So there is still an answer when the business community calls to The Hague. Peter Berdowski, CEO of dredging company Boskalis, had complained at the beginning of this year that such a phone call was pointless. “The shutters in The Hague close everywhere if a company such as Boskalis reports with real concerns,” he said in it FD.
According to Berdowski, one political proposal illustrated the loosened policy reality in The Hague like no other: ICSR, a six-party initiative law to make Dutch companies legally responsible for their business activities abroad.
Child labor in a garment factory in Bangladesh? Illegal logging via a subcontractor in the Amazon? A Dutch company would no longer be able to get away with this because of this proposal. This could have major consequences for companies such as Boskalis, which helps with the construction of oil pipelines and the extraction of land from the sea, for example. There is a risk that human rights and sustainability agreements will be violated somewhere in the chain.
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This week, the law came to a screeching halt, after VVD ministers Liesje Schreinemacher (Foreign Trade) and Micky Adriaansens (Economic Affairs) pulled the brakes. Adriaansens wrote that ‘the government does not want our business community to fall behind compared to competitors across the border and elsewhere in the EU’. Schreinemacher was concerned that the Netherlands and other countries “are not acting together”.
The law has not yet died: Schreinemacher and Adriaansens had to swallow their words quickly and apologized. But Berdowski can be satisfied. He had already alluded to a departure from the Netherlands. In an interview in The Telegraph in 2021 he had expressed his concerns about the whole ‘corporate social responsibility’, and about the Dutch plan to stop financially supporting international fossil energy projects. Then it remained silent.
But now it’s 2023, it’s election time and corporate anger has clearly spilled over into politics. At the beginning of February, a cabinet delegation at war strength – seven ministers and one state secretary – received the business community in the Catshuis. That day leaked through RTL News explains that Prime Minister Mark Rutte was furious with Finance Minister Sigrid Kaag (D66) when he expressed his concerns about the business climate. Not bad advertising, the VVD must have thought.
Influential yet surprising
Around the time Berdowski first announced his departure, at the end of 2021, CDA MP Mustafa Amhaouch requested a debate on the business climate. At the time, Shell had just announced that it would move its headquarters from the Netherlands to the United Kingdom. The debate was postponed again and again and finally took place on Thursday: it was an additional sign that the subject is in the spotlight. And it became clear how much dissatisfaction has swelled.
VVD MP Pim van Strien spoke of ‘a tipping point’ and therefore pleaded for a ‘location climate agreement’. “We have to act now, otherwise it will tilt in the wrong direction.” On the right, criticism of the political attitude towards companies was widely shared. “Under the surface, the hairline cracks are starting to become visible in the foundation,” said Mustafa Amhaouch, the CDA member who had requested the debate. “That requires quick action.”
The political mistake with the dividend tax, more than four years ago, suddenly felt far away. Rutte III first wanted to abolish that tax, although that intention was not included in any election program. The business climate benefited, Prime Minister Rutte said. Only after months of commotion did he withdraw the plan. Nobody wanted to talk about the business climate. Until now.
‘Free fall’
What has changed? Quite a lot, according to CEOs like Berdowski and also according to Ingrid Thijssen. The chairman of employers’ organization VNO-NCW wrote an opinion piece last year NRC that the Dutch business climate had entered a ‘free fall’. She is also fierce about the IVMO, the law that obliges corporate social responsibility, as an example of meddling that drives companies away.
In her opinion piece, Thijssen pointed to four fundamental bottlenecks. Education had to be improved, the Dutch tax climate certainly did not have to be ahead of the European average, the infrastructure of KLM and Schiphol had to be preserved and the government bureaucracy could be improved.
But a deeper unease could be heard between the lines: companies feel surprised. And adjusting is hard if you’ve missed the signals. That is more than a simple power issue. The employer lobby does remain influential, even if it is not always immediately visible.
For example, it can be heard in The Hague that VVD and CDA only started to think fundamentally differently about climate politics after VNO-NCW had made the switch. The result can be seen in the coalition agreement of Rutte IV: climate policy that sets high goals, but rather subsidizes companies for them than punishes them.
It is the art of the shareholder and the surfer that also makes the corporate lobby so successful: carefully feeling how the waves move and stepping in at the right time to keep control for an optimal result. And so VNO-NCW no longer openly argues for ultra-low taxes and instead advocates climate policy, preferably business-friendly. When the waves change direction, you sway along. That is precisely where things went wrong with the law that requires sustainable and socially responsible entrepreneurship. The companies had absolutely not expected that this law would come into force. A year and a half ago, it still seemed that the same law had been expertly rendered harmless.
Behind-the-scenes diplomacy was replaced by a vigorous media offensive
At that time, the House of Representatives had been working towards a law for years, in fact since hundreds of workers died in 2013 when the Rana Plaza clothing factory collapsed in Bangladesh, where a number of European brands also had trousers, dresses and shirts manufactured. A first advisory committee, employed by the Social and Economic Council, had already drawn up an ambitious proposal whereby the Netherlands would not wait for European procrastination and would come up with legislation itself.
The idea was simple: consumers find it difficult to obtain information and quickly opt for the lowest price. You can hardly expect companies to take the initiative on their own if the rest does not participate. If you make it compulsory, everyone will participate.
But in the final advice of the Social and Economic Council, the sharp edges of the proposal were polished: Europe could solve it better. This turnaround was thanks to VNO-NCW and the trade unions, who followed along and determined the final advisory text, so reconstructed de Volkskrant later on.
CEO in jail
Only: that was excluding outgoing minister Tom de Bruijn (Foreign Trade, D66). In the aftermath of Rutte III, he saw how European attempts to arrive at a comparable directive were not progressing and decided in December 2021 that the Netherlands should start pioneering after all.
The law that would be used for this, his successor Schreinemacher decided, was the initiative law that had already been prepared by the House. It came from six parties: D66 and ChristenUnie, two coalition parties, and also SP, PvdA, GroenLinks and Volt.
The business lobby suddenly eluded the initiative. Behind-the-scenes diplomacy has been traded in recent weeks for a full-blown media offensive. “If something goes wrong with a supplier of a supplier of a supplier in Nigeria, you as a CEO may go to jail,” said Ingrid Thijssen at the table at the talk show. On 1.
According to proponents, the proposal is formulated in such a way that there can be no question of prison sentences, but that does not allay the fears: VVD member Van Strien started the debate again on Thursday.
Political toy
The initiators behind the law meanwhile see how their proposal has become a political plaything due to the actions of the VVD ministers and the large business lobby, the subject of a debate about the state of the entire Dutch business community.
“Companies should not underestimate what they can do to improve the conditions in which people work,” sighed a disappointed Stieneke van der Graaf (CU) in NRC. In her eyes, opponents of the law “really paint a ghost image.”
Read also: Sustainable business law not yet over, despite VVD criticism
Berdowski and Thijssen cannot yet celebrate that the law has broken down. The legislative process by the House has yet to formally begin. Nevertheless, the discussion that the law initiated already marks the return of the business climate as an untainted subject in the political arena.
Something stands out about this. Most of the problems raised by VNO-NCW affect many more groups than Dutch and foreign investors. On the eve of the parliamentary debate, the organization and MKB-Nederland once again drew up a list of points of concern. The quality of education again scores high, as does the nitrogen deadlock, the housing shortage and the inadequate capacity of the power grid. Each and every one of these are subjects on which the cabinet still has a lot of work to do, according to all parties.
But it is difficult to show quick results when it comes to finding solutions to those problems, unlike when blocking an initiative law.
A version of this article also appeared in the newspaper of February 18, 2023