Scope of the IRBC obligations
The main obligations that the signing renewable energy companies commit to, are to implement the 2011 UN Guiding Principles on Business and Human Rights and the 2011 OECD Guidelines for Multinational Enterprises in their economic activities (the UN and OECD Guidelines). With respect to being monitored, companies can choose their ‘preferred sectoral scope’, being either solar energy or wind energy (or both). Furthermore, signatories can opt out of the international application of the Agreement, meaning that only their supply chains for economic activities in the Netherlands are scrutinised. If necessary, the normative scope of the Agreement will be made consistent with the upcoming national implementation of the Corporate Sustainability Reporting Directive (Directive (EU) 2022/2464) and the upcoming Corporate Sustainability Due Diligence Directive.
Self-assessment and monitoring
Parties are required to self-assess their performance yearly on the basis of a collectively developed assessment framework. On the basis of the results of this self-assessment, parties have to draft and share their due diligence action plan (DDAP) with concrete improvement targets. The self-assessment results and individual DDAPs are shared with the independent secretariat and are used on an aggregated and anonymised basis to develop a collective due diligence support programme. Furthermore, each year an annual progress report is published that shall provide general insight in the progress made by the parties. Such general insight includes (i) a report on how each individual party has contributed to achieving the goals of the Agreement, (ii) an aggregated and anonymised report on the self-assessments of the parties, as well as (iii) the collective goals realised that year.
Although the Agreement is technically not enforceable in a court of law, it provides for an accountability mechanism under which disputes between the independent secretariat (as monitor) and a party with respect to such party’s implementation of the Agreement’s obligations can be brought before an independent dispute committee, which is to be set up by the parties ultimately within one year after the Agreement entered into force. A decision of the dispute committee is a binding arbitral award and will be published on the website of the Agreement. Furthermore, complaints from ‘stakeholders’ may also be addressed by the dispute committee. Stakeholders in this context are parties that have suffered an injury, loss, or damage of material significance due to a violation of an RBC agreement by a party. Interesting to note is that the dispute committee can award damages as compensation to stakeholders if a complaint is well-founded, which decision would thus also be legally enforceable. In general, failure to comply with the obligations under the Agreement may also result in the expulsion of the Agreement by the other parties, accompanied with naming and shaming on the Agreement’s website.
A second key focus point of the Agreement is to initiate collective projects aimed at addressing specific adverse impacts and risks identified in the companies’ supply chains, and, more in general, projects that have a positive impact on human rights and environmental issues. Specific collective projects already provided for in the Agreement are a collective project on the issue of forced labour in solar energy supply chains and a collective project on ‘a just transition’.
Spread the word
The third key focus point of the Agreement is to increase the number of signatories with the aim of increasing the collective leverage that they have in the renewable energy sector. To that effect each party shall put up information on its website regarding its participation in the Agreement and inform all of its external business relations of their participation. The parties are in principle also required to encourage their trade partners to also become party to the Agreement. Interesting to note is that the parties are also specifically required to raise awareness of the accountability mechanism, such as by informing supplier companies and labour unions about the possibility for stakeholders to submit a complaint with the dispute committee.
The Agreement creates an elaborate governance structure to pursue the implementation of the Agreement and ensure effective monitoring. The highest body in this governance structure is the general assembly, consisting of the parties to the Agreement. The general assembly decides on (amongst others) the strategic agenda and approval of the budget. The steering committee is tasked with governing the implementation of the Agreement within the limits set by the general assembly and comprises of a fixed amount of representatives of the different types of parties (e.g. energy companies, trade associations and governments). The working groups are groups dedicated to a specific project or objective and are mandated by the general assembly to act in accordance with their purpose (e.g., a working group on recruiting new participants to the Agreement). The parties shall also appoint an independent chairperson that acts as the principal spokesperson of the Agreement on behalf of the parties. The earlier mentioned dispute committee will be instated to decide on the merits of stakeholder complaints or disputes between the independent secretariat and a party. The last body is the independent secretariat, which is hosted by the Dutch public advisory entity called the Social and Economic Council (in Dutch: Sociaal-Economische Raad). Its tasks include the monitoring of the compliance with the obligations of the parties, and, if necessary, bringing disputes before the dispute committee.
Types of participation
As the Agreement is a ‘multi-stakeholder instrument’, there are different types of signatories and types of participation. The primary signatories are the parties, such as the renewable energy companies, governments, industry associations, NGOs, knowledge institutions and labour unions. Each type of party has different obligations under the Agreement depending on the nature of its activities. All parties take part in the governance of the Agreement, although with differentiated rights and obligations (e.g. of the parties, only the companies are expected to contribute to the budget financially). Secondly, the Agreement can also be signed in the capacity of supporting organisation, which role is not open for renewable energy companies. Supporting organisations actively promote the Agreement on their respective platforms and in their networks and contribute to specific projects where possible. The third form of participation is that of CAP, short for contracting authorities and renewable energy technology platforms (e.g. central and municipal governments and price comparison websites). CAPs commit to include IRBC criteria in their public or non-public tender procedures with respect to renewable energy technologies.
IRBC criteria in tenders
Although the Agreement expects serious commitments from renewable energy companies in the area of IRBC and has a far-reaching accountability mechanism, there are also benefits to partaking in the Agreement. Specifically, CAPs commit to including the UN and OECD Guidelines as contractual commitments by their counterparties when procuring renewable energy technologies. Additionally, the Dutch government endeavours to incorporate IRBC standards in tender procedures for (offshore) wind permits. Thus, companies already implementing the IRBC standards set out in the UN and OECD Guidelines as a result of adhering to the Agreement may be rewarded commercially, as it will increasingly result in having a competitive edge in tender procedures. Depending on the amount CAPs joining the Agreement, becoming party to the Agreement may ultimately prove commercially expedient.
As already announced by the Dutch Minister for Economic Affairs and Climate in a letter to the Dutch parliament last November, IRBC criteria will already play a role in the comparative assessment in the upcoming IJmuiden Ver offshore wind tenders. Pursuant to the recently published draft tender regulations, 40 of the in total 400 points in the comparative assessment can be obtained through compliance with IRBC criteria. More importantly, full compliance with the IRBC criteria can only be proven by being party to the Agreement or a ‘similar multi-stakeholder instrument’. Being party to the Agreement may therefore already be a competitive necessity in the upcoming IJmuiden Ver offshore wind tenders.
Interested in what becoming party to the Agreement would entail for your organisation or how to prepare for the upcoming EU legislation on corporate sustainability due diligence and reporting? Please contact us below. Our experts are eager to advise your organisation on these matters.