Leading the way in sustainability is not a luxury, but a dire necessity

For years, the Dutch government has been supporting voluntary international corporate responsibility covenants and efforts have been made to develop methods for companies to measure and reduce their global footprint. The lack of real tangible progress shows the failure of these forms of self-regulation. It is time for binding laws and regulations. The proposed law on responsible and sustainable international business (initiatiefwet verantwoord en duurzaam internationaal ondernemen), which will be officially discussed in the House of Representatives this week, offers opportunities for internationally operating businesses to become more sustainable more quickly.

Header photo: Deforestation Madre de Dios, Peru (c) Tom Laffay

The ‘mandatory duty of care’ that has been included in the proposed law is of great importance to ensure that companies investigate negative impacts on human rights, the environment and climate in their supply chains, and that they combat or prevent abuses. The proposed law thus follows the OECD guidelines that have been in force since 2011, albeit that they are voluntary.

In Brussels, work is currently underway on regulations related to responsible and sustainable international business for the entire European Union. But this process is slow and whether the result will be satisfactory is still uncertain. Given the acceleration in climate change and loss of biodiversity, it is important that Dutch companies will be obliged by the new legislation to improve their international activities. Business models with a negative impact on people, nature and the climate are still flourishing, and even receive government support. Examples of unsustainable revenue models with a major negative impact are trade in fossil fuels and irresponsible mining.

Countering unsustainable trade

As an internationally oriented economy, the Netherlands needs to make a proportional contribution to the international climate and biodiversity goals. There is a growing realization that the continued existence of revenue models that harm human rights, exacerbate climate change and cause loss of biodiversity makes the transition to a sustainable society impossible. In the long term, any business model that is unsustainable will collapse. But the companies that lead the way in sustainable business are dealing with an uneven playing field, in which companies with lower ambitions are still rewarded. This perverse incentive, among other things, ensures that many companies are disturbingly slow to take their responsibility.

This is signaled not only by civil society organisations in the Netherlands, but also by international institutes. International authorities such as the Intergovernmental Panel on Climate Change (IPCC) and the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) advocate an “urgent, transformative change” of the economy.

The need for binding legislation

Would binding legislation hurt the Netherlands economically? Certainly not. Other European countries (Germany, France, United Kingdom and Norway) have reached similar conclusions. They do not wait for the slow European policy-making process and introduce legislation independently. This is not about radical innovation, but about formalizing long-standing international guidelines that almost all economic sectors already subscribe to.

Legislation should propel companies to improve their business models. This will be advantageous to them in the long term, if only because the Netherlands has committed itself internationally to phasing out subsidies and credits for harmful activities over the next seven years. Acceleration is not a luxury, but a bitter necessity.

This is the approximate translation of an opinion piece that was shared with the standing parliamentary committee on Foreign Trade and Development Cooperation. The following organizations signed the opinion piece and the letter: IUCN NL, Naturalis, Natuur & Milieu, Rewilding Europe, Tropenbos International, WWF-NL.