PublicPoliciesonCSRintheNetherlands:AnAssessmentof

GovernmentalInfluenceonDutchClothingBusinesses

MasterthesisPoliticalScience,InternationalRelations

ResearchProject:TransnationalPoliciesofSustainability

June2016

LaraDeckers[10276181]

Supervisor:LucFransen

SecondReader:PhilipSchleifer

Wordcount:17.979

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TableofContent

ListofAbbreviations 4.

1. Introduction 5-6.

2. TheoreticalFramework 7-11.2.1.CorporateSocialResponsibility 7-8.

2.2.GovernmentinvolvementinCSRpractices 8-11. 2.3.BusinessCharacteristics 11.

3. MethodologicalApproach 12-18. 3.1CaseSelection 12-13. 3.2ElementsofStudy 13. 3.3Data&Method 13-15. 3.4Sampling 15. 3.5Operationalization 15-16. 3.6Validity&Reliability 16-17. 3.7Theoretical&SocialRelevance 17-18.

4. GovernmentalInfluenceMechanisms 19-33. 4.1BroaderVision&PolicyoftheDutchGovernment 19-21. 4.2GovernmentalInstruments 21-31. 4.2.1FinancialInstruments 22-23. 4.2.2InformationalInstruments 23-24. 4.2.3PartneringInstruments 24-26. 4.2.4HybridInstruments 26-31. 4.3Conclusion 32-33.

5. ABusinessUnderstandingofCSR 34-40. 5.1DefiningCSR 36. 5.2FocusinCSRPolicies 36-37. 5.3EstablishmentofCSRPoliciesandtheUnderlyingMotives 37-39. 5.4Conclusion 39-40.

6. ThePerceptionofGovernmentalInstruments 41-50. 6.1Familiarity 42-43. 6.2PerceptionsofGovernmentInvolvement 43-45. 6.3ReactionstoGovernmentInvolvementandBusinessExpectations 45-47. 6.4MutuallyVariations 47-48. 6.5Target 48-49. 6.6Conclusion 49-50.

7. Conclusion&Discussion 51-53.

8. Acknowledgment 54.

9. Bibliography 55-61.

10.Appendix 62-64. 10.1.CaseDescription 62-63. 10.2.Contactinformation 64.

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ListofAbbreviations

BSCI–BusinessSocialComplianceInitiativeCSR–CorporateSocialResponsibility

EIA–EnergyInvestmentDeduction

FWF–FairWearFoundation

IDH–SustainableTradeInitiative

IFC–InternationalFinanceCorporation

ILO–InternationalLaborOrganization

TSE–TopSectorEnergy

MIA–EnvironmentInvestmentDeduction

NGO–Non-GovernmentalOrganization

OECD–OrganizationforEconomicCooperationandDevelopment

PIU–PurchasingInnovationUrgency

SAC–SustainableApparelCoalition

SDE+–StimulationofSustainableEnergyProduction

SER–SocialandEconomicalCouncilofTheNetherlands

SME–SmalltoMedium-sizedEnterprises

UN–UnitedNations

VAMIL–ArbitraryDepreciationofEnvironmentalInvestments

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1.IntroductionThenewsofthecollapseoftheBangladeshifactorycomplexRanaPlazainApril2013shedlight

ondistressingconditionsinthegarmentindustry.Thegrowingglobaldesireforcheapandfast

fashionshowedits truecostbykilling1,127workers(TheGuardian,2013).Thecollapse is, in

someway, a poignant example of the problematic changes that occur in the context of trade

liberalization, the neo-liberal principle of free market and the globalization of production in

whichstatesbecamelesswillingandlessabletoregulatetheeconomicsystem(Jenkins,2001:

1). Over the years, the production shifted away from the center of consumption towards

developingcountries,wherelargeworkforceswerewillingtoworkforlowwages(Wetterberg,

2011: 64). Due to the highly competitive nature of the garment industry, businesses were

constantly looking for cheaper possibilities to produce, even though this happened at the

expenseoflaborstandards,whichbecamehardertoguaranteeinthetransnationalproduction.

The protection of labor standards is the responsibility of national states and states lack the

jurisdictiontoimposetheirlawsonthecountrieswheretheproductionstakeplace(Idem:64-

65).

Businesseswereconfrontedwiththeconditionsthatoccurredintheirproductionchainbecause

ofeventssuchasthecollapseofRanaPlazafactorycomplex.Theyhadtojustifytheirchoicesto

external parties such as non-governmental organizations (NGOs). This, combined with the

growing awareness of the effects of production among consumers, resulted in a growing

willingness amongbusinesses to improve the conditions inwhich they operate. Itwas in this

context that there came an increasing emphasis on self-regulation: the corporate social

responsibility(CSR)ofcompaniesandtheriseofprivateregulatorystandards(Jenkins,2001:1).

In the absence of government involvement, a shift towards private regulatory standards to

govern the transnational supply chain was witnessed. This way businesses could voluntary

adoptastrictersetofsocial,environmentalandeconomicalstandardstostimulateandsupport

sustainabledevelopmentintheirproductionchain(Marx&d’Hollander,2012:5).

Today,theemergenceofthesekindsofstandardshasgrownspectacularlyandthequestionof

how governments can interact with these standards is increasingly relevant (Ibid). In recent

years, governments have started to interact and engage little by littlewith private regulatory

standards, resulting in policy strategies to stimulate the development or adoption of these

standards(Idem:5,48).Governmentshavestartedtoexperimentwithnewwaysofgovernance

topromoteandsupport theuptakeofstandardsbybusinesses.Nationalgovernments, forone

canstillberegardedastheultimateregulators;withthepowertoenforce lawswith legaland

economic instruments (Steurer, 2013: 7-8). This combined their ability to strengthen the

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potentialimpactofthestandardsbyprovidingincentives(Marx&d’Hollander,2012:5),makes

thempotentiallypowerfulstakeholders.

AlthoughCSRhasbeenfrequentlythefocusofstudies,itisarelativelynewandastilldeveloping

research field. Certain questions remain unanswered. Since governments only recently have

startedtogetinvolvedinthesubject,theeffectivenessofstateinvolvementregardingbusiness

activityonsocialandenvironmentalstandardscouldbefurtherexplored.Theobjectiveofthis

thesis istoprovidemoreinsight intotheinfluencegovernmental instrumentshaveontheCSR

businessactivitiesofDutchclothingbusinesses.Consequently, the followingresearchquestion

isformulated:

“To what extent do governmental instruments influence the social and

environmentalaspectsoftheCorporateSocialResponsibilityofDutchclothing

businesses?”

Bysheddinglightongovernmentinvolvement,notonlyabetterunderstandingofthedifferent

typesofgovernmental interventions isobtainedbutalsowhether thesearesuccessfuland for

whom.ItshowshowCSRisembeddedonanationalscaleandtellsusmoreabouttheparticular

issuesandpatternsinthecaseoftheNetherlands.Makingadistinctionbetweenthesocialand

environmental aspects of CSR allows for looking specifically at the differences of government

influencebetween theseaspects.Thisprovidesan insightwhethergovernmental interventions

showdifferencesinthesetwoproblemareas.

Thisstudyisstructuredinthreeparts.Thefirstpartconsistsofthetheoreticalframeworkand

themethodologicalapproach.InthetheoreticalframeworktheconceptofCSRanditsdifferent

components are discussed, aswell as the existing literature on the influence of governmental

policy instruments regarding CSR. In this second chapter the defined sub-questions are

presented.Thethirdchapterconcentratesonthemethodologicalapproach;theresearchdesign

and its implications on the validity and reliability of the study, aswell as the theoretical and

socialrelevanceofthisstudy.Thesecondpartcontainstheempiricalfindings,startingwiththe

chapter 4 Governmental Influence Mechanisms, in which the governmental instruments

provided by the Dutch government are described and the first sub-question is answered.

Chapter5BusinessUnderstandingofCSRoffersanexaminationof thebusinessperceptiveon

CSRandanswersthesecondsub-question.Inchapter6,BusinessCommunityandGovernment

Involvement, the way the government and the business community interact is discussed to

answerthefinalthreesub-questions.Thethirdpartofthisresearchincludestheconclusionand

thediscussionofthefindings.

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2.TheoreticalFramework

2.1.CorporateSocialResponsibility

Inacademicdebatesandbusinessenvironmentstherehasbeendisagreementonconceptsand

definitionsofamorehumane,moreethicalandmore transparentwayofdoingbusiness (Van

Marrewijk, 2003: 95-96). CSR, also Corporate Citizenship, Sustainable Business or Corporate

Accountability,areusedtodescribetherelationshipbetweenbusinessesandsociety(Jackson&

Apostelakou2010:373).Nowadaystheconceptsareconsideredtobesynonyms(VanMarrewijk,

2003:102).

CSRhasbeendiscussedthoroughlyanditbecameawidelyusedconcept,opentomanydifferent

interpretations. A definition that is characterized by its simplicity is that of the European

Commission: “CSR is theresponsibilityofenterprises for their impactsonsocietyandoutlines

what an enterprise should do to meet that responsibility” (European Commission, 2011). Its

simplicity leaves room for someone’s own interpretation andmakes it approachable. A broad

definition of CSR “refers to company activities – voluntary by definition – demonstrating the

inclusionofsocialandenvironmentalconcernsinbusinessoperationsandininteractionswith

stakeholders”(VanMarrewijk,2003:102).Althoughstillinpartundefined,thegivendistinction

between the social and environmental problem areas gives more direction. In addition, it

underlinesthevoluntarynatureofCSR.It isbasedonthenotionthatCSRrevolvesaroundthe

company’simpacton,therelationshipwithanditsresponsibilitiestosocietyasawhole(Idem:

101)andisnotlimitedtoeithersocialwelfareissuesorenvironmentalissues.

Byemphasizingonasocietyasawholeand includingthesocialandenvironmentalaspectsof

CSR, the focus is on the role of companies regarding the broader issue of sustainability. The

questionhere ishowabusiness canbe socially just andeconomicallyviable in the long term,

using non-renewable resources as efficiently as possible, being ecologically compatible,

producinghealthyproducts forhuman consumptionat a fairprice, and takinganimalwelfare

intoaccount (VanBruchemetal.,1991:146).This canalsobe translated to theproductionof

clothing;companiescanbesociallyjustbypayingtheirsewersafairwage;animalwelfarecan

be taken into account regarding the use of fur or angora wool; limiting the use of certain

chemicals;or, the responsibleuseof resources, sinceproducing fibers suchascottonrequires

waterandland;andtoproducesyntheticfabricsoilisrequired.

ThedebatesaroundtheconceptandthedefinitionofCSRhaveledtoawiderangeofdifferent

interpretations, not only by the academics studying the topic but also businesses trying to

implementCSR.WhyclothingbusinessesadoptCSRandhowtheyimplement it,differsamong

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businesses.Sometimesbusinesseswanttodowhatisrightorapplyitsimplybecausetheygain

somethingfromit.Whateverthemotivesare,ithasanimpactontheperceptionofwhatCSRis,

makingitawideconceptopentomanydifferentinterpretations.

2.2.PublicPoliciesonCSRandPublicMetaGovernance

Theroleofthegovernmentis,increasingly,thefocusofstudy.Firstly,Academicsfocusedmainly

onthenature,thedefinitionandthedevelopmentofthetermCSRandtheemergingofprivate

regulatory standards in the global trade governance (Qu, 2007: 582 andMarx& d’Hollander,

2012:5).Whereasnow,asgovernancesystemshavebecomemorecomplexandgovernments

are increasingly active in promoting and shaping CSR, there is a greater emphasis on

government involvement. The importance of government involvement is emphasized by the

democratic legitimacy of the government (Steurer etal., 2011:207, see also Bell &Hindmoor,

2012;andMarx&d’Hollander,2012:5).

GovernmentsarepotentiallypowerfulstakeholderswiththeabilitytodefinethescopeofCSRby

settingmandatoryminimumstandards(Steureretal.,2011:207).Mandatoryinitiativesreferto

“meansthatlegislatures,ministriesorpublicagenciesdefinerulesthatarebindingforall(orfor

allmembersofaparticulargroup),andthattheexecutiveandjudicialbranchesofgovernment

(or the agencies themselves)monitor and enforce compliance” (Steurer, 2013: 7).Mandatory

initiatives can consist of a legal (laws/decrees) or an economic (taxes/fees/cap-and-trade

schemes)component(Ibid).

Inadditiontothis,governmentscanalsoshapeandpromoteCSRactivitybyusingavarietyof

voluntary policy instruments (Steurer etal., 2011: 207). Voluntary instruments are rules that

are not legally binding but suggest certain behavior, politically (Steurer, 2013: 8). Voluntary

instruments can replace or complement mandatory initiatives or can in case of politically

contested issues compensate for the lack ofmandatory initiatives (Steurer et al., 2011: 207).

These instruments can be legal, financial and informational. Legal instruments have a more

recommending character and are not obligatory or do not foresee sanctions in case of non-

compliance(Steurer,2013:8).Financialinstrumentstrytoinfluencebehaviorthroughfinancial

incentivesandmarketforcesandconsistofsubsidies,awardsorpublicprocurements(Steurer

etal.,2011:208).Informationalinstrumentsarebasedonknowledgeandusemoralandfactual

persuasion to highlight options and the possible consequences (Steurer et al., 2011: 209).

Examples of informational instruments are endorsements, benchmarking reports, brochures,

guidelines,websites, andmedia campaigns (Steurer,2013:8). In thecontextofCSR, thereare

twomorepolicy instrumentsthatplayavitalrole,namely:partneringandhybrid instruments

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(Steurer etal., 2011: 208). A partnering instrument is an instrument that brings government,

businessesandotherstakeholderstogetherinpublic-privatepartnerships,stakeholderforums,

ornegotiatedagreementstoexchangeresourcesoravoidmandatoryregulations(Ibid).Ahybrid

instrumentisacombinationoftwoormoreinstrumentsdescribedabove(Ibid).TheCSRpolicy

instrumentscanbeapplied in fourdifferent fieldsofactions that reflectwhat thegovernment

candotopromoteCSRactivity(Idem:209):

1. Raiseawareness,buildcapacities,andputcapacitiesintoaction;

2. Improvedisclosureandtransparency;

3. Facilitatesociallyresponsibleinvestment;

4. Leadbyexample

The different instruments can be characterized by more than one thematic field of action

(Steurer,2010:59).

AsthefieldofpromotingandshapingCSRbusinessactivitytakesplaceinacomplexandmulti-

actor governance system (Steurer, 2013:15), the role of private or non-state actors and non-

stateinitiativescannotbeignored.Theseactorsandinitiativesinteractwitheachotherandwith

governmental instruments and the government as a whole in variety of ways (Gunningham,

2005:5).Inthiscomplexsystem,governmentsusepublicmeta-governanceorthegovernanceof

governancetoservetheirpublicpolicyobjectives(Steurer,2013:16).Governanceisaconcept

referringtothevariousformsofsteeringbystatesandnon-stateactorsatallgeographiclevels

andacrossthem(Idem:3).Inthisresearch,meta-governancereferstotheoverseeing,reflecting

on and orchestrating different types of regulation (Steurer, 2013: 16, see also Jessop, 2009).

Governments pursuemeta-governance to direct and control the interplay of various types of

regulation coming from whatever societal domain on a particular issue. By doing so,

governmentsareabletoutilizethecapacitiesofprivate,non-stateactorsandotherinstitutions

toaccomplishtheirpolicygoals(Gunningham,2005:5andSteurer,2013:16).Meta-governance

differsfromhybridpolicyinstrumentasitaimstoinfluencemoreindirectly;steeringactorsthat

steeractors.Governmentscanusepublicmeta-governancetoprovideadequateresourcesthat

lowercostsandempowernetworkactors(Sørensen&Torfing,2009:250).To illustrateonthe

basis of the clothing sector, meta-governance enables governments to influence clothing

businessesthroughprivateregulatorystandards.

Steurer et al. provide a plain description of how governments aim to promote CSR by

distinguishingbetweenfivepolicyinstrumentsandfourfieldsofaction.Thisdescriptionforms

theconceptualbasisoftheanalysisoftheDutchgovernmentalinstrumentsinchapterfive.The

focusofthearticlebySteureretal.-likeasubstantialnumberofhiscolleagues-liesonvarieties

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innationalpolitical-economicconfigurationsandvarietiesinCSRpractices(Steureretal.,2011:

206, see also Fransen, 2013: 213-214). Previous studies were not able to identify what

particularaspectsofnationalpoliciesaffectCSRactivityandhowfavorablethesepoliciesarein

promoting CSR (Idem: 214, 225). This makes it interesting to study to what extent CSR is

nationally embedded, what role governments play in shaping CSR practices and how

appropriatespecificgovernmentalinstrumentsare(Idem:214).

Inadditiontothis,previousstudiesmainlyfocusedonthesocialaspectsofCSR(seeforexample

Marx, 2008; Wettenberg, 2011; Fransen & Burgoon, 2014; Fransen & de Winter, 2015).

Therefore, the focus in this research is on both environmental and social aspects of CSR. A

distinction is made between the different aspects of CSR in order to examine what extent

governmental instruments focusoncertainaspects.Adifference in focus isexpectedbasedon

threeassumptionsregardingtheinvolvementofthegovernment.Forone,sincethecollapseof

theRanaPlazafactorycomplexinBangladeshthesocialconditionsinwhichtheemployeeshad

towork,receivedagreatdealofattentionfromthemedia.Itcan,therefore,beexpectedthatthe

governmentputagreateremphasisonimprovingthesocialaspects(Fransen&Burgoon,2015).

Secondly,adistinctioncouldbeexpectedintheareaoftheenvironmentalaspects.Itiseasierfor

businessestoverifyenvironmentalaspects(forexample,bybecomingorganiccertified),making

itperhapsmoreattractivetoimprovetheenvironmentalaspectsbecausebusinessescanmore

easily‘score’pointsfromtheconsumer(Merk,2011).Lastly,thegovernmentcouldputagreater

emphasisonenvironmentalaspectsasaconcern for thepublichealth,becausesomechemical

substances used in productionmay have negative consequences for the consumer. In light of

these assumptions, it is interesting tomake thedistinctionbetween social and environmental

aspects.Thisprovidesuniqueinsightsofthespecificwaysgovernmentsintervene.Thisrevolves

around theextent instruments focusona certainaspectsandwhetherornot thegovernment

favorsoneovertheother.Asaresult,thefollowingresearchquestionisformulated:

“Towhatextentdogovernmentalinstrumentsinfluencethesocialandenvironmental

aspectsoftheCorporateSocialResponsibilityofDutchclothingbusinesses?”

Inordertoanswertheresearchquestioninapplicableway,theresearchquestionisdividedina

numberofsub-questions:

“What governmental instruments are in place regarding the Corporate Social

ResponsibilityofDutchclothingbusinesses?”

“To what extent do the definition and focus of CSR from businesses and the

governmentcorrespond?”

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“How do Dutch clothing businesses experience the governmental instruments and

respondtothem?”

2.3BusinessCharacteristic

Literature reveals that businesses characteristics are important in understanding the

willingnessof businesses to improve theirCSRactivity. Size,market segment andownerships

typeareallelementsaffectingCSRbusinessactivity.

The size of a business has a positive influence on the degree of CSR activity (Jackson &

Apostolakou, 2010: 280). The share of a business in the market determines how sensitive a

business istosocietalpressure(Fransen&Burgoon,2014:598).Largebusinesseshaveahigh

publicprofileandaremorevulnerabletonegativepublicity.Theyare,therefore,morelikelyto

adeptamorestringentCSR(Jenkins,2001:8,Cramer,2005:92).Inadditiontothis,themarket

segment can affect the decision of businesses to improve their CSR activity. Businesses

producing products for the higher market segment have a different consumer audience then

businessesfocusingonthemediumorlowermarketsegment(Fransen&Burgoon,2014:598).

ThecorporatepreferencestoimproveCSRarelowerforbusinessesinalowerconsumermarket

(Idem:608).Literaturealsorevealedtheimportancetotakeownershiptypesintoconsideration.

Publicly owned businesses are expected to be more concerned about the effects of negative

publicity,becauseattackstothereputationofthebrandcanhavenegativeeffectsontheshare

prices (Marx, 2008: 253). It is important to take the businesses characteristics into account

because they have an effect on the willingness to improve CSR activity and, therefore, might

affect the degree of influence the Dutch government has on businesses. In light of this two

additionalsub-questionswereformulated:

“HowdoDutchclothingbusinessesdifferinrespondingtothegovernmentalinstruments?”“To what extent does the Dutch government target a specific group of businesses in

influencingtheclothingsector?”

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3.MethodologicalApproachIn this thesis, an inductive qualitative approach is used as theoretical approach. Inductive

approach starts with the observations and theories are formulated towards the end of the

research and as a result of observations. The researcher considers different possibilities that

couldexplainthephenomenonanddigsdeeperintothesubject.Ratherthantestingthevalidity

of an existing explanation, an inductive approach exists of intermediate evaluations of the

findings that could give an indication ofwhatwill happen in the next stage of data gathering

(Fransen, 2011: 170). This is significantly different from a deductive approach, in which an

explanationforacertainphenomenonistested.Theinductiveapproachcorrespondstotheaim

ofthisthesistocontributetoourunderstandingoftheimpactofgovernmentinvolvementonthe

businessactivityandbehaviorregardingCSR.Aninductiveapproachprovidesagreatin-depth

in the findings by leaving room for unexpected explanations and outcomes and identifying

underliningpatternsthroughobservations.

3.1.Caseselection

Theresearchdesign isasinglecasestudy.Singlecasestudyanalyses focusononesinglecase

(N=1)thatisexpectedtoprovideaninsightintoacausalrelationshipacrossalargerpopulation

ofcases(Gerring&Seawright,2007:86).Studyingonesinglecasemakesitpossibletoexamine

thecomplexityofthesituation.Thecaseoftheclothingsectorisinterestingbecausethissector

isahigh-impactsector.Meaningthattherisksconcerningtheenvironment,labor,humanrights,

corruptionandtaxobligationsaremoreelevatedtheninothersectors(KPMG,2014:8).Because

oftheseelevatedrisks,thesectorislabeledbytheDutchgovernmentasaprioritysector(Idem:

7).Asaresult,itisexpectedthatthegovernmentwillbeincreasinglyinvolvedinimprovingCSR

activityinthisparticularsector.Characterizingforthissectorisaconstantpressureforbrands

and suppliers to adapt their offers to seasonal and fashion changes (Fransen, 2011: 5). In

addition, the sector is hard to regulate because it has many small suppliers with fierce

competitionsamongthem.Suppliersareoftenconfrontedwithlargeorderswithtightdeadlines,

putting pressure on the workers (Ibid). Studying the Dutch case is interesting because the

Netherlandshasbeen taking the lead internationally as a governmentpromotingCSRpolicies

(Fransen&deWinter,2015:18).IntheNetherlandsisanationalpoliticalenvironmentinwhich

actors expect progressive action on labor standards from businesses. In their turn, Dutch

businesses were in 2009 ranked among the top 5 of European countries in terms of their

endorsement of voluntary human rights, social and environmental standards and their

commitmenttotransparencyinsustainabilityreporting(Ibid).

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Since Dutch initiatives have taken the lead on CSR and the Netherlands is renowned for a

progressiveCSRpolicyagenda(Idem:20), thiscasecanbeunderstood in termsofanextreme

caseinwhichthehighestoutcomecanbeexpected.

Aproblematicpartofselectinganextremecaseisthattheprobabilityoftherepresentativeness

ofthecaseislow,relativetoothercases(Gerring&Seawright,2007:104).Itisthereforenotthe

aimtogeneralize the findingsof this thesis toabroader level.However, itprovidesan insight

whichcontributestofurtherdevelopingtheliteratureonhowpublicpolicyandbusinessactivity

relate toeachother;andgivesabetter insightofhowgovernment involvementhaseffectand

why,whichisrelevanttopolicymakers.

3.2.ElementsofStudy

Although the Netherlands is the sample, the units of analysis in this thesis are Dutch

governmentalinstrumentsregardingthesocialandenvironmentalaspectsofCSRactivityofthe

clothing sector. These initiatives could be financial support; setting up knowledge based

networkorganization,or initiatingpublic-privatepartnerships.Theunitofanalysis ispartofa

larger population of cases, namely the governmental instruments implemented by the

NetherlandstostrengthentheoverallCSRactivityoftheprivatesector.

In this thesis, the observation is twofold. On the one hand, the focus is a more descriptive

examinationofwhatkindofgovernmental instrumentsare inplace.On theotherhand, it isa

process-oriented examination of the actual impact of these governmental instruments on the

socialandenvironmentalaspectsofCSRbusinessactivityofDutchclothingbusinessesandhow

thesebusinessesrespondtothem.

3.3.DataandMethod

The case study consists of primary and secondarydata. To answer the first two sub research

questions: “What governmental instruments are in place regarding to the social and

environmentalaspectsCorporateSocialResponsibilityofDutchclothingbusinesses?”and“What

istheimpactofthesegovernmentalinstrumentsonthesocialandenvironmentalaspectsofthe

CorporateSocialResponsibilityofDutchclothingbusinesses?”aqualitativecontentanalysisof

policy documents is used. This provides the opportunity to get a clear outline of what

governmentalinstrumentsareinplace.ItshowsthecontextinwhichtheCSRofDutchclothing

businessesisimplemented.Acontentanalysisofpolicydocumentsleavesopentheabilitytosee

whetheradistinction ismadebetween the social andenvironmental aspectsofCSRandwhat

the intended impact is on these aspects. The data gathered from the documents is

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complemented by an interviewwith two senior policy advisors from theMinistry of Foreign

Affairs,Marielle vander Linden and JosHuber. The content analysis of policy documentswill

serveasaninputfortheinterviewsthatwillbeconductedtoanswerthethirdandfourthsub-

questions: “How do Dutch clothing businesses experience the governmental instruments and

respondtothem?”and“TowhatextentdoDutchclothingbusinessesvaryinhowtheyrespond

tothegovernmentalinstruments?”.

Regarding these interviews, semi-structured interviewswill be conducted. In semi-structured

interviewsthepredeterminedquestionsarestructuredinsuchamannerthattherespondents

have the ability to speak in their own words and include other relevant information. Semi-

structured interviews give the opportunity to ask process-focused questions in a more

structuredway.Itallowsformoreflexibilitytoadjusttheorderinwhichthequestionsareasked

and to add questions depending on how the conversation goes. In two cases interviews are

conducted by e-mail (with Kings of Indigo and G-Star). To ensure the validity of the e-mail

interviews,informationfromsecondarysourcesisused,suchasinterviewswiththefoundersof

KingsofIndigoandG-Star.TheinterviewsareconductedinDutchandtheresearchertranslates

allusedquotations.Toensuretheusedquotationsaretranslatedcorrectlyornotmisinterpreted,

theywerepresentedtotherespondents.

Secondarydatafromacademicliteratureonthetopicofferssupportofthefindingsofthisstudy.

The informationof thedifferentdatasourcescancomplementeachother.Theanalysiswillbe

conducted through a combination of process tracing and comparative logics. Process tracing

emphasizes on the causal process that leads to certain outcome (George &Bennett, 2005).

Processtracingisasuitablemethodforinductiveresearchwhentheaimisnottotestanexisting

explanation, but when you are looking for different explanations. Inductive process tracing

attempts tomap out different causal paths, which results in an open-mindedness that leaves

room for unexpected explanations and outcomes. The comparative logics allows for the

establishmentoftheimportanceofgovernmentinvolvement,bycomparingtheactualbusiness

activitytothepurposeoftheinstruments.

Thecombinationofprocesstracingandcomparativelogicsisausefulmethodbecauseitallows

to inquiredetailedempiricaldataonbehaviorsbyobtainingdocuments, interviewingsubjects

andperformingcontentanalysisondocumentsandstatements.Thisisparticularlyhelpfulinan

environmentwithamultitudeofattitudes(Bennett&George,1997).Inordertostudytowhat

extentbothenvironmentaland laboraspectsof theCSRofDutchbusinessesare influencedby

Dutch governmental initiatives, the precise sequence ofwho doeswhat andwhy needs to be

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established. The combination of process tracing and comparative logics enables tomake this

distinction.

3.4Sampling

Elevencompaniesareapproachedfortheinterviews(seeforacasedescription,Appendix10.1).

Based on information from Rank-A-Brand five companies have been selected. Rank-A-Brand

made a list in which Dutch clothing businesses were ranked based on their sustainability

performance in the year 2015 (Rank-A-Brand, 2016). Frontrunners aswell as companies that

scoredaverageandtheonesthatwereonthebottomofthelist,werechosentogetacomplete

andrepresentativepictureof theDutchclothing industry.Thebusinesses thatareapproached

are: Kings of Indigo, G-star, King Louie, America Today, CoolCat, MS Mode Sissy-Boy, PME

Legend, Cast Iron and Vanguard. The brands PME Legend, Cast Iron and Vanguard are

trademarksofJustBrandsandhaveanidenticalCSRactivity.JustBrandshasoneCSRmanager

whoisrepresentingthethreebrands.TheinformationonPMELegend,CastIronandVanguard,

therefore,comesfromonesource.AmericaToday,togetherwithCoolCatandMSMode,arepart

of the CoolinvestmentGroup.Although oneCSRmanager is representing the four brands, the

actualCSRactivityamong thebrandsdiffers. In the interviewwith theCSRmanager from the

CoolinvestmentGroup, two sortsof information is gathered; firstly, information regarding the

business understanding of CSR (ch.5) that only applies to America Today; and secondly,

informationregardingthewaygovernmentinvolvementisexperienced(ch.6)whichappliesfor

allthreebrands.Toavoidconfusion,itisclearlydistinguishedwhenitconcernsAmericaToday

orthethreebrands.Toincreasefurtherrepresentativeness,acombinationofsmall,mediumand

large businesses is selected. The samplingmethod used is a combination of snowballing and

convenience.

3.5OperationalizationIn order to research to what extent governmental instruments influence the social and

environmental aspects of the CSR of Dutch clothing businesses, it is important to define and

layout the concepts and variables used in this study. The social and environmental aspects of

CSRbusinessactivityareinthiscasethedependentvariablesbecausetheaimistofindoutifthe

governmental instruments – being the independent variables - influence these aspects. In the

theoretic framework, CSR was described as a wide concept open to many different

interpretations. Since the concept is open tomany interpretations, theunderstandingofwhat

CSRentails exactlymayverywell differbetweenvariousbusinesses that are the focusof this

study.AlthoughthisstudypresumesthatCSRcontainsanenvironmentalandasocialaspect,the

usageoftheconceptwillbemodifiedduringtheprocess.

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The concept of governmental instruments consists of two aspects: governmental and

instruments. In this context, governmental is defined as the Dutch national government. This

includestheelevenDutchministries,however,doesnotincludethelocalgovernments,district

waterauthoritiesortheEuropeanUnion.Instruments,inthiscontext,aredefinedasinitiatives

theDutchnational government undertakes to encourage clothingbusinesses to get started or

improve their CSR. These initiatives may be financial support, setting up knowledge based

networkorganization,or initiatedpublic-privatepartnerships.Thefivepolicy instrumentsand

fourfieldsofactionprovidedbySteureretal.anddescribedinthetheoreticalframework,form

the conceptual basis of the understanding of governmental instruments in this study. Using

theseconcepts,thisstudycanprovideacomprehensiveandplainpictureofCSRpolicy-making

withoutdescribingamoreorlessrandomcollectionofinitiatives(Steureretal.,2011:209-10).

3.6ValidityandReliability

Everychoicearesearchermakeshaseffectonthevalidityandreliabilityofthefinalproduct.The

decision for a single case study has effect on the internal and external validity. As already

mentioned above, to choose the Dutch case creates difficulties with the representativeness

relativetoothercases.Sinceitisanextremesinglecasestudy,theexternalvalidityislow.Itis,

thereforeunlikely that the findingsof this studycorrespondwithothercasesand it isnot the

aimtogeneralize the findings toabroader level.Aprocess tracingmethod isusedto increase

theinternalvalidityofthisresearch.Thismethodensuresthatthecausalconnectionsmadeare

more credible, emphasizing on the causal process. The benefit of inductive process tracing is

thatitisaddressingtheproblemofequifinalitybykeepingalternativeexplanationsforthesame

outcomeinmind(Bennett&George,1997).

Interviewingleadstoakindofparadoxconcerningvalidityandreliability:structuredinterviews

aremore reliable because they are easier to replicate but are less valid because there is less

roomfortherespondent’sowninterpretationandremarks.Thesameistrueforopeninterviews,

however, in the reverse sequence. A compromise is conducting semi-structured interviews.

Predeterminedquestionsallowus toaskprocess-focusedquestions inamorestructuredway,

which increases the transparency and replicability. However, it also allows for flexibility to

adjust questions in response of the development of the conversation and it leaves room for

intervieweestheirowninput,whichleadstomorevalidanswers.

Qualitative content analysis is often criticized because itmight be subject to the researcher’s

own interpretation. Therefore, the purpose of documents and the context of the documents

shouldbetakenintoaccount.Toincreasereliability,transparencyonthecriteriaofanalysisand

resultsisnecessary.Qualitativecontentanalysisallowsmappingoutthemeaning,patternsand

17

the underlying themes in the documents,which is easily overlooked by quantitative research

(Hsieh & Shannon, 2005: 1278). Since there is only one coder, there is no problemwith the

inter-coderreliability.Discussingtheresultsandtheirinterpretationwiththesupervisorofthis

thesispreventsbiasedresults.Providingclearandtransparentexplanationsofhowconclusions

aredrawnisaguaranteeforfurthervalidityandreplicability.Theuseddocumentsareallpublic

documents,making themeasy to trace for interested readers. Furthermore, bynotdepending

solely on one source of data and combining content analysiswith semi-structured interviews

andsecondarydata, triangulation isensured.Textualevidencecandemonstratethecredibility

ofthestudybyenhancingthefindingsoftheinterpretation(Idem:1285)andtheinformationof

thedifferentdatasourcescancomplementeachother.

Likeotherstudies,thisstudyhasitslimitations.Inordertoguaranteethevalidityandreliability,

severalmethodological choicesweremade. The inductive qualitative approach relateswell to

the ambitions of this study to get better insights into the attitudes of businesses toward

governmental instruments and the effects these instruments have on business activities. The

combinationofprocesstracingandcomparativelogicsmethodandtheusageofcontentanalysis

and semi-structured interviews to gather data are logical choices that are in line with the

theoreticalapproach.

3.7.Theoreticalandsocietalrelevance

Thefindingsofthisstudyarerelevantinvariousways.Theoretically,thefindingscontributetoa

betterunderstandingoftheinfluencethatgovernmentalinstrumentshaveontheCSRbusiness

activities of Dutch clothing businesses. Promoting and supporting the uptake of standards by

businesses has increasingly become a complex andpolycentredmulti-stakeholder governance

process(Steurer,2013:17).Bysheddinglightonthegovernmentinvolvementinthisprocess,an

insightisprovidedonthedifferentgovernmentalinstrumentsthatareinplace.Italsoshowsto

whatextenttheseinstrumentsarefavorableinsteeringbusinessactivitytowardmorestringent

social andenvironmental requirement.Becauseof theirprominent roleas regulatorswith the

power to enforce laws, it is of importance to understand government involvement in this

process.MakingadistinctionbetweenthesocialandtheenvironmentalaspectsofCSR,provides

an insightwhether there isavarianceacross thedifferentCSRproblemareas.This isrelevant

because it says something about the preferences of the Dutch government in promoting

particularissues.ThisthesiscontributestotheunderstandingofhowCSRactivityisembedded

on a national level and what particular patterns and issues can be distinguished that

characterize theDutchcase. It couldbe thestartingpoint foracross-countrycomparison that

focuses on whether these characteristics are specific to the Netherlands or as well to other

coordinatedmarketeconomiesandhowthisrelatestohowCSRisembeddedonanationallevel

18

in liberal market economies like the United States. This could say something about the

relationshipbetweenvarietiesinnationalpolitical-economicconfigurationsandvarietiesinCSR

practices.

Inaddition,knowledgeontheextenttowhichgovernmentalinstrumentsinfluenceCSRbusiness

activities of Dutch clothing businesses is also relevant for professionals engaging in policies

regardingCSR,laborstandardsandtheimprovingglobalenvironmentalconditions.Mostlikely,

itisnotonlyrelevantforDutchpolicymakerstoreviewtheeffectivenessoftheimplementation

oftheirpolicies,butalsoforpolicymakersthathavetoimplementsuchpoliciesyet.Thefindings

of this study could give the latter guidelines about what policies work as opportunities or

constraintstoCSRactivityofbusinesses.Furthermore,itisrelevantforbusinessesthatwantto

putCSRintopractice,asthesefindingsprovideaninsightontheexperiencebusinesseshadwith

governmentinvolvementpoliciesandshowswhichkindofinitiativesareinplace.

19

4.GovernmentalInfluenceMechanismsThischapterportraysthegovernmentalinstrumentsthatareinplacewithregardtoCSRactivity

ofclothingbusinesses.Itisthepurposetoanswerthefollowingsub-question:

“What governmental instruments are in place regarding to Corporate Social

ResponsibilityofDutchclothingbusinesses?”.

As discussed in the theoretical framework, governmental instruments can be understood as

initiativesoriginatedbytheDutchnationalgovernmentandcanbedividedintofiveCSRpolicy

instruments (legal, economic, informational, partnering and hybrid), which apply to four

thematicfieldsofactions(transparency,awarenessonCSR,sociallyresponsibleinvestmentand

leadbyexample). It is important tomake thesedistinctions togetacomprehensivepictureof

CSRpolicy-making in theNetherlands. Thisway, public policies onCSR can be organized and

understood in such a way that it can both practically and theoretically categorize the

governmental activities. As previously established in the case description, the Netherlands is

taking the lead internationally as a government promoting CSR policies, therefore, it can be

expectedthattheNetherlandshasfar-reachinginitiatives.However,sincethepolicyletter“CSR

paysoff” states thatCSR iswhatcompaniesdomore thanwhat theyare legallyobliged todo,

and most of the CSR-risks falls outside the boundaries of the jurisdiction of the Dutch

government(MinisterievanEconomischeZaken&MinisterievanBuitenlandseZaken,2013:1;

Huber&vandenLinden,2016), it isexpected thatmostof thegovernmental instrumentsare

voluntary. Getting an understanding ofwhat governmental instruments are in place and how

theseare characterized is the first step to learnmoreabouthowbusinesses respond to these

kindsofinstruments.

This chapter is structured as followed: following the introduction to the broader policy and

vision of the Dutch government regarding CSR, the different governmental instruments are

discussedinwhichadistinctionismadetoseetowhatextenttheinstrumentsarebinding.The

chapter ends with a summary conclusion of what these results mean to the main research

question.PolicydocumentsandaninterviewwithMariellevandenLinden,CoordinatingPolicy

AdvisorCSRandTradeof theMinistryof ForeignAffairs, and JosHuber, SeniorPolicyOfficer

UnitPrivatesectorandCSRoftheMinistryofForeignAffairs,formthebasisofthischapter.

4.1.Broadervision&policyDutchGovernment

The initiatives regardingCSRactivityof theclothingsectorarepartofabroaderpolicyof the

national government in the field of CSR, sustainable development, trade and foreign aid. The

foundation for the national policies are several international agreements concerning

fundamentallaborrights:conventionsestablishedbytheInternationalLaborOrganization(ILO),

20

theUnitedNations(UN)GuidingPrinciplesonBusinessandHumanRightsestablishedin2011

andtheGuidelinesforMultinationalEnterprisesoftheOrganizationforEconomicCooperation

andDevelopment(OECD)adaptedinthesameyear.

With the establishment of the Guiding Principles and the adaptation of the Guidelines, 2011

marks an important starting point in which various activities related to chain responsibility

wereestablished(Huber&vandenLinden,2016).EspeciallytheGuidelinesplayanimportant

role in formulating national policies (Ibid). Although the name suggests otherwise, the

Guidelines are applicable to all businesses that operate abroad, smaller businesses included

(Ibid).TheGuidelinescommunicatetobusinesseswhattheDutchgovernment(andthe43other

countries that have subscribed to the Guidelines) expects from them when they are doing

business abroad (Ministerie van Buitenlandse Zaken, 2013: 1). This involves that these

businesses have the responsibility to, as best as possible, identify, prevent and reduce poor

workingconditions,childlabor,environmentaldamage,corruption,andhumanrightsviolations

in their production chain. Summarizing: acting upon the so-called Due Diligence Principle

(MinisterievanEconomischeZaken&MinisterievanBuitenlandseZaken,2013:2013:3).How

theGuidelinesare interpretedbyacountryandtowhatextendtheyareenforceddiffers from

countrytocountry.InthecaseoftheNetherlandsthegovernmentexpectsbusinessestofollow

theseGuidelines(Huber&vandenLinden,2016).OrinthewordsofMariellevandenLinden:

“It [CSR] means that businesses should behave responsibly and decently in

foreigncountries.”

In 2000 the Social and Economical Council of The Netherlands (SER) issued a policy note -

Corporate social responsibility – a Dutch approach, inwhich theDutch understanding of CSR

was describes (Cramer: 2005: 91). CSR is based on the notion that social activities are an

inseparableelementofthecorporatepolicyandofmaintainingrelationshipwithstakeholders,

whichisbasedontransparencyanddialogue.Centralinthisunderstandingistheideaofvalue

creation of 3 levels, namely: people, planet, and profit (Ibid). With the establishment of the

policy note a consensus about the concept CSRwas reached, inwhich business communities,

civil society organizations and the Dutch government agreed on. In 2013, the Ministries of

ForeignAffairs andEconomicAffairs issued the vision letter “CSRpays off”. In this letter, the

DutchviewonCSRisstatedanddescribinghowitcanbeputintopracticeswiththeGuidelines

in mind. It also showed the role of the government within in framework of CSR. The

intervieweesdescribed thisroleasadvising, facilitating,partnering,endorsingandmandating:

advising businesses how they can act upon Due Diligence; facilitating by getting all the

stakeholders together; creating partnerships with private initiatives such as the Fair Wear

21

Foundation (FWF); endorsing initiatives with financial support or other incentives; and

mandating as in protecting human right in its own jurisdiction. These different roles are

reflectedinthegovernmentalinstrumentsandarelargelyinlinewiththefourthematicfieldsof

actiondescribedbySteurer.

4.2Governmentalinstruments

TheDutchgovernmenthassetupvarious instrumentsrelatedto theCSRofDutchbusinesses.

These instrumentshavealldifferentcharacteristicsandtogetherreflect thedifferentgoals the

government wants to achieve. If looking at how binding the instruments are, a national

legislation is in place to protect the citizens from poor working conditions within the Dutch

jurisdiction. In the context of globalization, however, the social and environmental conditions

fall outside the jurisdictionof theNetherlands.TheDutch government is, therefore, unable to

enforcelegislationordeclarelegislationapplicableabroad,leavingallinstrumentsvoluntaryin

nature.AlthoughthegovernmentcannotmakeCSRcompulsory,itseesCSRasamoralobligation

ofbusinesses.AsMariellevanderLindenstatedintheinterview:

“Obviously,we do notwant companies operating abroad to discard principles that are

consideredasself-evidentandcompletelynormalintheNetherlands.IntheNetherlands

youwouldnothirechildren,sowhyallowitabroad?”.

Despiteofthevoluntarynatureoftheinstruments,therearecertainrequirementssubjecttothe

GOVERNMENALINSTRUMENTS

TYPEOFINTERVENTION THEMES

Subsidies Financialinstrument Sociallyresponsibleinvestment

SectorRiskAnalysis Informationalinstrument AwarenessonCSR

SustainableTradeinitiative

Partneringinstrument AwarenessonCSR&Transparency

ForeignPolicy Hybridinstruments:(Informational&financial)

Transparency,AwarenessonCSR&LeadbyExample

TransparencyBenchmark

Hybridinstrument(Informational&financial)

Transparency&AwarenessonCSR

CSRNetherlands Hybridinstrument(Informational&partnering)

Transparency,AwarenessonCSR&Sociallyresponsibleinvestment

Covenant Hybridinstruments(Legal,informationalandpartnering)

Transparency,AwarenessonCSR&Sociallyresponsibleinvestment

SustainablePublicProcurement

Hybridinstruments(Legal,informationalandpartnering)

Transparency,AwarenessonCSR&LeadbyExample

Table4.1:TypeofInterventionandThemestheGovernmentalInstrumentsrepresent

22

instruments. The following section discusses the instruments, its characteristics and its

requirementsbasedonthefivetypesofgovernmentinterventionsandthefourfieldsofactions

in which the instruments are applied. The legal instrument type is left out of consideration

becausenoneof theCSR initiatives from theDutchgovernment is solely characterizedby this

type.

4.2.1FinancialInstruments

Thesubsidiesprovidedby theDutchgovernment topromotesustainablebusinessactivityare

financial instruments. The thematic field of the facilitating socially responsible investment

characterizesfinancial instruments.Theaimistointegratesocial,andenvironmentalconcerns

into the coreofbusinessactivity through financial incentives (Steurer,2010:63).Figure4.2.1

offersasummaryoverviewofthefinancialinstrumentsprovidedbytheDutchgovernmentand

thefieldofactioninwhichitapplies.

Figure4.1:TypeofInterventionandThemestheGovernmentalInstrumentsrepresent

4.2.1.1CSRSubsidies

Businesses that comply with the OECD guidelines can receive financial support from the

government in international trade and investment activities (Rijksoverheid, 2016a). The

Netherlands Enterprise Agency and CSR Netherlands support businesses to fulfill their

responsibilities (Huber & van den Linden, 2016). CSR Netherlands (see: 4.2.4.3) provides a

subsidy specific for small tomedium-sized enterprises (SMEs), the so-called ICSR Voucher. A

businessthatwantsadviceonwaystoimprovetheirCSR,canapplyforanICSRVoucherandthe

government subsidizeshalf of the consultancy costs.Thisoffers SMEs theopportunity to take

steps they otherwise might not (or could not) take (Huber & van den Linden, 2016). The

governmenthastheaimtolowerthethresholdforbusinessestoadaptCSR.

The Netherlands Enterprise Agency has four subsidy instruments in place regarding

sustainability issues. The Energy Investment Deduction (EIA) is a subsidy instrument for

businessestogainataxadvantagebyinvestinginenergy-efficienttechnologiesandrenewable

energy. Clothing businesses can apply for this subsidy and take steps to lower their energy

consumption (RVO, 2016a). Businesses can also apply for the Environment Investment

Deduction(MIA)andArbitraryDepreciationofEnvironmentalInvestments(VAMIL).Bymaking

FieldofactionGovernmentalInstrumentTypeofIntervention

Financialinstruments CSRSubsidies Sociallyresponsible

investment

23

useofMIAorVAMIL subsidies, businesses can invest in environmentally friendlyproductsor

resourceswithafiscaladvantageandbringinnovativeandsustainableproductstothemarket

(RVO,2016b).Anothersubsidy instrument topromoterenewableenergy is theStimulationof

SustainableEnergyProduction(SDE+).TheSDE+isusedtoinvestin-forexamplesolarpanels-

but also technologies regarding biomass, geothermal energy, water, wind and (RVO, 2016c).

Lastly, businesses can jointly apply with other stakeholders to the Top Sector Energy (TSE),

whichalsofocusonrenewableenergy(RVO,2016d).

It is interesting topointout thatnoneof thesesubsidiesarespecifically targeting theclothing

sector.ExcepttheICSRvoucher,thesubsidyinstrumentsallfocusontheenvironmentalaspects

of business activity. Businesses can apply to the subsidies on a voluntary basis. To get the

subsidiesonemustmeetcertainrequirements.Inthiscase,abusinesshastoconsidertheOECD

guidelines.Whentheguidelinesareexceeded, the fundingcanbewithdrawn.However, so far,

thishasnotbeendone.Until now, therehavebeen critical conversations inwhichbusinesses

wereheldaccountableandhad toexplain themselves.Anotherpossible step is toaddress the

casetotheOECDNationalContactPoint.This leadstomediationwherecompromise issought

(Huber & van den Linden, 2016). These subsidies are considered to be weak economic

incentives.ExportsubsidieswithCSRstringsormoreeconomicincentiveinstrumentsaremore

successfulinraisingawarenessofCSRamongbusinessesthatareusuallyhardtoreach(Steurer

etal.,2011:211-212).ExamplesoftheseexportsubsidiesdonotexistintheNetherlands.

4.2.2InformationalInstruments

Within the governmental instruments provided by the Dutch governments, The Sector Risk

Analysis is considered to be an informational type of intervention. The main purpose of its

existenceistohighlightoptionsandthepossibleconsequencesbyusingknowledge.Figure4.2.2

offersasummaryoverviewoftheinformationalinstrumentprovidedbytheDutchgovernment

andthefieldofactiontowhichitapplies.

Figure4.3:TypeofInterventionandThemestheGovernmentalInstrumentsrepresent

4.2.2.1.SectorRiskAnalysis

In2014,theDutchgovernmentcarriedouta“SectorRiskAnalysis”withtheaimtoidentifythe

sectorswith elevated CSR risks in order to start a dialoguewith the sector about these risks

FieldofActionGovernmentalInstrumentTypeofIntervention

InformationalInstruments

SectorRiskAnalysis AwarenessonCSR

24

(Rijksoverheid,2016a).TheSectorRiskAnalysisisaclear-cutexampleofaninformationalCSR

policyinstrumentthatusesmoralandfactualpersuasionbypointingouttheCSRrisksinsectors

(see also Steurer, 2011: 208). The analysis identified thirteen high-impact priority sectors,

including the clothing sector. The CSR risks are more elevated then in other sectors (KPMG,

2014: 8). The analysis identified both social and environmental risks that are elevated in the

clothing sector. Regarding the social conditions, elevated risks are: child labor; unhealthy and

unsafeworkenvironment;lowwages;excessiveworkhours;andviolationsoftradeunionrights,

freedom of association and women rights (Idem: 154-5). The environmental risks contain:

greenhouse gas emissions; animalwelfare;water and soil contamination in the production of

cottonandtextile; theuseofchemicals inthecultivationofcotton; theuseofchemicals inthe

processofdyingandbleachingthematerials(Idem:8,154-5).

Theanalysisalsoreportsonthecurrentsituationandthestepsalreadymadeby thesector. It

describesaninitiativefromthesector,theActionPlanforaMoreSustainableDutchTextileand

ClothingSector.The sector committedon theirown initiative to theActionPlan in2013.This

ActionPlanisajointapproachtotackletheproblemsthatoccurinthesupplychaininwhichact

uponDueDiligenceinastructuralway(Idem:155).TheRiskAnalysispointsoutthatalthough

theActionPlan is an important step in the right direction, some risks are underexposed. The

clothing sector has traditionally had a strong focus on labor issues, while the sector-wide

implementationofenvironmentalactivitiesislimited.ThiswasreflectedintheActionPlan.The

analysis emphasizes the importance to focus on both aspects equally. Besides providing

informationontheCSRrisks,ithighlightstheoptions(withoutimplyingconstrains)andpaves

thewayfortheCovenantSustainableClothingandTextile(see:4.2.4.4)

4.2.3PartneringInstruments

AlthoughpartneringinstrumentsplayavitalroleinthecontextofCSR,intheDutchcasethereis

onlyoneinitiativethatfitsthedescription,theSustainableTradeInitiative(IDH).Thepurposeof

partneringinstrumentsisbringinggovernmentagenciesandbusinessestogether.Inthecaseof

theIDH,thisisintheformofastakeholderforum.Figure4.4offersasummaryoverviewofthe

partnering instrument provided by theDutch government and the fields of action inwhich it

applies.

4.2.3.1SustainableTradeInitiative

The IDHwassetup in2008and isapublicly fundedandgovernmentmandatedchangeagent

(IDH,2016a).TheIDHwascalledintobeingtostrengthensustainableprocessesthroughoutthe

25

Figure4.4:TypeofInterventionandThemestheGovernmentalInstrumentsrepresent

production chain. Supporting andworking alongsidewith large and leading corporations, the

IDH is trying to accelerate the process of up scaling sustainable productionworldwide (Krol,

2016).Theaimistoencouragesustainabletradebybuildingresult-orientedcoalitionsbetween

businesses, NGOs, governments and other stakeholders (Rijksoverheid, 2016a). The IDH

describestheclothingsectorasasector“whereproductsaresourced inadownwardspiralof

cheaplabor,lowqualityandexploitative,unsafeandpollutingfactories”(IDH,2016b).TheIDH

argues for a business case for sustainability, in which win-win situation and it becomes

economicallyattractiveforallthestakeholderstoproducemoresustainably(Ibid;Krol,2016).

TheIDHcanbeconsideredaspartneringinstrumentasitpromotesdialoguesandpartnerships

betweenstateandnon-stateactors(seealsoSteurer,2011:212).

In2010, ledbyIDH,54chairpersonsofDutchandinternationalbusinesseswrotealetterwith

theirviewtotheDutchGovernmentinwhichtheycalledforacommonsustainabilityagendafor

international trade. Especially for facilitating governmental policies regarding to sustainable

trade,makingpublic investments andhavingministries and embassies promoting sustainable

trade (IDH, 2010: 2-3). The only Dutch clothing business subscribed to the letter containing

these views was G-Star (Idem: 5). In addition to this, is IDH attempting to bring about a

sustainable changewith four initiatives. It aims to establisha ‘Race to theTop’ inVietnamby

catalyzing sustainable growth (IDH, 2016c). Secondly, it aims to increase sector collaboration

throughtheSustainableApparelCoalition(SAC),asector-widegroupof80 leadingcompanies

and public stakeholderxs (IDH, 2016d) Thirdly, the IDH aims to improve productivity and

compliancethroughthePakistanBuyer'sForum,a joint initiatewiththeInternationalFinance

Corporation(IFC)andtheILO(ILO,2016).Lastly,witha joint initiative ‘CleanByDesign’with

theIFCandlargecorporationtheIDHtriestoreducetheenvironmentalimpactoftheclothing

industryinChina(Krol,2016).Participationtooneoftheinitiativesisonavoluntarybasis.The

IDH concentrates on large corporations because with their large purchasing power, the IDH

initiativeshavegreaterforces.ThesenotalwaysincludeDutchbusinesses.Thisdoesnotmean

FieldofActionGovernmentalInstrument

TypeofIntervention

PartneringInstruments

SustainableTradeInitiative

AwarenessonCSR

Transparancy

26

thatSMEsareexcludedfromIDHinitiatives;togetherwiththeSAC,IDHsupportsSMEstojoinin

with large corporation and further up-scaling sustainable production (Krol, 2016). There is

currently no public information onDutch clothing companies’ participation in IDH initiatives.

ThereareDutchparticipantsinboththePakistanBuyer'sForumandtheSAC,butthisisnotyet

communicatedpublicly(Krol,2016).

ThefocusoftheIDHisinlinewithinternationalguidelinesandtreaties.Theimportanceofbothsocial1andenvironmentalaspectsisemphasized.However,whentheroadmapforthePakistan

Buyer's Forum is examined, there is a quantitative distinction; the social aspects include 27

topics, in comparison to 8 environmental topics (IDH, 2015: 3-4). This difference can be

understoodasthesocialaspectsarelikelytodescribemorespecificproblems(suchasmaternity

benefits or provisions for leave)while environmental aspects are likely to describe risks in a

broadersensethatcoverlargerarea’s(suchaswatermanagement,soilerosionorpollution).

4.2.4HybridInstruments

Byfar,mostoftheinitiativesfromtheDutchgovernmentregardingCSRarehybridinstruments.

Hybrid instruments are combinations of two or more types of interventions. Both the

transparency Benchmark and the Dutch foreign policy consist of informational and financial

aspects.CSRNetherlandsiscombinationofpartnering,informationalandfinancialinstruments.

Whereas the Covenant Sustainable Clothing and Textile and Sustainable Public Procurement

combininglegal,informationalandpartneringinstruments.Figure4.5offersanoverviewofthe

hybridinstrumentsprovidedbytheDutchgovernmentandtheapplicablefieldsofaction.

4.2.4.1ForeignPolicy

TheforeignpolicyoftheNetherlandscanbeunderstoodintermsofahybridinstrument,asitis

acombinationof informationalandfinancial instruments.Thegovernment isexertingpolitical

influenceonlocalgovernmentbyitsembassies.Embassiessupportbusinessesintheireffortsin

thefieldofCSR.TheyalsoadvisebusinessesontheCSRrisksthatmayoccurinforeignmarkets

(MinisterievanBuitenlandseZaken,2016:1).TheydothisbymakinguseoftheCSRriskcheck

provided by CSR Netherlands (Rijksoverheid, 2016a). When businesses encounter problems

abroad and require local governments to help solving this, the Dutch embassies can play a

mediatingrolebyaddressforeigngovernmentsoftheirresponsibilitytohonortheinternational

agreements (Huber& van den Linden, 2016). CSRplays an important role in theDutch trade

1The IDHmakes a distinction between social and labor conditions. In this thesis labor conditions are

understoodasapartofsocialaspectsofCSR.Therefore,whenthesocialaspectsoftheIDHarediscussed,

thisincludesthelaborconditions.

27

Figure4.5:InterventionTypeandThemesrepresentedbytheGovernmentalInstruments

28

missions. Businesses that take part in these trade missions have to subscribe to the OECD

guidelines and delegations have to raise awareness on CSR in the visiting countries

(Rijksoverheid,2016a). Itprovidesaneconomic incentive forbusinessesbecauseparticipating

intrademissionscanresultinbuildingupanewnetworkoftradingpartners.Althoughthereare

certain requirements imposed on the participation, the foreign policy instrument, again, is

voluntarybynature.BusinesseshavetoactconformtotheOECDguidelines,whichconsistsof

both social and environmental aspects. Therefore, there is no evidence that the government

favorsoneaspectovertheother.

TheforeignpolicystrategyoftheDutchgovernmentistargetingthreefieldsofaction.Byplaying

amediatingrole,thegovernmentisbuildingcapacitiesamongthestakeholders,whichispartof

the raising awareness action field. By favoring businesses that take CSR reporting seriously,

foreign policy stimulates transparency. In addition to this, the government takes up an

exemplary role. With CSR as one of the priorities, the government is addressing other

governmentsoftheirresponsibilities.

4.2.4.2.Transparencybenchmark

The Transparency Benchmark (hereafter: Benchmark) provided by the Ministry of Economic

Affairsisahybridinstrumentcombininginformationalandfinancialinstruments.Theaimisto

raiseawarenessabouttheleveloftransparencyinsustainabilityreportingbybusinesses.Since

2004, it has been performed every year. In 2013 the Benchmark was adapted to fit the

international developmentswith regard to CSR (Ministerie van Economische Zaken, 2014: 5).

TheBenchmark is a studyof sustainability reporting among the500 largest companies in the

Netherlands(TransparencyBenchmark,2016a).Businessesassessthedegreeoftransparencyof

theirCSRperformance.Theseself-assessmentsarecheckedandusedtoawardcompanieswith

points (a total of 200 points can be awarded). There is an equal focus on environmental and

social aspects within the criteria of the assessment. To continue to stimulate companies that

alreadyreportontheirCSRperformance,thecompanywiththehighestscorecanwintheCristal

award. Awards such as the Cristal are widely used financial instruments to promote

transparency,butcanbeconsideredasrelativelyweak(Steureretal,2011:211).

By offering guidelines for businesses to assess their performance and supplying information

resources, the government uses the Benchmark as an informational instrument. The

informationalpartalsoconsistsofastimulationstrategytotargetthebusinessesthatdonotyet

takepartintheself-assessments(MinisterievanEconomischeZaken,2014:5).Inthecaseofthe

clothing sector, a disadvantageof theBenchmark is that it targets the500 largest businesses.

Therefore, only four clothingbusinesses takepart:Zeeman,Hema,MissEtamanddeBijenkorf,

29

and the last two have not provided the Benchmark with any results yet (Transparency

Benchmark,2016b).Thelackofpresencecanbeexplainedbecausetheclothingsectorincludes

a lot of small businesses, and themajority therefore does notmeet the criteria to participate

(Huber&vandenLinden,2016).AlthoughtheBenchmarkhasproventobeefficient forother

sectors with an improvement in CSR activity in 43% of the businesses (Ministerie van

EconomischeZaken:4), itseemstobeunabletotarget theclothingsectorby focusingonlyon

largebusinesses.

4.2.4.3.CSRNetherlands

The Dutch Ministry of Economic Affairs created CSR Netherlands in 2004, a knowledge and

network organization that focuses specifically on CSR. It is a hybrid instrument on raising

awareness and capacity building that combines partnering and informational aspects of the

typesofintervention(seealsoSteurer,2010:212).CSRNetherlandsdistinguishesthedifferent

opportunities and risks that exist in each sector in the field of CSR and offers a voluntary

platformforbusinessesthatwanttobecomemoresustainable(CSRNetherlands,2016).Itdoes

not target businesses without CSR ambitions. By offering a platform for businesses to meet

government, research institutions, non-governmental organizations, trade unions and other

importantstakeholders,itwantstoachieveatransitiontoamoresustainableworld(Ibid).With

regard to the Dutch clothing sector, CSR Netherlands provides specific guidelines to reduce

waste, improve social conditions and raise awareness about the impact of the use of certain

materials(CSRNetherlands,2015:1). Ithascreatedthesocalled“CSRriskcheck’,whichoffers

businessesthepossibilitytogaininsighthowmuchrisktheyrunasabusiness(CSRriskcheck,

2016) andhow todealwith these risks by offeringpossible solutions (CSR riskmanagement,

2016).ThesesolutionsfocusonbothenvironmentalandsocialaspectsofCSR.Toimprovethe

social standards CSR Netherlands refers to the FWF and emphasizes the importance of good

relations with the suppliers. The solutions focusing on the environmental aspects are more

extensive:usingrecycledorsustainablematerialsinproduction;rentingoutclothes;takingback

andrecyclingoldclothes;orrepairingclothes.

4.2.4.4.CovenantSustainableClothingandTextile

In March 2016, the “Covenant Sustainable Clothing and Textile” (hereafter: Covenant) was

established as a result of a dialogue between the Dutch government, businesses and other

relevant stakeholders toaddress the risks thatoccur in theclothingsector ina structuraland

solution-oriented way (SER, 2014: 7). Thus creating a hybrid instrument in which legal,

informational and partnering aspects of intervention are combined. The government plays an

importantroleinboththedevelopmentoftheCovenantandinitsexistence.Firstly,thedialogue

30

took place on invitation of theDutch government (SER, 2016: 4). Secondly, by stimulating its

development by facilitating a platform where all stakeholders are urged to join the dialogue

(Huber & van den Linden, 2016); by offering support throughout the process in order to

successfullyestablishanambitiousandrealisticagreement;andparticipatingasapartnerinthe

dialogue(SER,2014:9).Thirdly,byprovidingfinancialandpoliticalsupportasagovernmental

body(SER,2016:18-19).Itsobjectiveistwofold:firstly,tomakeaconsiderablestepforwardin

improvingspecificriskswithinaperiodof5years,andsecondly,toprovideacommonsolution

toproblemsthatcannotbeovercomeindividually(SER,2014:8).

Signing theCovenant, givesbusinesses theadvantageof anticipating societal expectationsand

fulfilling their responsibilities of Due Diligence. Thus, it becomes easier for businesses to get

financialsupportfromthegovernmentandsupportindevelopingtheirCSR-policy(Idem:5-6).

TheCovenantalsospecifically targets smallerbusinessesbyofferingadditional support in the

form of manuals, workshops and sample letters to provide guidance in understanding and

implementingDueDiligence (Idem:17).Therefore, theCovenantcanbeapplied in the fieldof

raising awareness and facilitating socially responsible investment and also in the field of

increasingtransparency,asitrequiresCSRreporting.

IntheCovenant,ninespecifictopicsareidentifiedthatdeservepriorityattentionofbusinesses

inthetextileandclothingsectoractiveintheNetherlands:

Table4.2-PriorityTopicsoftheCovenant

Socialconditions Environmentalconditions

1. Discriminationandgender 1. Naturalresources

2. Childlabor 2. Water pollution and use of

chemicals,waterandenergy

3. Forcedlabor 3. Animalwelfare

4. Freedomofassociation

5. Livingwage

6. Safetyandhealthworkplace

Source:SER,2016:15

Intheninetopics,aquantitativedifferenceinthefocusonenvironmentalandsocialconditions

canbeobserved.AsinthecaseoftheIDH,thisdifferencecanbeunderstoodfromthewaythe

conditionsaredescribed.Inthedescriptionoftheenvironmentalconditions,thethreetopicsare

comprehensive. Natural resources not only focus on the use of water but also on circular

economy, recycling, andunderstandingof sustainable rawmaterials (SER, 2016: 36-7).Water

pollutionanduseofchemicals,waterandenergyisalsoinclusivewithfocusingonuseofwater,

31

use of chemicals, use of energy and land, disposal and dumping of chemicals and pollution

(Idem:37-8). While theenvironmental topics focusona rangeof issues, the social topicsare

moreunequivocal.

The Covenant includes some priorities pointed out in the Sector Risk Analysis (gender and

animalwelfare),whichwere notmentioned in the initiative from the sector Action Plan. The

Covenantisnotonlymoreinclusive,butalsobroaderandaimsmoredepth.Itisbroaderinthe

sense that it is supported by four parties (national government, civil society organizations,

unions,andtradeorganizations).It isnolongerentirelyvoluntaryfortheparticipantsandhas

more impact as the performance of the participantswill be assessed andmonitored annually

(Idem: 5, 10). The Covenant also includes the legal type of intervention. Although signing the

Covenantisvoluntary,therequirementsoftheCovenantarequitestrict.TheCSRperformance

and the quality of CSR reporting of businesses aremonitored. If the efforts of a business are

belowstandards, thebusiness isaskedto increasetheirefforts(Idem:10-1).Whenabusiness

does not take action, it has to face the complaints and disputes committee or even theDutch

ArbitrationInstitute(Idem:13-4).

4.2.4.5.SustainablePublicProcurement

ThefinalhybridinstrumentusedbythegovernmenttoputCSRpolicyintopracticeisthrough

sustainable public procurement. This is a combination of legal, partnering and informational

types of intervention that applies in the fields of lead by example, transparency and raising

awareness on CSR. Sustainable procurement is used as a legal instrument including

environmental and social requirements and guidelines that apply in purchasing of goods or

services, such as energy efficient, using recycledmaterials and fairproduction (Rijksoverheid,

2016b).Bybuyingsustainableproducts,thegovernmentiscreatingamarketforsuchproducts

and is setting an example for others (Huber & van den Linden, 2016). In addition, the

governmentusestheprocurementpolicytohelppeoplewithadistancetothelabormarketto

findjobs(Rijksoverheid,2016b).Publicprocurementisalsousedtopromoteinnovationandto

providemoreopportunities for SMEs and freelancers. Thepartneringparts in the sustainable

publicprocurementare thePIANOonetworkandthePurchasing InnovationUrgencyprogram

(PIU).ThePIANOonetworkfostersanexchangeofexperiencesamongpublicprocurers.Itstask

istoprofessionalizethepublicprocurementatalllevelsofgovernment(PIANOo,2016,seealso

Steurer,2010:212).ThePIUprogramisaplatformthatbringstogetherinnovativesupplyand

demand and stimulates businesses to buy sustainable innovative products (Rijksoverheid,

2016b).Within the sustainable public procurement both social and environmental aspects of

CSRareconsideredequally.

32

4.3.Conclusion

ThischapterdemonstratesthattheDutchgovernmentiscommittedtoimprovingthesocialand

environmentalconditionsthroughoutthesupplychainoftheclothingsector.Forthispurpose,

there are several policy instruments in place and the development of these instruments are

based on international agreements. For quite some time, the Dutch government has been

involvedinsettingupinitiatives,suchastheCSRNetherlandsandTransparencyBenchmarkin

theearly2000s.Especially2011,marksanimportantstartingpointwiththeadaptationofthe

OECD Guidelines and the establishment of the Guiding Principles. Committed to the OECD

Guidelinesand issuingthepolicy lettervoicingtheview“CSRpaysoff”, theDutchgovernment

expresseditsambitionstofurtherimprovetheconditionsinthesector.Thelatestinstrument-

the Covenant established earlier this year - seems promising because of it is ambitious and

inclusivenature.

In thisstudy, theDutch initiativesaredivided intoconceptualpolicy instrumentsaccording to

Steurer. By doing so, this study provides a plain picture of the Dutch CSR policies without

describing a random collection of initiatives. Strikingly, most initiatives are characterized as

hybrid instruments.Thedifferentaspectsunderline thecomplexityof the fieldofCSRpolicies.

Furthermore, the main fields in which the initiatives operate are raising awareness and

improving transparency. The Dutch government recognizes its own responsibility to help the

sectoridentifyingandunderstandingtherisksthroughoutthesupplychainandprovidesupport

andworktowardssolutions.Asexpected,thegovernmentalinstrumentsarevoluntarybynature.

Thereason is thatmostofCSR-risks falloutside the jurisdictionof theDutchgovernmentand

because the government hopes to stimulate businesses in a voluntary way to take their

responsibilities. This explains why there are no specific legal policy instruments. With the

establishmentoftheCovenantanditsrequirements,asteptowardmorestringentinitiativesis

taken. However, because of the voluntary nature of the existing initiatives it is, the question

remainswhetherthestragglers-thegroupofbusinessesthatisnotmotivatedenoughtouptake

CSRpolicies -willbestimulated toundertakemoreactionaswell.At themoment, there isan

ongoingdebatewithinthegovernment,ifthereislittleactionfrombusinessestowardspositive

CSR behavior, whether or not they should enforce Due Diligence legislation. This will be

discussedinchapter6.

ThegovernmentalinstrumentsprovidedbytheDutchgovernmentsfocus,ingeneral,equallyon

boththeenvironmentalandsocialaspectsofCSR.Therewerethreeexceptionswherethiswas

notthecase.Althoughthesubsidyinstrumentfocusesonbothenvironmentalandsocialaspects,

thereisastrongeremphasisontheenvironmentaspectsbecauseofamultitudeofsubsidiesfor

33

sustainableenergy.BothinthecaseoftheIDHandtheCovenantaquantitativedifferenceinthe

focusonenvironmentalandsocialconditionscanbeobserved,inwhichastrongeremphasisis

on the social aspects. However, in both cases, environmental aspects appear to be

comprehensive.Itis,therefore,thequestionwhetherthereisaqualitativedifference.

The Dutch government is committed to the issue and put far-reaching initiatives in place to

achieveimprovementsinthesectorthathaveimplicationsfortherestofthisthesis;becausethe

government’sinvolvement,itcanbeexpectedthatbusinesseswilltakenoticeandthatthiswill

affecttheirCSRpolicy.

34

5.ABusinessunderstandingofCSRIn this chapter the focus lies on the business side of CSR. This revolves around the way

businesses define CSR; the focus on CSR aspects; the development of CSR policy within the

company and the underlying motives; and the actual CSR activity of the businesses. The

definitionandthefocusarecomparedtotheperceptionsofCSRfromgovernmenttoanswerthe

secondsub-question:

To what extent do the definition and focus of CSR from businesses and the

governmentcorrespond?

ThedegreeofcorrespondencecontributestotheunderstandingoftheeffectivenessoftheDutch

government involvement.WhentheunderstandingofCSRistoa largeextentcomparable, it is

more plausible that the government is influencing the business understanding of CSR. The

motivesforthedevelopmentofCSRpolicyandtheactualCSRactivitycontributetoanswering

theresearchquestion. Itprovides insight intotheextenttheDutchgovernmentplaysarole in

theestablishmentof theCSRpractices in theDutchclothing sector. In theprevious chapter is

established that theDutchgovernment is committed to improvingsustainablepractices in the

clothingsectorandhasavarietyofinitiativesinplacetorealizethistransition.Itcan,therefore

beexpectedthatelementsofthegovernmentperceptionofCSRarereflectedinthebusinesses

understandingofCSR.

Thechapterconsistsoffourparts.First,thewaybusinessesdefineCSRisdiscussed.Secondly,is

determinedwhichaspectsofCSRthebusinesscommunityemphasizes.Thisiscomparedtotheir

actualCSRpractices.ThirdlytheestablishmentoftheCSRpracticesandthemotivesbehindthis

arediscussed.Inthefinalpartthesefindingsarecomparedtothegovernmentalunderstanding

of CSR in order to answer the sub-question. In addition, the way the findings relate to the

researchquestion isdiscussed. Thedataused in this chapter is collected from the interviews

conductedoveraperiodoftwomonths.Inadditiontotheinterviewwiththepolicymakersfrom

theMinistry of ForeignAffairs, six interviewswithCSR representatives frombusinesseswere

conducted.Togethertheyrepresent11clothingbusinessesthatdifferinsize,capacityandactual

CSRactivity(seeforcontactinformation,Appendix10.2).InformationonCoolCatandMSMode

is absentas the interviewwithRemcoKouwenhovenonly revealed information regarding the

business understanding of CSR of America Today. This is complemented with data gathered

from policy documents and websites on CSR activity. Table 5.1 offers an overview of the

characteristicsregardingCSRoftheinterviewedbusinesses.

35

2Rank-A-Brandmakes a distinction between climate and environmental aspects. In this thesis climateconditionsareunderstoodasapartofenvironmentalaspectsofCSR.Therefore,whentheenvironmental

aspectsofRank-A-Brandarediscussed,thisincludesclimateaspects.

MOTIVE

Moral,after

receiving

bad

publicity

Moral

Moral,

resourcesto

doso

Moral,

market

trends,

competitive

position

Moral

Moral,

preventbad

publicity

RANK-A-

BRAN

DSCORE

ENVI-

RONMENTAL

CONDITION

S2

6outof18

1outof18

0outof18

3outof22

11outof18

2outof18

RANK-A-

BRAN

DSCORE

SOCIAL

CONDITION

S

8outof14

5outof13

3outof13

4outof14

8outof14

4outof14

ACTIVITY

MADE-BY,Codeof

Conduct,20%materialis

sustainable,participation

inChildLaborproject

Mem

berFairW

ear

Foundation,10%

materialissustainable

Mem

berBSCI,

participationinChild

Laborproject

Mem

berBSCI,5%

materialissustainable,

participationinChild

Laborproject

90%materialis

sustainable,Mem

berFair

WearFoundation,water-

managem

ent,recycles

andrepairsproducts

Mem

berBSCI,

participationinChild

Laborproject,MADE-BY

FOCUS

BothSocial

and

Environ-

mental

BothSocial

and

Environ-

mental

BothSocial

and

Environ-

mental

BothSocial

and

Environ-

mental

BothSocial

and

Environ-

mental

BothSocial

and

Environ-

mental

DEFINITION

Consideringthe

socialand

environm

ental

effectsof

production

CSRconcerns

theentirewayof

business

managem

ent

“CSRis(…)what

itsmeansinthe

broadestsense”

“Theimpactin

social(…)andthe

environm

ent.

“Makebeautiful

denimsinthe

mostresponsible

waypossible”

“Holistic”,

“Makingtheright

choices”

BUSINESS

G-Star

KingLouie

Sissy-Boy

AmericaToday

KingOfIndigo

Vanguard,PME

Legend,Cast

Iron

Table5.1-BusinessCSRCharacteristics

36

5.1DefiningCSR

The interviews revealed that the businesses interpretations of CSR are highly comparable to

eachother.ItisbasedonthenotionthatCSRrevolvesaroundtheimpactofabusinesstosociety

as a whole. It covers all aspects of business management and can be considered as a broad

understanding of CSR correspondingwith that of the government. This is further outlined in

table5.1.ThewaytheCSRmanagerfromSissy-Boy,ReneMulderdescribesit,isexemplaryfor

thebusinesses:

“If you Google themeaning of CSR, you getmany definitions. It is often confused

withlaborstandards,childlabor;itiscombinedwithapieceofsustainability.Butit

is all connected. FormeCSR is actuallywhat itmeans in thebroadest sense. It is

dealingconsciousand socially responsiblewitheveryaspectwithinyourbusiness.

Whether this is your electricity use in shops, transport, down to production, the

environmentorlaborstandardsinfactories”.

KirstenZwart,CSRManageratKingsOfIndigo,furtherillustratesthis,bysaying:

“ CSR is one of the pillars of Kings Of Indigo;Make beautiful denims in themost

responsibleway.”

5.2FocusinCSRpolicies

InalltheinterviewstheimportanceofbothsocialandenvironmentalaspectsinthefieldofCSR

wereemphasized.LikeJeroenDijkema,ManagingDirectorfromKingLouie,notes:

“Socialaspectsarenotmore important, it isas importantas themoreeco-friendly

component.”

KirstenZwart,SourcingManageratKingsOfIndigo,says:

“People & planet; both are equally important and inseparably connected to each

other.”

Althoughthebusinessesemphasizetheimportanceofbothaspects,therearefourcasesinwhich

respondents revealed that they initially started improving the social aspects. This is also

reflectedintable5.1inwhichtheCSRcharacteristicsofthebusinessesaredescribed.Thescores

given byRank-A-Brand regarding the social and environmental business activity showhigher

scores in the field of social conditions. Kings of Indigo is the exception with higher

environmentalscores.ThisisduetotheprogressiveCSRpolicyKingsOfIndigohashadsinceits

establishment in 2012 inwhich it has been activelymaking sustainable choices in both fields

(Zwart, 2016). To illustrate: the CSR policy of Kings Of Indigo is already in line with

37

requirementsoftheCovenant.Sissy-BoyhasonlyjuststartedwithCSRandiscurrentlyworking

on improving the social aspects (Mulder, 2016). However, the businesses expressed their

motivationtoalsoaddresstheenvironmentalaspects.CSRisconsideredasanongoingprocess

in which improvements are made step by step. Like Remco Kouwenhoven, CSR Manager for

AmericaToday,explains:

“Initiallythefocuswasmainlyonlaborconditions.(…)Butnowseethatsubstantial

changes are beingmade on environmental aspects. It is actually an extension of it

[CSR].Itisalsosimplypartofyourimpact.”

The initial focus on social aspects can be explained by the greater attention social conditions

havereceived fromexternalparties(Kouwenhoven,2016;seealsoBosch,2016).According to

Remco Kouwenhoven, this is because of incidents of child labor practices in the 1990’s, and

morerecentlythecollapsetheRanaPlazafactorycomplexin2010inBangladesh.

While businesses differ in size, capacity and actual CSR activity, the intrinsic motivation to

improveCSRonallaspectsispresent.BusinesseswithprogressiveCSRactivity(KingsofIndigo,

G-star)andbusinesseswithaverageCSRactivity(KingLouie,Vanguard,PMELegend,CastIron

and America Today), both implement the environmental and social aspects in the actual CSR

activity(Seealsotable5.1).Sissy-BoyhasjuststartedimprovingitsCSR,andhasastrongfocus

on social aspects. However, Sissy-Boy has an intrinsic motivation exists to also improve

environmentalaspects.ItappearsthatintheactualCSRactivitythereisagreateremphasison

socialaspects tosomeextend.Withregard toenvironmentalaspects, improvementshavealso

beenmade.ThisemphasisonsocialaspectsisnottofoundinthedescriptionofwhatCSRentails.

5.3EstablishmentofCSRPolicyandtheUnderlyingMotives

The CSR policies of King Louie, America Today Vanguard, PME Legend and Cast Iron have

developed roughly the same.Within the businessmanagement of these companies, there has

always been an assumption of doing good business and making good products, without

unpleasantsideeffects.Thishasdevelopedtoapoint,threeyearsago,wherethesebusinesses

felt the need to professionalize their CSR policies. In order to professionalize, alliances were

soughtwithFairWearFoundation(KingLouie),BSCI (AmericaToday,Vanguard,PMELegend

andCastIron)andMADE-BY(Vanguard,PMELegendandCastIron)andenvironmentfriendly

waystoproducewereexplored.Seeforthecharacteristicsofthesemembershiporganizations:

table 5.2. Engaging in good business practices is considered to be a logical decision. Jeroen

Dijkema,ManagingDirectorfromKingLouieexplainsthisbystating:

“Let the consumer appreciate us for the beautiful clothes we make and she can

38

expectthesetobemadeassustainableaspossible”

The rationale behind the development of the CSR policy from America Today contains other

elements as well: market trends, consumer awareness and its competitive position made

AmericaTodaydecidetoimproveitsCSRactivity.Tothequestionwhetherthegovernmenthas

playedaroleinthedevelopmentoftheCSRpolicy,RemcoKouwenhoven,theCSRManagerfrom

AmericaToday,saysthefollowing:

“The government does create context. (…) But honestly, the efforts from the

governmentwerenotarealmotivationforustodoit.”

From its establishment on, CSR has played an important role in the businessmanagement of

KingsOfIndigo.CSRactivityisconsideredtobeself-evident(Zwart,2016;seealsoTheDenim

Daily,2014).InthewordsofTonyTonnaer,founderofKingsOfIndigo:

“Icouldneverstartmyowncompanyanddodirtydenim”(FashionUnited,2016)

KingsOf Indigodirectly joined theFWFandstartedusingsustainablematerials fromdayone

(Zwart,2016).Thisnaturalnessinincorporatingsustainabilityintothecoreofthebusinesscan

alsobeseenatG-Star(HuffingtonPost,2014).However,atG-starthedevelopmentofCSRtook

placeafterallegationsofpoorworkingconditions in2006 (Lambooy,2009:5,45). Since then

theCSRactivityofG-Starhas evolvedprogressively. It considersCSRas a condition fordoing

business (Huffington Post, 2014). Improving CSR policy has become a priority for Sissy-Boy

during the past year. Sissy-Boy had a financially rough time and although it has recovered, it

claimsitisnotyetinthepositiontobeprogressiveinthefieldofCSR.Sissy-Boyhastheintrinsic

Table5.2-CharacteristicsMembershipOrganizations

FWF A multi stakeholder initiative that works with businesses and factories to improve labor

conditions for garmentworkers. It has80members. It aims to increases effectivenessof the

efforts made by businesses (Fair Wear Foundation, 2016). The FWF is considered as

progressiveNGOswithastringentCodeofConduct(Huber&vandenLinden,2016;seealso

Dijkema,2016).

MADE-BY

ANGOactingtoimproveenvironmentalandsocialconditionswithinthefashionindustry.The

focus isonconsultancyandproviding transparent tools forbusinesses to communicate their

progress. Although the Code of Conduct is less stringent, MADE-BY includes both

environmentalandsocialconditionsandoffers.MADE-BYhas8members(MADE-BY,2016)

BSCI A business-driven initiative supporting retailers, importers and brands to improve working

conditions in supplying factories and farms. BSCI has 1.870 members (BSCI, 2016). BSCI is

consideredtoalessstringentorganization(Mulder,2016andKouwenhoven,2016).

39

motivationtoimproveCSR,butnotallnecessaryresourcestoitsdisposaltodoso.Therefore,it

wasdecidedtoimproveCSRactivitystepbystep,withthefirststepjoiningBSCI(Mulder,2016).

Although King Louie has been actively improving its CSR policies, it also mentioned limited

resources,duetotheirsize,asafactorholdingfurtherCSRimprovementsback(Dijkema,2016).

InthissectiontheestablishmentoftheCSRpoliciesandtheunderliningmotiveswereexamined.

Inrecentyearsa trendhasbeenobserved inwhichbusinesseshavestartedtoprofessionalize

their CSR policies by entering into memberships with organizations such as BSCI, FairWear

Foundation andMADE-BY. Businesses had a range ofmotives to adapt or improve their CSR

policies.TheyshowedamoralassumptiontoimproveCSR.Othermotiveswere(preventing)bad

publicity, market trends, consumer awareness and competitive position. Motives for not

improvingCSRwerethelackofresources,whetherthiswasduetofinanciallyroughtimesorthe

size of thebusiness. Thesedifferences are furtherdiscussed in 6.4. The effort from theDutch

government, as Remco Kouwenhoven pointed out above, does not seem to motivate the

businessestoadaptorimproveCSRpolicies.

5.4Conclusion

Thebusinessesarequiteunanimousoncertainpoints.Althoughtheydifferinsize,capacityand

actualCSRactivity,theyshareawillingnesstotackletherisksintheirsupplychains.Theyalso

sharethesamebroaddefinitionofCSRinwhichthefocusisnotlimitedtoeithersocialwelfare

issues or environmental issues. This is comparable to the government its perception of CSR

described in the previous chapter: the Dutch government expects businesses to take their

responsibility to identify, prevent and reduce poor working conditions, child labor,

environmentaldamage,corruption,andhumanrightsviolations in theirproductionchain(see

4.1). The business community and the government share this broad understanding that

corresponds with the broad definition of CSR described in the theoretical framework. The

consensuson theconceptCSRcanbeexplainedby theestablishmentof thepolicynoteof the

SER in 2000, in which business communities, civil society organizations and the Dutch

governmentagreedonthenotionthatCSRconcernedwiththreelevels:people,planetandprofit.

Thiswasinlinewiththeexpectationsdescribedintheintroductionofthischapter.

Thefocusofbusinessesisalsocomparabletothatofthegovernmentasitisnotlimitedtoeither

social welfare issues or environmental issues. This chapter also revealed, however, that

businesses initially tend to have a stronger emphasize on social aspects. This initial focus on

socialaspectscanbeexplainedbythegreaterattentionsocialconditionshavereceivedoverthe

years from external parties. The further CSR activities progresses, the more environmental

40

aspects increases are emphasized. There is a range of motives for businesses to adapt or

improve their CSRpolicies. These vary betweenmoral commitment to CSR issues, preventing

bad publicity and following market trends. None of the respondents considered government

involvement as amotive to adapt or improve their CSR policies. Themain reason businesses

mentionedtonotimprovetheirCSRisthelackofresources.

ThebusinesscommunityandtheDutchgovernmentsharethesamebroaddefinitionofCSRin

which the focus is not limited to either social welfare issues or environmental issues. This

distinction, however, doe exist in reality. In the actual CSR business activity a stronger

emphasizeisonsocialaspects.

41

6.BusinessCommunityandGovernmentInvolvementThis chapter describes the results of the empirical research regarding the final three sub-

questions:

“How do Dutch clothing businesses experience the governmental instruments and

respondtothem?”

“How do Dutch clothing businesses differ in responding to the governmental

instruments?”

“Towhat extent does theDutch government target a specific group of businesses in

influencingtheclothingsector?”

ThepreviouschaptershaveshownthattheimprovingCSRactivityintheDutchclothingsectoris

placedhighonthepoliticalagendaintheNetherland.Thebusinesscommunityisalsomotivated

totackletherisksinthesupplychains.Thismotivation,however,seemsnottobetheresultof

the efforts of the Dutch government. To provide a clear understanding to what extend the

governmentisinvolvedintheestablishmentandimprovementofCSRpolicy,thewaybusinesses

experiencegovernment involvementandhowtheyrespondto themisdisused in thischapter.

This gives an insight into the interaction between the business community and the Dutch

government.Howbusinessesexperienceandrespondtotheinvolvementofthegovernmenthas

implicationsforpossiblegovernmentinfluenceontheirCSRpolicies.Italsoprovidesaninsight

inthedesirabilityofthepublicintervention.

Thechapterisdividedintofivesections.First,thefamiliarityofthegovernmentalinstrumentsin

the business community is discussed. Secondly, the perception businesses have of the Dutch

governmentinvolvementisoutlined.Inthethirdsectionthewayinwhichbusinessesrespondto

governmentinvolvementandwhattheyexpectfromthegovernmentsisexamined.Fourthly,the

responsesofthebusinessesarecomparedtoeachothertogetanunderstandingwhethercertain

business characteristics influence the way in which businesses respond to government

involvement. Followed by a concluding section inwhich the sub-questions are answered and

whatimplicationsthishasregardingtheresearchquestionandthetheoreticalframework.The

data used in this chapter is collected from the interviewswith CSR representatives from the

businesses,complementedwith informationgatheredfromsecondarysources.Asdiscussed in

the methodological chapter (see 3.4), the information from the interview with Remco

Kouwenhoven,CSRManager fromCoolInvestments regardsAmericaTodayaswell asCoolCat

andMSMode.

42

6.1Familiarity

The interviews revealed that the businesses are unfamiliar with the majority of the

governmental instruments provided by the Dutch government. Table 6.1 shows which

businesses were familiar with the instruments. Remco Kouwenhoven is familiar with the

majority of the instruments. This is because prior to his current position, he worked as a

consultant forMADE-BYandwas inclosecontactwith theDutchGovernment (Kouwenhoven,

2016).NoneoftherespondentsreferredtoSustainablePublicProcurement.Thismaybedueto

the fact that the businesses do not produce work clothes and therefore do not deal with

governmentprocurement.ThebusinesseswereallfamiliartoCSRNetherlands.AmericaToday,

CoolCat,MSMode,Sissy-Boy,Vanguard,PMELegend,CastIronandG-Starhaveworkedtogether

with CSR Netherlands in a project on Child Labor (Gidrd, 2016). Although both Remco

KouwenhovenandReneMulder(CSRManagerSissy-Boy)werefamiliarwiththeICSRVoucher,

theydidnotmakeuseofit.G-StarhascollaboratedwithIDH,asitsubscribedin2010toapolicy

noteissuesbytheIDH(IDH,2010:5).

The respondents are familiar to the Covenant, because they were contacted by their trade

organization. America Today, CoolCat, MS Mode, Kings Of Indigo and G-Star are signing the

Covenant(InRetail,2016).KingOfIndigorecentlystatedonitsFacebookpagethatitisgoingto

sign the Covenant. The other interviewed businesses are considering signing the Covenant.

RemcoKouwenhovenandReneMulderwerebothwellinformedabouttheprocessleadingupto

Table6.1-FamiliaritytoInstruments

GovernmentalInstruments Familiarwith:

CSRNetherlands - AmericaToday,CoolCat,MSMode- Sissy-Boy- Vanguard,PMELegend,CastIron- KingOfIndigo- G-Star- KingLouie

Covenant - AmericaToday,CoolCat,MSMode- Sissy-Boy- Vanguard,PMELegend,CastIron- KingOfIndigo- G-Star- KingLouie

Subsidies - AmericaToday,CoolCat,MSMode- Sissy-Boy

SustainableTradeinitiative - AmericaToday,CoolCat,MSMode- G-Star

TransparencyBenchmark - AmericaToday,CoolCat,MSMode

ForeignPolicy - AmericaToday,CoolCat,MSModeSectorRiskAnalysis - AmericaToday,CoolCat,MSMode

43

the covenant.Pointingout that in theaftermathof theaccident inBangladesh, improvingCSR

activitywasplacedhighon thepolitical agenda in theNetherlands and led to the SectorRisk

AnalysisandtheCovenant(Kouwenhoven,2016;Mulder,2016).

While businesses are quite unfamiliar with governmental instruments, the government

involvementcouldbeindirect.TheDutchgovernmentinteractswithorganizations,suchasFWF,

and it couldbe that thegovernment is influencingbusinesses through these interactions.This

was also revealed in the interviewswithRemcoKouwenhoven andBartBosch (CSRManager

Vanguard, PME Legend, Cast Iron). Both note that organizations such as BSCI and MADE-BY

communicate with governments (Kouwenhoven, 2016; Bosch, 2016). This indirect influence

points to thepursuitofpublicmeta-governanceby theDutchgovernment, as thegovernment

uses the capacities and thenetworksof private, non-state actors, such asBSCI andMADE-BY.

Furthermore, the presence of public meta-governance is also underlined as the Dutch

governmentisalsoakeyfinancerofincivilsocietyorganisations3andhasspentlargeamounts

on development aid to support these kinds of organisations the last ten years (Fransen& de

Winter,2015:18).

6.2PerceptionsofGovernmentInvolvement

As noted in the previous section the majority of the instruments provided by the Dutch

governmentwereunfamiliartothebusinesses.Thisunfamiliaritycanalsobefoundintheway

the business community perceives the governmental instruments and the ambitions of the

Dutchgovernmenttoimprovesustainabilityintheclothingsector.ReneMuldersaysaboutthe

governmentinvolvement:

“I findthegovernmentvery,um..,aloofmightnotbetherightword,norexpectant,

butsomethinginthemiddle.”

This characterizeswhatemerged from the interviews:businessesarenot familiarwithall the

efforts of the government, resulting in a distant perception of government involvement. The

instrumentsthatarefamiliartotherespondentsareexperiencedmorepositive.Inparticularthe

development of the Covenant is experienced positively. It is seen as an industry-wide

collaboration tool, in which businesses together with the government, NGOs and trade

organizations can join forces to address the problems occurring in the sector. The more

stringent character of the Covenant is also considered as positive. However, a number of

3AnexampleofthisisaninvestmentmadebytheDutchgovernmentof32millioneurototheFairWear

Foundation for a five-year program regarding living wage, freedom of association and tackle violence

againstwomen.

44

ambiguitiesarepointedout:thefunding;whetherornotitisachievable;thewayprogressmade

bybusinessesisassessedandthestringencyofthisassessment;andthelegalbaseisconsidered

tobeweak(Kouwenhoven,2016;Mulder,2016;Dijkema,2016;Bosch,2016).Inadditiontothis,

the question arises whether the Covenant is able to encourage businesses without CSR

ambitionstojoin(Mulder,2016).Theterm‘DueDiligence’,whichishighlightedintheCovenant

considered isconsideredvagueanddistracting fromitsmeaning(Kouwenhoven,2016;Bosch,

2016).Thatbusinesseshavenotalwayshaveperceivedgovernmentinvolvementassomething

positive,appearedfromtheinterviewwithBartBosch:

“MinisterPloumenhasputcompaniesmainlyinabadlightinthenews.Thatisnot

verypracticalifyouaskme.Abetterthingtodoistocollaborateandmakeitmove

intotherightdirectiontogether.”

Thisquotereferstoanincidentin2013inwhichtheMinisterofForeignAffairsLillianPloumen

publiclyaddressedtheCSRactivityofaDutchclothingbusinessinanegativeway.However,this

perception has changed, while the importance of multi-stakeholder initiatives such as the

Covenantareemphasizedbyallrespondents.Althoughbusinesseshavebecomemoreinterested

in government involvement, they tend to turn to trade organizations and membership

organizationsforinformationandadvice.ThebusinessescollaboratedwithCSRNetherlandsin

the Child Labor project, perceive it as a capable but slow organization. The government

involvement, however, was in some cases unknown (Mulder, 2016; Bosch, 2016). Jeroen

Dijkema,ManagingDirectoratKingLouie,experiencesCSRNetherlandsinadifferentway:

“IhaveneverbeenapproachedbyCSRNetherlands.Thismightsaysomethingabout

me.Itfeelsverydistant,veryfaraway.”

KingLouiewouldbeopentobeapproachedbyCSRNetherlands.However,KingLouieisaSME

withoutaCSRmanagingpositionthat isdevotedto thesubject.As it ismoreconvenient,King

Louieturnstoitstradeorganization,Modint,foradviceandsupport(Dijkema,2016)TheDutch

governmentcouldplayaroleinthisaswell.IfthegovernmentwantstofulfillthisroleforSMEs

suchasKingLouie,itshouldtakeupamoreactiveroleincommunicatingwithSMEs.

Howcompanies experienced the involvementof the governmenthas implications forpossible

governmentinfluenceontheirCSRpolicies.TheinterviewswiththeDutchbusinessesshowthat,

although the role of the government is experienced as distant, they are positive about the

instrumentstheyarefamiliarwith.Theseinstruments(CSRNetherlandsandtheCovenant)are

both characterized as hybrid policy instruments containing a partnering and informational

component.This impliesthathybrid instrumentswithpartneringand informationalaspectsof

intervention have a better reach compared to the other policy instruments provided by the

45

Dutchgovernment.Itthereforeseemsthatthesekindsofinstrumentshavetheabilitytoplaya

role in the CSR activity of the businesses. The most recent governmental instrument, the

Covenant, isthemostpromising.Alltherespondentsarefamiliarwithitandare(considering)

signingit.However,theCovenanthasnotyetbeenupintoaction.Itisthereforenotpossibleto

seewhetherornotitinfluencestheCSRbusinessactivityofDutchclothingbusinesses.

6.3ReactionstoGovernmentInvolvementandBusinessExpectations

In thissection thewaybusinessesrespond togovernment involvementand theirexpectations

fromtheDutchgovernmentisdiscussed.Itwasdecidedtoincludetheexpectationsbecauseof

theunfamiliaritywithgovernmental instruments.Thisgivesanadditional insight intotheway

thebusiness communityand theDutchgovernment interact. It alsoprovidesan insight in the

desirabilityofpublicintervention.

The government involvement is subject to discussion. Businesses are indecisive about the

function of the Dutch governmentwith regard to CSR business activity in the Dutch clothing

sector.ReneMulderillustratesthisbystating:

"What do I want? That constantly remains the same question: do we want the

Covenant?Dowewanttodrawitourselves?Ordowesaythatthegovernmentcan

makemandatoryregulationssothatitisequalforeveryone?”

This indecisivenesshas further emergedwith thedevelopments concerning theCovenant and

has set off contradictions. On the one hand the importance ofworking together to efficiently

addresstheproblemsinthesectorisemphasized.Whileontheotherhandbusinesseshavenot

yetmadeuptheirmindswhetherthisisataskforthegovernmentorthebusinesscommunity;

or whether this is the responsibility of Dutch businesses, suppliers, local governments, the

Netherlands,EUorUN(Bosch,2016;Dijkema,2016;andMulder,2016).

WithregardtotheCovenant,Sissy-Boyraisesanotherissue.ItseemsthattheCovenantisunable

toencouragebusinesseswithoutCSRambitionstojoinandisSissy-Boythereforethinkingabout

notsigningtheCovenant.TherationalbehindthisisthatwhentheCovenantdoesnotcomeinto

practice, the Dutch government might feel compelled to enforce binding legislation (Mulder,

2016).Thepossibilityof legislation ismentioned frequently. It is considered tobeanefficient

tool in cases where businesses are too small to deal with certain situations. This way, the

government can contribute to a transition towards a more sustainable clothing production

(Bosch, 2016). Legislation does not have the preferences of America Today, CoolCat and MS

Mode.Althoughtheywouldnotmindit,theydonotbelievelegislationwillbefar-reachingand

offset further improvements regarding CSR activity. A sector-wide initiative, such as the

46

Covenant, is considered to be a better solution (Kouwenhoven, 2016). He is also generally

positiveaboutthecurrentroleofgovernment:

“Tome it particularly seems useful that they [the government] have been able to

bring parties together, sometimes slightly boost developments by subsidizing and

contributing to lower the threshold so that more businesses are able to convert. I

considerthatusefulfunctions.”

Other respondents also emphasized the ability of the government to bring stakeholders

together. As the interviewwith JeroenDijkema revealed, King Louie is very positive towards

workingalongsideotherclothingbusinesses,government initiativesandotherstakeholders to

exchange information and help each other further in becomingmore aware and transparent.

HannahvanGrimbergenfromtheCSRdepartmentfromG-Starfurtheremphasizesthis:

“Inordertomakethetextileandclothingindustrymoresustainable,cooperationis

very important. Each party has their own role. Like the role of the government is

importantforthefocusonsustainability.”

RemcoKouwenhovensaysonthesubject:

“Many problems are just too hard and too complex to tackle on your own. So,

cooperation with other businesses, societal organizations and the government is

great.Weareabsolutelypositivetowardsthat.”

Despite the contradictions, the businesses respond well to the initiatives from the Dutch

government that stimulate collaborations between the stakeholders in the sector. The

respondentsrepresentingAmericaToday,CoolCat,MSMode,Sissy-Boy,Vanguard,PMELegend,

Cast Iron and King Louie underline that international coordination is more desirable than

nationalinitiativessuchastheCovenant.BartBoschdescribesthisasfollowing:

“You shouldmake sure that on big topics like this, you are united as aworld, like

UnitedNations.(…)Ireallybelieve itshouldgo inthatdirection.Youshouldcreate

regulationonthatlevel,becauseithastobesomethingglobal.Ithastobesomething

everybodyhastoconformto.”

Accordingtotherespondents international initiativesaremoresuitabletomakesustainability

in theproductionchain intoasuccess.This ismainlydue to the internationalcharacterof the

productionchain.Nationalagreementsareconsiderednottobeabletotacklealltheproblems

occurring in the sector. In particular, what occurs prior to the production of materials and

clothing (Bosch, 2016). International regulations would control every part of production. In

addition to this, international coordination on the subject of CSR in the clothing production

47

wouldresult inuniformideasonthesubject.CommunicatingCSRpractices toexternalparties

acrossnationalborderwouldthenbecomeeasier(Dijkema,2016andKouwenhoven,2016).The

respondentsconsiderthisanimportanttaskfortheDutchgovernment.Anotherimportanttask

fortheDutchgovernmentaccordingtoBartBoschisinformingconsumers.Forhim,increasing

consumerawareness isacrucialpart in thedevelopment towardsamoresustainableclothing

production.Whenthere isagreaterdemandforsustainableclothes, themarketwillanticipate

(Bosch,2016).KingsOfIndigodoesnothavespecificexpectationsfromthegovernment(Zwart,

2016).ThiscouldbeexplainedbytheCSRpolicyofKingsOfIndigo,whichisprogressivealready

(seetable5.1foranoverviewofKingsOfIndigoCSRactivity).ItispossiblethatKingOfIndigo,

becauseoftheirprogressiveCSRpolicy,donotneedthesupport.

What this section revealed is that businesses are indecisive about the function of the Dutch

government with regard to CSR business activity in the Dutch clothing sector. This

indecisiveness has increased with the development of the Covenant and contradictions have

emerged. Involvement of the Dutch government is desired because of the complexity of the

productionchain,whilebusinessesareskepticalaboutthereachofDutchinitiativesandseemto

prefersectorinitiatives.

6.4MutuallyVariations

Thebusinesses thatwere interviewed for this studydiffer in size,market segment andactual

CSRactivity(seeTable6.2).Inchapter5,themotivesforbusinessestoadaptorimprovetheir

CSRpolicieswerediscussed.Kingsof Indigo,withthemostprogressiveCSRactivity, indicated

thattheDutchgovernmentdidnotplayaroleinthedevelopmentoftheirCSR.Thesameapplies

fortheotherbusinesses,regardlessofthestatusoftheirCSRactivity.Inadditiontothis,theway

businessesrespondtogovernmentinvolvementistoalargeextendcomparable.AmericaToday,

CoolCat, MS Mode, Sissy-Boy, Vanguard, PME Legend, Cast Iron, King Louie and G-Star are

positivetowardsworkingalongsideotherclothingbusinesses,governmentinitiativesandother

stakeholderstowardsamoresustainableclothingsector.KingsofIndigorespondeddifferentto

government involvement. It was indicted that they do not have expectations from the

governmentregardingtheirCSRactivity.ItseemsthatgovernmentalsupportdoesnotfitKings

OfIndigo,becauseoftheirprogressiveCSRpolicyandastheirCSRpolicyisalreadyinlinewith

therequirementsoftheCovenant.

The size of a business has a small influence on the degree of awareness of governmental

instruments. Large businesses have the resources to create CSRmanaging positions that are

devotedtothesubjectofsustainability.KingsOfIndigoisasaSMEanexceptionwithitsown

48

CSRManager.Largerbusinessesaremoreawareabouttheinitiativesandthepossibilitiesthey

offer.Inadditiontothis,largerbusinessesaremoreindecisiveabouttheroleofthegovernment

regarding promoting and shaping CSR activity. In the interviews businesses referred to the

growing interest of their consumer audience inCSRbusiness activity.But asdescribed in5.1,

noneof thebusinesses indicated that their consumeraudiencewasamotive to improve their

CSR activity. It appears that there is no variation between medium and higher consumer

markets segment. Therefore, it can be concluded thatmarket segment does not influence the

interviewedbusinesses inadoptingor improvingCSRactivityanddoesnotprovidean insight

into thewaybusinesses react to government involvement.The interviewedbusinesses are all

ownedprivately.Sincethewaybusinessesrespondtogovernment involvementslightlydiffers

amongthebusinesses,theprivateownershiptypedoesnotseemtoinfluencethis.

Althoughbusinessesrespondandexperiencegovernmentinvolvementsimilartoalargeextent,

therearetwoexceptions.Firstly, itseemsthatsizedoesmatter,as largerbusinessesaremore

aware of the governmental instruments provided by the Dutch government, but also more

indecisiveaboutthewhetherornotthepromotingandshapingCSRactivityistheresponsibility

of theDutchGovernment. Secondly, the levelprogressivenessofCSRactivityhas influenceon

thewayabusinessrespondstoinvolvementofthegovernment.

6.5Target

The requirements of the Covenant are inclusive in the sense that it concerns both social and

environmental aspects. When signing the Covenant, businesses need to improve their CSR

systematicallythenextfiveyears.Althoughitisachievable,businessesthatjuststartedtoadapt

CSRpolicies, suchasSissy-Boy,have toput theirback into it tomeet the requirementsof the

Covenant. For business that have been actively improving their CSR policies during the past

years, such as America Today, CoolCat,MSMode, Vanguard, PME Legend, Cast Iron and King

Louie, it will be less challenging in meeting the requirements. Bart Bosch underlines this by

stating:

BUSINESS SIZE MARKETSEGMENT OWNERSHIP LABELCSR-RANK-A-BRAND

AmericaToday Large MediumSegment Private D–label

Sissy-Boy Large HighSegment Private E–label

Vanguard,PMELegend,CastIron Large HigherSegment Private D–label

G-Star Large HigherSegment Private C–label

KingLouie Medium MediumSegment Private D–label

KingOfIndigo Small HigherSegment Private B–label

Table6.2–BusinessCharacteristics

49

“IactuallythinkthatwhatisdevelopingtowardtheCovenant,isperfectlypossible

todo,aslongasyoutakethetime.”

TheCSRpoliciesofprogressivebusinesses,likeKingsofIndigoandG-Star,aretoalargeextend

in line with the requirements of the Covenant. It therefore seems that the Covenant is not

focusingatprogressivebusinesses,butmainlytargetsbusinessesthatyethavetomakestepsin

the field of CSRor still havework to do. The voluntarynature of theCovenant indicated that

businesseswith theambition toadaptand improveCSRare the targetgroup. This isalso the

casewithCSRNetherlands,subsidiesandtheforeignpolicy.Theseareonavoluntarybasisand

calluponthewillingnessfrombusinessestoimprovetheirCSRactivity.TwoexceptionsareIDH

andtheBenchmark.Theseinstrumentsarebothaswellonavoluntarybasis,buttargetspecific

businesses. The IDH, the partnering instrument, targets large international businesses with

progressive CSR activity, while the Benchmark targets large Dutch businesses from every

gradationofCSRactivity.

ThepolicyinstrumentsprovidedbytheDutchgovernmenthavedifferenttargetaudiences.They

haveavoluntarynatureincommon,suggestingthattheinstrumentscallonthewillingnessfrom

thebusinesscommunitytoimprovetheirCSRactivity. Itappearsthattheinstrumentsfamiliar

tothebusinessesaimtoreachawiderangeofbusinesses,especiallytheoneswithlimitedCSR

activity.

6.6Conclusion

Thischapterdescribed thewaybusinessesexperiencegovernment involvementandhowthey

respondtothem.Bydoingso,an insight intothe interactionbetweenthebusinesscommunity

and the Dutch government is provided. It was examined to what extend the governmental

instruments are familiar to the businesses. This examination showed that businesses are

unfamiliarwiththemajorityoftheinstruments.Thisresultsinanoveralldistantexperienceof

the role of the government. The instruments that businesses are familiar with are CSR

NetherlandsandtheCovenantandareexperiencedmorepositive.These instrumentsareboth

characterized as hybrid policy instrument containing a partnering and informational

component.This impliesthathybrid instrumentswithpartneringand informationalaspectsof

interventionarebetterabletoplayaroleintheCSRactivityofthebusinesses.

Whatemergedfromthedataisthattheroleofthegovernmentisunderdiscussion.Businesses

are indecisive about what function of the Dutch government should adapt with regard to

improving CSR business activity in the Dutch clothing sector. This results in a contradictory

response of the business community towards government involvement: on the one hand, the

50

involvement of the government is desired because of the complexity of the production chain,

while on the other hand, businesses seem to prefer sector initiatives. Although businesses

respond and experience government involvement similar to a large extent, there are two

exceptions. Firstly, it seems that sizedoesmatter, as largerbusinesses aremoreawareof the

governmental instrumentsprovidedby theDutchgovernment,butalsomore indecisiveabout

thewhether or not the promoting and shaping CSR activity is the responsibility of theDutch

Government.SMEsconsidergovernmentinvolvementingeneralasmorepositive.Secondly,the

level progressiveness of CSR activity has influence on the way a business responds to

involvement of the government. They have lower expectations of the government. An

explanationforthiscanbethatbecauseoftheprogressiveCSRpolicy,governmentinvolvement

islessnecessaryforthem.Whatthebusinesseshaveincommonisthattheytendtoturntotheir

trade organizations and organizations they are connected for information and advice. The

government can use the capacities and the networks of these actors. The Dutch government

interacts with these organizations, and is thereby able to influence the business community

indirectly.Thisindirectinfluenceisregardedaspublicmeta-governance.

Lastly,theextendtowhichthegovernmentattemptstoreachaspecificgroupofbusinesseswith

the governmental instruments was examined. The policy instruments have different target

audiences.Thatappearsthattheinstruments,whicharebestknownbythebusinesses,theaim

istoreachawiderangeofbusinesses,especiallytheoneswithlimitedCSRactivity.Allthepolicy

instrumentsprovidedbytheDutchgovernmenthaveavoluntarynatureincommon,suggesting

thattheinstrumentscallonthewillingnessfromthebusinesscommunitytoimprovetheirCSR

activity.

51

7.Conclusion&DiscussionSeeingagap in the literatureconcerning the influenceofgovernmental instrumentsregarding

CSR business activity of the clothing sector, this study made an attempt to fill this gap by

obtainingmoreinsightinthegovernmentalinstrumentsprovidedbytheDutchgovernment,the

way the Dutch clothing sector and the Dutch government interacts and the effects of this.

Consequently,thefollowingresearchquestionwasformulated:

“To what extent do governmental instruments influence the social and

environmentalaspectsoftheCorporateSocialResponsibilityofDutchclothing

businesses?”

WhatbecameclearingatheringandanalyzingthedatawasthatwithintheDutchclothingsector

thereisawillingnesstotackletherisksinthesupplychains.Somebusinessesareprogressivein

developing their CSR policies, while in others it still in its infancy. However, this research

showed that the efforts of the Dutch government play aminor role in the developing of CSR

policies.Infact,thebusinesseswereunfamiliarwiththemajorityoftheinstrumentsprovidedby

theDutchgovernment.

The unfamiliarity toward governmental instruments results in the overall experience that the

governmentplayedadistantrole intheprocessofadaptingCSRactivity.Theinstrumentsthat

businesses are familiar with are CSR Netherlands and the Covenant. These instruments are

consideredpositive.Bothinstrumentsarecharacterizedashybridpolicyinstrumentscontaining

a partnering and informational component. This suggests that hybrid instruments with

partnering and informational aspects of intervention have the ability to reach businesses and

are therefore more likely to play a role in the CSR activity of businesses. These hybrid

instrumentsseemsuitabletothecomplexgovernancesystems,inwhichpromotingandshaping

CSRbusinessactivitytakesplace.

ManyoftheCSRrepresentativesoftheclothingbusinesseswereindecisiveaboutwhatfunction

theDutchgovernmentwithregardtoimprovingCSRbusinessactivityshouldadapt.Astherole

of the governmentwasunderdiscussion, contradictory responses emerged from thebusiness

community.Ontheonehandit isdesired,whileontheotherhandgovernmentinvolvementis

disputed. In particular, the limited impact of the Dutch government, uncertainties around

initiatives and the responsibilities of the government were called into question. None of the

respondents considered government involvement as a motive to adapt or improve their CSR

policies. Instead theymentioned a range of othermotives for businesses to adapt or improve

52

their CSR policies. These vary between moral commitment to CSR issues, preventing bad

publicityandfollowingmarkettrends.

The results show that businesses tend to turn to trade organizations and membership

organizationsforinformationandadviceinsteadoftheDutchgovernment.Itseemsunlikelythat

there is direct governmental influence in the Dutch clothing sector. However, what emerged

fromtheinterviewsisthattheDutchgovernmentinteractswiththesetradeorganizationsand

membershiporganizations.Thisindicatesthatthebusinesscommunityisinfluencedindirectly.

This form of meta-governance provides the Dutch government an opportunity to serve their

publicpolicyobjectives.Thisishighlyplausibleconsideringthecomplexityinwhichpromoting,

shaping and adopting CSR business activity takes place. In addition, the presence of indirect

influence is further emphasized by the general consensus on the concept CSR, in which

businesses,civilsocietyorganizationsandtheDutchgovernmentshareabroadunderstanding

of CSR that includes both social and environmental aspects. It suggests that, although the

majority of the policy instruments have not proven to be successful, the government in the

NetherlandsdoescreateafavorablecontextforbusinessestoworkontheirCSR.

The findings offer insights into the effectiveness of governmental instruments, the interaction

betweenthegovernmentandthebusinesscommunityandaboutparticularissuesandpatternin

the case of the Netherlands. The understanding of CSR is to a large degree embedded in the

Netherlands,asboththeDutchgovernmentandthebusinesscommunityarecommittedtothe

issue.Itseems,however,thatthecommunicationdoesnotgoaccordingly,limitingtheinfluence

ofthegovernmentonthebusinesscommunity.

The findingshavebothsocietaland theoretical implications.Thisassessmentofgovernmental

influence of Dutch clothing sector is relevant for policymakers. By actively approaching the

businesscommunity,thegovernmentcanmaketheinitiativesmoreaccessibleforbusinesses.In

addition,theDutchgovernmentcancommititselftoestablishaEuropeancoordinatedinitiative.

Lastly, the government should continue with the provision of hybrid instruments with

partneringelements,as thesearewellappreciatedandwelcomedby thebusinesscommunity.

The findings of this thesis cannot be generalized to a broader level, as the case of the

Netherlands is an extreme case. The findings do, however, provide insights that can lead to

betterunderstandingoftheeffectivenessofgovernmentinvolvementiffurtherexamined.Itcan

contribute to furtherdevelopmentof the literatureonhowpublicpolicyandbusinessactivity

relatetoeachother.Itcouldbethestartingpointforacross-countrycomparisonthatfocuseson

whether these characteristics are specific to theNetherlands or aswell to other countries. In

53

addition to this, it is also possible that meta-governance manifests itself in one of the

governmental instrumentsdescribed in this study.Therefore, itwouldbe interesting to study

meta-governancemorein-depth,asitseemstoplaysaroleinthecaseoftheNetherlands.

Although theDutchgovernmentdoesnotmakeadistinctionbetweensocialorenvironmental

aspectsinpromotingandshapingCSRbusinessactivity,businessesdoso.Thefindingssuggest

thattheCSRstatushasinfluenceontheadoptionofenvironmentalorsocialaspects.Businesses

tendtoimprovesocialaspectsfirst,duetoconsumersandcivilsocietyorganizationsinterests.

AsCSRactivityintensifies,environmentalaspectsgetmoreattention.Additionalresearchcould

bededicatedtothissubjectaswell.

While writing this thesis, the developments around the Covenant were still in progress.

Thereforetheactual impactof theCovenantontheDutchclothingsectorcannotbemeasured.

FutureresearchshouldfocusontheCovenant,togetinsightsintomulti-stakeholderplatforms.

The respondents were chosen with careful consideration and with precision to get a

representativeimageoftheDutchclothingsector.Businesseswithdifferentsizes,capacityand

actualCSRactivitywere selected to achieve this.However, Sissy-Boy,whichwas thebusiness

that represented the lowest category of CSR activity, showed willingness and intention to

improveitsCSRactivity.Thiswillingnessandintention,however,mightnotbepresenceatother

businessesinthiscategory.Therefore,generalizingthesefindingsmustbedonecautiously.The

findingssuggestthattheDutchgovernmentiscommittedtolowerthethresholdforbusinesses

inthiscategory.Amoreaccurateconclusionrequires,alargersampleofbusinessesinthelowest

category of CSR activity. Nevertheless, there is a high probability that the findings that

businessesareunfamiliarwiththemajorityoftheeffortsoftheDutchgovernmentalsoapplyto

a larger sample. This appears sobecause thiswas the casewithbothwell-informedand less-

informedbusinesses.

54

8.AcknowledgmentThisthesisbenefitedfromtheseminarssessionsoftheResearchProjectTransnationalPolitics

ofSustainability.IamparticularthankfultoLucFransenforhissupervisionandhiscomments.

Inaddition, Iwould like to thank JosHuber,MariellevandenLinden, JeroenDijkema,Kirsten

Zwart,RenéMulder,HannahvanGrimbergen,BartBosch,RemcoKouwenhovenandSibbeKrol

fortakingthetimetoanswermyquestions.JacobvanderWel,EmilievanSpronsenandSylvia

Deckers for rereadingand for their suggestions to improvemyresearch.Finally,mygratitude

goestothesecondreaderPhilipSchleifer,fortakingthetimetoreadthisresearch.

55

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10.Appendix

10.1CaseDescription

KingLouie:KingLouiewasfoundedin1981inAmsterdamandisavintageinspiredbrand.The

aim is not toproduce ‘fast fashion’ clothesbut timeless clothedwith goodquality.KingLouie

producesall itsclothinginTurkeyandAsia.Ithasworkedwiththemainsupplierfor20years

andhas longstanding relationships with other manufacturers as well. CSR is considered a

continuousprocessofimprovement,andaresponsibilitytothepeoplethatmaketheproducts.

KingLouieworkssolelywithmanufacturerswhovalueandguaranteegoodworkingconditions

for itsemployees. Inaddition to this, it ismember toFWFandaims tomeet the international

labor-,climate-andenvironmentalstandardstoreducetheenvironmentalfootprint(KingLouie,

2016).

KingsOfIndigo:KingsofIndigowasfoundedin2012andisnowsellingitscollectiontoover250

retailers in12countriesandonline,witha focusonNorthernEurope. It is specialist indenim

inspiredclothingwithcharacter,qualityandinwhichsustainableinnovationisakeyfeature.It

has 10 employeesworking at the headquarters in Amsterdam (Kings of Indigo, 2016). It has

beenamemberofFWFsince2012andover90%ofthecollectionisproducedwithsustainable

materials,mainlyorganiccotton(GOTScertified),linenorTencel.Theydon’tuseanychemicals

mentioned on the REACH list in production. At Kings of Indigo, However, innovation ismore

thanjustsustainability. Innovativemethodsofproductionsuchaslaserandozonewashesand

innovation in materials, fabrics and techniques are key in sustainability. Sustainability is

consideredthewaytodobusinessinthefuture(TheDenimDaily,2014).KingsofIndigoispart

ofVarovaFashion,whichhelpsKingsofIndigofinanciallyandbyprovidingbackofficeservices

throughitsotherFashioncompanies(Varova,2016).

Sissy-Boy:Sissy-Boyisaretail-brandoriginatedintheNetherlandsin1982withover40shops

in the Netherlands, Belgium and Luxembourg. Besides clothes, Sissy-Boy sells household

supplies. Sissy-Boy is affiliated to BSCI and applies the BSCI Code of Conduct in their supply

chain.Thiscodeoutlinestheguidelinesthatcompaniesmustmeet.Theguidelinesarebasedona

number of international agreements including: Conventions of the ILO, the UN Universal

DeclarationofHumanRights,UNDeclarationontheRightsoftheChildandtheConventionon

theEliminationofallformsofdiscriminationagainstwomen.In2012VarovaFashionacquireda

majorityshareinSissy-Boy(Varova,2016).

G-star:G-Starisactivein80countriesandhasanestimatedturnoverof750millioneuro.Itwas

foundedin1989inAmsterdamandisknownforitsdenim(Volkskrant,2016).TheCSRpolicies

63

consistoffourpillars:responsiblesupplychain;sustainableproduct;sustainableoperation;and

community involvements.G-star has committed itself to far reachingmeasures to ensure that

within every pillar the CSR activity is very well organized. The CSR policies are constantly

evolvingand improvedwherenecessary(G-Star,2016).Withinthe fourpillars, the focus ison

both the environment and social aspects.With regard to responsible supply chain, G-Star has

initiatives such as a Code of Conduct, agreements on fairwages, clean production. It also has

entered into a partnership with MADE-BY in 2011. With regard to sustainable product the

business seeks to sustainable solutions that exert the least possible damaging impact on the

environment. In order to do so, they use sustainable materials and method. Sustainable

operation isabout reducing thedirect impacton theenvironment, likepackaging, shipping, in

the offices, showrooms and shops. Community involvement is about positively influencing

communitiesandimprovingthelong-termprospectsinthecommunity(G-Star,2016).

Just Brands – Vanguard, PME Legends and Cast Iron: Just Brands is the name of the design,

logistics,marketing & sales organisation behind PME Legend, Cast Iron and Vanguard. It is a

fashioncompanyestablishedover20yearsagoandisheadquarteredinAmsterdam.Ithas1,500

sales outlets in theNetherlands, Belgium and Luxembourg. The three brands focus on amale

audience in the age range of 18-45 (Just Brands, 2016a). CSR plays an integral part of in the

businessmanagementof JustBrands. It isbasedontheTriplePapproach,aimingtoachievea

balance between economic performance (Profit), social aspects (People) and respect for

environment (Planet). It entered into a partnership with MADE-BY and over 10% of the

collection is producedwith sustainablematerials,mainly organic cotton (Oekotex 100), They

don’t use any chemicals mentioned on the REACH list in production. Just Brands has also

additionalpoliciesofclimateandenvironmentalissues(JustBrands,2016b).

CoolinvestmentsGroup–AmericaToday,MSModeandCoolCat:TheCoolinvestmentsGroupis

afamilyownedinvestmentgroup,originatedfromCoolCatretail,whichwasestablishedin1979.

Coolinvestments consists of different parts including a retail part. This includes the fashion

brands CoolCat, MS Mode and America Today. These brands are primarily active in the

Netherlands, Belgium, Luxembourg, France, Germany and Spain. They have a wide audience,

from children, teens, and students to women apparel. It has over 600 own shops

(Coolinvestments,2016).TheBSCICodeofConduct isapplied in thesupplychainsofCoolCat,

MSModeandAmericaToday.ItalsosignedtheBangladeshAccordtoensureasafeworkplaces

infactoriesinBangladesh.Thebrandshaveindividualpoliciesontheuseofsustainablematerial,

rangingfrombanningfurtousingorganicclothing.Coolinvestmentshasalsoadditionalpolicies

ofclimateandenvironmentalissues(seeAmericaToday,2016;CoolCat,2016;MSMode,2016)

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10.2ContactInformation# Name Position Company Typeof

ContactDate

1 JosHuber SeniorPolicyOfficerUnitPrivatesectorandCSR

MinistryofForeignAffairs

Interviewinperson

14/04/2016

2 MariellevandenLinden

CoordinatingPolicyAdvisorCSRandTrade

MinistryofForeignAffairs

Interviewinperson

14/04/2016

3 JeroenDijkema ManagingDirector KingLouie Interviewinperson

26/04/2016

4 KirstenZwart QueenofSourching KingsOfIndigo MailCorrespondence

2/05/201627/05/2016

5 RenéMulder

BusinessDevelopmentManager

VarovaFashion Interviewinperson

12-05-2016

6 HannahvanGrimbergen

CSRManager G-star MailCorrespondence

28/04/201630/05/2016

7 BartBosch BuyerManager JustBrands Interviewinperson

20-05-2016

8 RemcoKouwenhoven

SustainabilityOfficer

CoolInvestments

Interviewinperson

30-05-2016

9 SibbeKrol ProgramManager IDHsustainabletrade

Telephoneinterview

31-05-2106