The extent to which a company makes a positive contribution to the environment and climate plays an increasingly important role. The renewed corporate governance code, valid from 1 January 2023, mandates that applicable companies identify the effects of their actions on people and the environment, and define a strategy to make a positive contribution to the environment and climate. The influence that the Dutch works council can and should have on this is often forgotten. It is important that companies take this into account and involve the works council.

The works council and employees themselves should be more aware of the ways through which the council can exert influence, these being:

• the right of advice related to any significant contemplated decision relating to the company’s care for the environment;
• the right of advice and right to consent regarding other potential decisions affecting the environment;
• the statutory duty to promote environmental care and entitlement to all information necessary to fulfil that duty;
• the right to make environment-related proposals; and
• attaching conditions to any advice and/or consent it gives, regardless of the subject on which the works council is consulted.

Right of advice on environmental measures

The most powerful right the works council has in this context is the right of advice regarding any contemplated decision to implement a measure relating to the company’s care for the environment.[1] Although this right of advice has been included in the law since 1998,[2] in practice, this right hardly seems to get any attention. It has not been litigated since its introduction.

The right of advice is interpreted broadly. Examples include:

• environmental plans;
• environmental programmes;
• environmental management and waste collection systems;
• waste prevention plans; and
• the application for an environmental permit with significant environmental impact.[3]

Environmental impact

There are also other decisions that do not fall within the scope of the right but do have an environmental impact and/or are related to environmental considerations. Those decisions may trigger another right of advice or right of consent. These include:

• making significant investments (right of advice);[4]
• introducing a significant technological feature (right of advice);[5]
• introducing a mobility scheme which rewards employees if they cycle to work (right of consent).[6]

By rendering negative advice, withholding consent or attaching conditions to a positive advice or consent, the works council can exert significant influence on making a positive contribution to the environment and climate (eg, the works council could “force” the company to make “greener” investments than it had anticipated).

Duty to promote environmental care and right to information

The right of advice and consent are well-known rights of the works council. It is less well known that the works council also has a statutory duty to promote the company’s care for the environment. This includes adopting or changing policies with provisions related to the environment.[7]

Information is crucial to properly fulfil the works council’s duty of care to promote the company caring for the environment. The works council has the right to obtain from the company any information necessary for the proper performance of its duties, and it is the company’s duty to provide this information.[8]

Works council right of initiative

In addition, the works council has the right to make proposals on (almost all) matters affecting the company, including environmental and climate issues. The right to information allows the works council to properly substantiate its proposal. The company is not obliged to adopt proposals from the works council, but the law stipulates that at least one consultation meeting must be held, in which the proposal is discussed.[9]

Negotiation tactics

As mentioned, the works council can also address the environment by attaching conditions to giving positive advice on or consent to a proposed company decision. Even when the contemplated decision is remotely related to or not at all related to the environment, the works council can attach conditions aimed at improving the environmental impact of the company. In doing so, the works council gives substance to its duty of care. If the company is unwilling to accept these conditions, there is a risk that the matter will have to be brought to court and that the proposed decision cannot be implemented pending the outcome of court proceedings.

To avoid the risk of the works council blocking or complicating the implementation of important decisions, most companies will be inclined to take a positive stance against such conditions attached by the works council. The works council is an important stakeholder in Dutch companies and companies will be keen to maintain and continue a positive, constructive relationship with it.

Comment

The role that the works council can play in environmental measures does not receive enough attention. Both in case law and in everyday practice, opportunities remain underutilised. The Dutch works council has several instruments at its disposal to influence the company’s dealings with the environment, and is, therefore, a body to be reckoned with.

This article was written for Lexology’s International Law Office newsletter.

Endnotes

[1] Section 25 (1)(l) of the Works Councils Act (WCA).

[2] Act dated 14 February 1998, Stb 1998, 107, entered into force on 4 March 1998, Parliamentary Papers II 1997/98 24615.

[3] Parliamentary Papers II 1995/96, 24615, No. 3, pages 9-10 and page 42.

[4] Section 25 (1)(h) of the WCA.

[5] Section 25 (1)(k) of the WCA.

[6] Section 27 (1)(c) of the WCA.

[7] Section 28 (4) of the WCA.

[8] Section 31 of the WCA.

[9] Section 23 of the WCA.