impacts related to corruption and taxation practices and other negative impacts covered by the OECD Guidelines for Multinational Enterprises and the Guiding Principles.

“In our work on fostering sustainable supply chain management among Dutch industry, Shift has been extremely helpful in elevating the policy discussion and business practice in the area of business and human rights. The Shift team’s unique combination of strategic policy advice and practical experience with companies and other stakeholders has been invaluable to our work.” - Mariëtte Hamer, President, Social and Economic Council of the Netherlands

The Dutch government will support the development of sector-based covenants with Dutch sector associations. The covenants are intended to be the product of multistakeholder dialogue between sector associations, member companies, government, trade unions and civil society organizations, through which sector associations identify leading ICSR risks facing their sector and develop collaborative approaches to address them.

This work is being undertaken in close collaboration with the Social and Economic Council of the Netherlands (SER), the advisory and consultative body of employers' representatives, union representatives and independent experts that has been fostering sustainable supply chain management among Dutch industry since 2008. | See our explanatory note on prioritization of human rights risks prepared for the SER

In 2011, the Dutch government committed to undertake a sector risk analysis in its policy paper “CSR Pays Off.” The resulting analysis, prepared by KPMG, was submitted to the Dutch Parliament in September 2014, with an accompanying letter from the Minister for Foreign Trade and Development Cooperation and the Minister of Economic Affairs. The report explores ICSR risks in 13 sectors: agriculture, chemicals, construction, electronics, energy, finance, food, metals, oil and gas, retail, textiles/apparel, wholesale and wood and paper products.

For the covenants to be perceived as credible, sector associations and their stakeholders will need to align their approaches with the guidance included in the SER’s Advisory Report on the substance of the covenants and process for developing them. That guidance expects the covenant processes to:

  • Use credible methodologies, aligned with leading international frameworks, for identifying sector-wide human rights, environmental, corruption and other ICSR risks; 
  • Identify collaborative approaches to building and exercising the leverage of sectors and their stakeholders to address such risks;
  • Involve relevant stakeholders in credible, dialogue-based multistakeholder processes.

The primary objective of Shift’s support is to build the capacity of all parties to play their envisioned roles as leaders, participants and conveners of a credible process aiming to assess and address sector-wide ICSR risks. This support includes workshops for a number of sector associations, together with expert stakeholders, held in The Hague and hosted by the SER. | Learn more about how Shift facilitates multistakeholder dialogue on business and human rights

Additional information about this project is available in the official magazine of the Social and Economic Council of the Netherlands (Dutch only).

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