Research report: Dutch listed companies must take more responsibility for negative externalities of their business activities

News · 26-10-2021

Dutch listed companies must take responsibility for the negative effects that their business activities and supply chain have on people and planet by aligning their business strategy more formally with planetary boundaries. This is not only about fighting dangerous climate change, but also, for example, about counteracting the loss of biodiversity and the need to think and act circularly.

This is one of the main recommendations of the research report commissioned by Eumedion and carried out by Maastricht University (MU) regarding the sustainability embedding practices in Dutch listed companies. MU examined the 2020 annual reports of 35 Dutch listed companies and interviewed 97 executives, supervisory directors and senior managers of these companies. The MU research report was published today and will be officially presented and discussed at the Eumedion annual conference that will be held on 2 November 2021.

The study shows, among other things, that the Dutch listed companies regard sustainability more as an opportunity than a risk. Many companies do not communicate (much) about sustainability risks, such as waste, climate change and human rights issues, in their risk management sections. The researchers also recommend that companies make their purpose statements more clear and meaningful and to connect them to their strategic objectives and targets. Furthermore, the study shows that the subject of sustainability is still barely embedded in the skill profiles of new supervisory directors. In addition, companies communicate little about any required sustainability competencies for executives. This is in spite of the fact that management literature indicates that executives in particular have a major influence on the creation of a corporate culture that supports both the strategic sustainability objectives and the financial performance of the company. Finally, the researchers recommend professionalising and better structuring the dialogue with the various stakeholders and reporting on it more extensively. According to the researchers, companies should inform stakeholders much better about due diligence procedures, the reliability of the reported non-financial information, sustainability measures in incentive schemes and key performance indicators with regard to waste, water and business travel.

Preliminary Eumedion comments

According to Eumedion, the research report provides a good picture of how sustainability is embedded within Dutch listed companies. What is positive is that many companies have already included specific sustainability objectives in their strategy, and are willing and able to be held accountable for this. Moreover, they see plenty of opportunities to earn money with sustainability. At the same time, companies generally still pay too little attention to tackling the ecological and social externalities of their business activities. In particular, they are not yet addressing the transition to a circular economy and the protection and restoration of biodiversity. In addition, the subject of sustainability is not yet explicitly embedded in the diversity and competence matrices for executive and supervisory board members. The MU researchers make clear and practical recommendations in these areas, which Eumedion embraces. Some of these recommendations have already been included in the 2022 Eumedion Focus Letter that was sent to the Dutch listed companies and Eumedion will include the other recommendations in the dialogues that will be held with the Dutch listed companies prior to the 2022 shareholders’ meetings. The fact that the listed companies are currently using almost 50 different reporting frameworks for sustainability information underlines Eumedion's commitment to achieving a uniform and authoritative reporting framework for sustainability information at the highest possible international level. 

Relevant documents

Maastricht University research report