The Dutch government has introduced the Wet Internationaal Verantwoord Ondernemen (WIVO), a legislative proposal that transposes the European Corporate Sustainability Due Diligence Directive (CSDDD) into Dutch law. Stakeholders are invited to provide feedback on the draft until December 29, 2024. This proposal builds on the European directive to ensure that companies take accountability for their impact on human rights and the environment throughout their value chains. By embedding the CSDDD into national legislation, the Netherlands aims to take a leading role in advancing responsible business practices.

While the Corporate Sustainability Reporting Directive (CSRD) and the CSDDD/WIVO share the overarching goal of promoting sustainable business practices, the two frameworks differ significantly in focus. The CSRD primarily targets transparency by requiring companies to report on environmental, social, and governance (ESG) factors. By contrast, the CSDDD and, by extension, the WIVO mandates concrete action. Businesses must go beyond disclosure and take steps to identify, assess, and mitigate risks while addressing any harm caused by their operations or value chains.

This article is written by Iman Zalinyan ([email protected]) and Sefa Geçikli ([email protected])i. Iman and Sefa are both part of RSM Netherlands Business Consulting Services with a focus on Sustainability and Strategy.  

How has the Netherlands' Corporate Social Responsibility policy evolved over time?

The Netherlands' policy on International Corporate Social Responsibility (IMVO) has evolved significantly since 2013, reflecting lessons learned and shifting priorities. Initially, the approach relied heavily on voluntary measures, with a focus on fostering collaboration among governments, companies, and civil society organizations through IMVO covenants. These covenants were voluntary agreements designed for high-risk sectors such as garment manufacturing, mining, and agriculture. Their primary aim was to raise awareness of risks within global value chains and to encourage cooperation among stakeholders to address these issues.

While the sectoral covenants played an important role in initiating discussions and fostering partnerships, studies showed that they did not lead to sufficiently tangible changes in companies’ supply chain practices. Despite raising awareness, the voluntary nature of the policy proved inadequate in achieving the systemic behavioral changes needed to tackle risks effectively. Recognizing these shortcomings, the Dutch government shifted its strategy in 2020, informed by advice from key advisory bodies such as the Social and Economic Council (SER) and the Advisory Board on Regulatory Burden (ATR), as well as evaluations and research findings.

The revised policy adopted a mix of voluntary and mandatory measures designed to complement and reinforce each other. This balanced approach seeks to combine the flexibility and cooperative potential of voluntary initiatives with the accountability and enforceability of binding regulations. A cornerstone of this new strategy is the introduction of a broad due diligence obligation, requiring companies to assess and address human rights and environmental risks across their value chains.

Mandatory measures, including legislation, have become a central element of this policy shift. Binding requirements are viewed as a way to set a minimum standard for corporate behavior, ensuring that companies take meaningful steps toward sustainability and responsibility. By creating a clear and consistent baseline, legislation aims to encourage enterprises to integrate responsible business practices into their operations more effectively than voluntary measures alone could achieve.

In this way, the Netherlands' IMVO policy has moved toward a more structured and effective framework. This evolution reflects a growing recognition that while voluntary measures have their merits, they must be supported by binding obligations to drive the systemic change required for sustainable and responsible corporate conduct, which will realize via WIVO.

Who Does the WIVO Apply To and When?

The WIVO introduces a phased approach to implementation, starting in 2027 with the largest companies with more than 1,000 employees and a net turnover exceeding €450 million. By 2029, the law will apply to companies with more than 3,000 employees and a net turnover above €900 million worldwide. Importantly, the WIVO’s scope is not limited to Dutch or European businesses; non-European companies generating significant revenues within the European Economic Area (EEA) are also covered, ensuring a level playing field across the market.

A premise of the directive is that if companies apply due diligence, this will have a positive impact in the value chain. The obligations in the directive broadly correspond to the six steps of the due diligence process as defined in the OECD guidelines. The European Commission will issue guidance by 26 January 2027 that will provide further interpretation on the due diligence obligations. Due diligence is a six-step process by which companies identify their value chains and the actual or potential adverse impacts on human rights and the environment in order to prevent, mitigate or eliminate these potential and actual adverse impacts and communicate about them.

Therefore, the legislation requires businesses to integrate risk-based due diligence into their core policies and management systems. Unlike the CSRD, which stops at reporting requirements, the WIVO enforces action. Companies must prevent and mitigate risks, implement corrective measures, and, where necessary, provide remedies such as financial compensation for harm caused. Regular monitoring and evaluation are essential, with an annual review to assess the effectiveness of these measures.

The current structure of The WIVO is as follows:

Enforcement and Collaboration: Ensuring Compliance with the WIVO

The Dutch Authority for Consumers and Markets (ACM) will act as the enforcement body, overseeing compliance with the WIVO. The law empowers the ACM to impose administrative penalties for non-compliance, including fines of up to 5% of a company’s annual turnover. In addition, civil liability can be invoked if a company neglects its due diligence obligations. This combination of administrative and civil enforcement highlights the seriousness of the WIVO’s mandate.

The WIVO also encourages collaboration among companies. Businesses may share resources and information under specific conditions to meet their obligations collectively. This is particularly important for addressing complex challenges such as labor exploitation or environmental degradation within global supply chains, where coordinated efforts can lead to more effective solutions.

Companies operating within a corporate group can fulfill due diligence obligations and develop climate transition plans at the group level. This collective approach reduces the compliance burden for individual entities within the group while ensuring alignment across the organization. By centralizing efforts, companies can streamline processes and focus on effective implementation.

The directive also encourages sharing information and resources, both within a corporate group and with other legal entities. To guide companies, the European Commission's guidelines on horizontal cooperation agreements and vertical restraints clarify how entities can work together while remaining compliant with competition law. Additionally, the ACM has issued a Policy Rule on Sustainability Agreements, outlining conditions under which companies can collaborate on sustainability initiatives without risking penalties.

Companies can also leverage sector initiatives, including multi-stakeholder partnerships, where businesses, trade unions, and civil society organizations collaborate to uphold internationally accepted social, ethical, and environmental standards. These initiatives allow companies to pool resources and collectively address systemic issues in their value chains. For example, businesses participating in a sector initiative could create a joint grievance mechanism, making it easier for stakeholders to lodge complaints while sharing the administrative burden among participants. This collective action can amplify influence and promote meaningful change in supply chains.

To support compliance, companies can use verification by independent third parties as part of their due diligence efforts. However, these verifications must meet established standards to ensure they are appropriate and reliable.

Despite the benefits of collaboration, companies are still individually responsible for meeting their due diligence obligations. Participation in group-level efforts or sector initiatives does not absolve businesses of their independent responsibilities. The European Commission is developing guidelines to help companies assess the appropriateness of these collaborative efforts while ensuring compliance with the directive.

Challenges and Opportunities for Businesses

For companies, the WIVO represents both a challenge and an opportunity. While the law imposes new obligations that may increase administrative burdens and costs, it also creates avenues for innovation and improved reputational standing. Businesses that proactively adopt the WIVO’s framework can strengthen their ESG credentials and gain a competitive edge in a market increasingly driven by sustainability-conscious investors and consumers.

Integrating the CSDDD into Dutch law through the WIVO is part of a broader trend in sustainability legislation. Alongside initiatives such as the CSRD and the International Sustainability Standards Board (ISSB) guidelines, the WIVO forms a comprehensive framework that drives transparency, accountability, and meaningful action. Together, these laws emphasize that sustainability is no longer a choice but a core requirement for conducting business in Europe.

Forward Thinking

As the consultation period for the WIVO progresses, businesses have a unique opportunity to engage and influence the final contours of the law. Participation in this process allows companies to shape a practical and actionable law and signals their commitment to responsible business conduct. The WIVO, born out of the European CSDDD, is not just a legislative requirement—it is a call to action for companies to lead the way toward a sustainable and just global economy.

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