Social criteria in the context of ESG

Recently, more and more new legislation is giving substance to the “S” of ESG. Important recent legal developments in the context of the social aspect of ESG include:

The Dutch Diversity Act
The Diversity Act entered into force on 1 January 2022 and imposes two measures to improve diversity in the boardrooms of Dutch companies:

• Appointment quota for supervisory boards of companies listed on a Dutch regulated market, to help ensure that men and women each hold at least one-third of the seats on the supervisory board.
• Large companies are required to set appropriate and ambitious target figures to improve gender diversity on their management boards, supervisory boards and in their sub-top management

Transparency on Equal Pay for Equal Work
On 30 March 2023, the European Parliament adopted the EU Directive on Pay Transparency to ensure that women and men in the EU get equal pay for equal work. And it sets out pay transparency measures, such as:

• Pay information for jobseekers
• A right to know the pay levels for workers doing the same work
• Gender pay gap reporting obligations for companies +100 employees

Proposed legislation: Mandatory appointment of a trusted advisor
Under the legislative proposal for the mandatory appointment of a confidential advisor regarding transgressive behaviour, currently debated in the Dutch Senate, companies will have to appoint a trusted advisor. The role of the trusted advisor includes:

• supporting employees;
• identifying bottlenecks in existing policies; and
• providing information and advice in the event of (alleged) transgressive behaviour.

Whistleblower Protection Act
Under the new The Dutch Whistleblower Protection Act more types of employers  are required to establish an internal reporting procedure for suspected wrongdoings. This obligation applies to each employer who generally has at least 50 employees. In addition, all employers covered by the Dutch Prevention of Money Laundering and Terrorist Financing Act (Wwft) and all organisations active in the fields of (i) financial services, products and markets; (ii) civil aviation; (iii) maritime labour and port state control; and (iv) offshore oil and gas activities, regardless of the number of employees, are required to establish a whistleblower policy.

European Corporate Sustainability Reporting Directive (CSRD)
As from 1 July 2024 large employers will be required to provide data on the commutes and business traffic of their employees. The purpose is to help employers make a conscious choice in favour of sustainable mobility and reduce CO2 emissions in traffic.