More parties should have a say in listed companies
To get important topics such as climate and human rights higher on the agenda of listed companies, stakeholders other than shareholders and employees should officially be given more say. This is what Professor of Business Law Harold Koster said in his inaugural lecture on 18 March. He proposes introducing a stakeholders’ meeting.
In listed companies, shareholders and employees already have legal powers in the field of corporate governance, which is about the good management of companies. Other stakeholders, such as environmental organisations, residents and customers, do not currently have specific rights in this area. If they want to achieve something, they try to do so by buying shares or lobbying. For example, two months ago Friends of the Earth placed a large advertisement in a national newspaper calling on 30 companies to submit a climate plan.
Koster thinks it’s time for a structured stakeholders meeting. Directors must carefully consider the interests of everyone involved in the company and its business. Companies should be prevented from primarily taking the financial interests of shareholders into account. This is important because the shareholders are investors and therefore not the owners of listed companies.
‘If you as a company have the issues formulated very clearly for you, you have to do something about them.’
A stakeholders’ meeting could get important topical issues higher on companies’ agendas, says Koster. ‘The latest annual global survey by PwC shows that about half of the 4,400 CEOs surveyed have formulated concrete climate goals for their company. The Dutch business community may be doing slightly better with 56 per cent, but there is still much to be gained. There are also major issues relating to human rights, for example. If you pay more attention to these, you gain more insight into the problems and what can be done about them. If, as a company, you have the issues formulated very clearly for you, you have to do something about them.’
Dialogue and transparency
Koster suggests placing the responsibility for the stakeholders meeting with the supervisory board. They can invite the relevant stakeholders each year. But who these should be is difficult to say, says Koster. ‘It depends on things like the business activities and who comes into contact with them. Moreover, some stakeholders are very well organised and have financial resources, while others do not. So which party do you pay attention to? These are difficult questions and there is no simple answer. Neither should we think that we have the answer to all these questions in corporate law. But let’s start by bringing stakeholders together and talking to them. You get to talk to each other by doing that and that is good for sharing knowledge and creating understanding. In effect that is progress.’
Text: Dagmar Aarts