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| 7 minutes read

The Netherlands: A Dutch initiative for a value chain due diligence


In December of last year, the Council of the EU finalised its position on the European Commission’s Proposal for a Directive on Corporate Sustainability Due Diligence (the “CSDDD” also known as “CS3D”) (see our previous blog post). Later in 2023, this will form the basis for the trilogues with the European Parliament.

On 11 March 2021, a number of members of the Dutch House of Representatives (Tweede Kamer der Staten-Generaal) in the Netherlands initiated a draft bill for international responsible business conduct (verantwoord en duurzaam internationaal ondernemen). The Dutch Council of State (Raad van State) issued a critical, yet non-binding, advice on this proposal. On 2 November 2022, the relevant members submitted a revised draft of the bill on Responsible and Sustainable International Business Conduct (Initiatiefwet verantwoord en duurzaam internationaal ondernemen) (the “Bill”) to the Dutch House of Representatives.

The Bill bears many similarities with the CSDDD and the German Supply Chain Duty of Care Act (Lieferkettensorgfaltspflichtengesetz) and the Corporate Duty of Vigilance Law (Loi de Vigilance) in Germany (see our previous blog post) and France.

Main provisions of the legislative proposal

The Bill aims to implement into statutory law certain principles and standards currently included in soft law, such as the OECD Guidelines for Multinational Enterprises drawn up by the Organisation for Economic Co-operation and Development (“OECD”) and the UN Guiding Principles on Business and Human Rights. In accordance with the OECD Guidelines, the Bill focuses on human rights, environment, employment and industrial relations.

The Bill introduces two important obligations: (i) a duty of care (zorgplicht); and (ii) a due diligence obligation (gepaste zorgvuldigheid). The applicability and the scope of the Bill are mainly determined by the following definitions:

  • undertaking” (onderneming) constitutes a variety of business undertakings in any legal form, including the undertaking’s subsidiaries and regulated financial undertakings (gereguleerde financiële onderneming). In principle, the Bill applies to all undertakings established in the Netherlands and EU. However, the Bill also applies to “large undertakings” established outside the EU.
  • value chain” (waardeketen) of an undertaking means all of an undertaking’s activities, services, products, production lines, supply chain and customers, as well as the activities of its business relationships. Moreover, business relationships include an undertaking’s contractors, subcontractors or other legal entities in the value chain, including State entities, which are in any way linked to the undertaking’s activities (including its financiers and (re-)insurers). Essentially, the due diligence obligation applies to all of an undertaking’s upstream and downstream activities, as well as a wide range of its relationships and is therefore extremely broad.

Duty of care

The general duty of care (zorgplicht) obliges undertakings that know or can reasonably suspect that their activities or their business relationships’ activities adversely impact human rights, labour rights or the environment in a foreign country (i.e., not the Netherlands) to:

  • take all measures reasonably required to prevent the consequences of such impact;
  • insofar as it cannot prevent such consequences: limit those consequences as much as possible, undo them and, if needed, ensure redress; and
  • if the consequences cannot be sufficiently mitigated: refrain from the activity in question or terminate the business relationship to the extent this may reasonably be expected from the undertaking.

An adverse impact on human rights, labour rights or the environment is deemed to occur in any event if the activities in the value chain make use of or involve limiting the freedom of association or collective bargaining, discrimination, forced labour, child labour, climate change, environmental damage, unsafe working conditions, breaches of animal welfare regulations, slavery or exploitation.

Due diligence obligation

In addition to a duty of care, the Bill introduces a due diligence obligation for “large undertakings” that engage in activities in countries outside the Netherlands. Undertakings qualify as a “large undertaking” if they meet two of the following criteria:

  • a balance sheet total of at least €20 million;
  • a net turnover of at least €40 million; and
  • an average number of at least 250 employees during the relevant financial year.

Large undertakings shall identify, prevent, mitigate and monitor any (potential) risks in their value chain which includes:

  1. adopting and publishing a due diligence policy which shall also be annually updated. Such policy shall be embedded in the undertaking’s internal risk and control systems and the management board must report thereon;
  2. investigating, collecting and analysing the potential and actual risks of adverse impacts on human rights, climate change and the environment of its own activities as well as those of its business relationships;
  3. ensuring that any identified potential and actual risks of adverse impacts on human rights and the environment are adequately tackled and drawing up an action plan to prevent, mitigate or terminate these risks;
  4. annual monitoring of the application and effectiveness of the due diligence policy and measures and reporting thereon to the supervisory bodies; and
  5. ensuring that a well-functioning remediation mechanism (herstelmechanisme) is in place through which an involved party can file and submit a complaint to the undertaking or that the undertaking adheres to an existing remediation mechanism.

Interestingly, while preparing its due diligence policy an undertaking will have to collaborate and take into account the views of interested parties, experts and business relationships, and obtain from them information on adverse impact risks. An undertaking would also need to take into account their views and impact thereon when terminating its activities. Interested parties include employees, communities or entities whose rights or interests are or may be directly affected by a lack of due diligence or an organisation promoting the interests of human rights or the environment.


The Bill predominantly includes best efforts obligations (inspanningsverplichtingen) but certain obligations qualify as obligations of result (resultaatsverplichtingen). Obligations of result include: (i) a written due diligence policy; (ii) an action plan; and (iii) annual reporting obligations.

The Dutch Authority for Consumers and Markets (Autoriteit Consument en Markt) (the “ACM”) will monitor compliance and enforce the Bill in cooperation with other regulatory bodies in the Netherlands and within the European Union.

The ACM is authorised to impose administrative fines up to 10% of the net turnover of the undertaking, administrative penalties or an administrative enforcement order. The Bill also provides for the directors’ criminal liability under the Dutch Economic Offences Act (Wet op de economische delicten) if an undertaking (repeatedly) fails to report annually on the implementation and execution of the due diligence policy.

Relationship with the CSDD Directive

In its coalition agreement published in December 2021 (see our previous blog post), the Dutch government confirmed that it would promote international and European corporate social responsibility. In that context, it supports the CSDDD. In addition to the Bill, which was not submitted on initiative of on behalf of the Dutch government, the Dutch government also intends to prepare Dutch legislation covering corporate social and business responsibility aspects.

Initially, the introduction of a specific bill focused at responsible and sustainable international business conduct was connected with the slow progress with the supply chain due diligence legislation at EU level. The initiators of the Bill explained in the explanatory notes that the CSDDD is used as a basis but individual countries proposing specific local legislation may influence the final text of the CSDDD.

That said, there are a number of noteworthy differences between the Bill and the CSDDD:

  • The Bill obliges all undertakings in the Netherlands and EU and certain “large undertakings” to adhere to the general duty of care. The CSDDD stipulates a directors’ duty of care for companies that either (i) employ more than 500 employees and have a net turnover of at least €150 million or (ii) employ more than 250 employees, have at least a net turnover of €40 million and operate in a “high impact” sector. In addition, the quantitative criteria for qualifying undertakings included in the Bill are stricter than in Germany (initially 3,000 employees) and France (5,000 employees).
  • The Bill imposes a due diligence obligation on “large undertakings”. The threshold for qualifying as a “large undertaking” under the Bill is lower than for qualifying for an in-scope company for the CSDDD. Moreover, the Bill does not differentiate between any sector a company is active in (as compared to the “high impact” sectors proposed under the CSDDD).
  • Under the Bill, non-compliance with the due diligence reporting obligations could lead to criminal liability for the directors. A breach of certain obligations under the CSDDD as currently proposed does not lead to criminal liability.
  • Under the CSDDD, EU Member States shall ensure that qualifying companies are liable for damages if they fail to prevent, mitigate or end adverse impacts that have been, or should have been, identified. The Bill also includes that undertakings shall have a remediation mechanism in place to cover damages incurred. In addition, the Bill also introduces a rebuttable presumption for any claimant who incurred loss or damage resulting from an adverse impact on human rights or the environment so that the defendant undertaking would have to prove it has not acted in breach of any obligation under the Bill.

Next steps

The Child Labour Due Diligence Act (Wet Zorgplicht Kinderarbeid), which was adopted by the Dutch Senate (Eerste Kamer der Staten-Generaal) and published in the Dutch State Gazette (Staatsblad) in 2019, never entered into force. Upon adoption of the Bill, the Child Labour Due Diligence Act will be revoked.

Whilst further negotiations on the CSDDD are ongoing in 2023 at the EU level, the Netherlands is simultaneously debating two initiatives that relate directly to the contents of the CSDDD: the Bill (at the initiative of members of the Dutch House of Representatives) and a legislative proposal by the Dutch government which is currently being prepared.

Considerable public attention was given to the Bill, especially since the start of 2023. It is currently heavily debated between politicians, businesspeople and NGOs. The businesses argue against the wide scope and detailed obligations as this would create an administrative burden and limits them in pursuing regular business activities. Supporters of the Bill doubt whether its practical enforcement is achievable.

Noteworthy, the Bill intends to introduce national legislation that is stricter than the EU law. It remains to be seen whether national legislation will become effective sooner than any implementation of the CSDD Directive but close monitoring of the EU proposal, as well as national proposals of legislation focused on human rights value chain due diligence is key.

The House of Representatives will vote on the Bill later this year. Subsequently, it will be sent to the Senate, which will vote to accept or reject the Bill. It is currently foreseen that the Bill will enter into force on 1 July 2024, except for certain provisions on enforcement which will take effect gradually on 1 January 2025 and 1 July 2025, respectively.


csd3, business & human rights, governance & corporate culture, general, climate change & environment, netherlands