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Management Summary
Conclusion
Overall, 38 companies within the scope have made significant progress on the themes selected by VBDO (natural capital, living wage, Sustainable Development Goals) in the last year.
Encouraging progress is shown on natural capital, a theme that VBDO addresses for the second consecutive year. Almost all companies demonstrate a general awareness on natural capital related issues and how they affect these issues. They mention several risks related to their operations and have a policy in which natural capital indicators are included. VBDO is pleased to see that many companies have started to set concrete targets on this topic. Nevertheless, relevant issues such as a loss of biodiversity, water management, and soil depletion are poorly addressed. Companies could still make progress on indicating and managing risks and impacts in their supply chain and calculating externalities. Greenhouse gas emissions are not included in the natural capital theme this year. This decision has caused many companies to receive lower scores than the previous year.
VBDO addressed paying a living wage for the second consecutive year. Last year only a few companies addressed living wages. The ongoing effort in this field has paid off. This year’s results show significantly more companies mention the importance of paying a living wage in their policies. However, three challenges remain. Firstly, many companies do not consider the risk of underpayment to be relevant for their business since their workforce is mostly high-skilled. Underpayment is a relevant risk however in emerging markets and the supply chain of companies. Secondly, companies find it challenging that internationally accepted definitions are still missing. Lastly, the lack of common standards and methods increases the difficulty for companies to implement living wage rates. Awareness as well as knowledge needs to be built on these topics. Combining efforts to make a change to the whole supply chain is essential. VBDO encourages pioneers to explore this topic further and to share their experiences.
This was the first year the VBDO encouraged companies to embrace the Sustainable Development Goals in their CSR strategies. Results differ widely amongst the companies but are encouraging. Many companies have conducted a materiality analysis to select relevant SDGs and link these goals to their existing CSR strategy. There are some encouraging examples of starting partnerships to achieve the goals. Next steps need to concentrate on setting concrete and measurable ambitions in line with targets, and measure progress accordingly.
Recommendations
Natural capital
- Assess impacts, risks, and dependencies of natural capital for your company, including topics such as water biodiversity, land use, and soil depletion;
- Identify impact, risks, and dependencies on natural capital for your supply chain;
- Set concrete, measurable, and time-bound targets to track progress on natural capital indicators;
- Start including the environmental externalities of your business activities in your project accounts.
Living wage
- Work together with other organizations to share existing methods and learn from best practices;
- Identify key risks regarding paying a living wage, both in your own operations as well as across the supply chain;
- Formally commit to paying a living wage rate, in your own operations: (e.g., in your Code of Conduct);
- Integrate paying a living wage into the purchasing decisions of the procurement department;
- Perform due diligence on suppliers to assess if they pay a living wage;
- Set a relevant time-bound ambition to paying a living wage in (parts of) your supply chain.
Sustainable Development Goals
- Conduct a materiality analysis to identify which SDGs are most relevant for your company;
- Create new business opportunities, which have a positive impact on the identified SDGs;
- Set measurable, time-bound targets;
- Report on progress to make the goals concrete;
- Form partnerships with other companies, governments, and NGOs to increase impact.
Commitments The 38 companies in scope made 46 commitments to VBDO to improve sustainability performances next year.
About this report
This report provides insight into the status quo of sustainability performance of the largest Dutch stock-listed companies, focusing on VBDO’s selected themes. In total, 38 companies were assessed on three selected ESG themes, followed by engagement questions prior and during their Annual General Meeting (AGM). The criteria and scoring methodology (with a comparison to last year) are explained respectively in appendices 2 and 3.