The Netherlands has revised its corporate governance code, placing long-term value creation at the heart of its provisions.
The new code, produced by the Dutch Corporate Governance Code Monitoring Committee, also provides guidance for supervisory boards seeking to oversee company culture and introduces a demand for companies to create internal audit departments.
A report from the monitoring committee said: “Many of the incidents of misconduct that have occurred over the past years—such as accounting fraud, corruption and cartel activity—can be traced back to a business model that focused too much on achieving short-term gains.
“The cost was passed on to the future, resulting in business losses, a fall in the value of shares, or, in some cases, bankruptcy and the dismissal of employees.
“For this reason alone, the consequences of decisions and actions for the company’s long-term value creation, and the impact of these on stakeholders, should be given a prominent role in decision-making processes.”
It adds: “In the revised code, long-term value creation forms the starting point for corporate governance.
“The code stipulates that the management board should focus on long-term value creation, and take the stakeholder interests that are relevant in this context into account.
“The way in which the management board goes about putting this into practice must be explained in the annual management report, and will be supervised by the supervisory board.”
On corporate culture the committee said: “Management board and supervisory board members are expected to create a culture which promotes desired behaviour and encourages employees to act with integrity.
“By communicating this culture with its corresponding values, incorporating it into the enterprise and maintaining it, guidance is provided in making everyday decisions and monitoring ethical conduct by people in all tiers of the enterprise.
“Contact between the top of the company and the employees is essential to get an idea of how the culture is experienced within the organisation.”