Sustainability in corporate law: board duties and reporting

In corporate law, sustainability is no longer a policy choice. It has become part of the duties of the board. The board is guided by the interest of the company and the enterprise connected with it. The Dutch Corporate Governance Code 2025 sums this up as sustainable long-term value creation. Reporting obligations apply alongside that duty, and the liability risk is real.

The short answer

The board is guided by the interest of the company and the enterprise connected with it. See Article 2:129(5) and Article 2:239(5) of the Dutch Civil Code (Burgerlijk Wetboek, BW).
That interest includes the lasting success of the enterprise in the long term, and therefore sustainability as well.
The Dutch Corporate Governance Code 2025 applies and treats sustainable long-term value creation as its central concept.
The 2025 Code introduces the risk management statement (verklaring omtrent risicobeheersing).
Following the Omnibus I package, the CSRD applies from more than 1,000 employees and more than EUR 450 million net turnover. The first report covers financial years from 1 January 2027.
Liability runs through Article 2:9 BW, Article 6:162 BW and through incorrect information in the management report (bestuursverslag).

The interest of the company

The law requires directors and supervisory directors to be guided by the interest of the company and the enterprise connected with it. It does not define that interest. The content comes from case law.

In its Cancun judgment of 4 April 2014, the Supreme Court (Hoge Raad) held as follows. Where the company runs an enterprise, the company interest is as a rule determined primarily by promoting the lasting success of that enterprise. In doing so, the board must exercise care in relation to the interests of all those involved.

Two things follow. First, the company interest is not the same as the shareholder interest. Second, the horizon is long. A decision that produces a short-term profit but damages the enterprise over time is not automatically in the company interest.

Sustainability fits into that framework of its own accord. Climate risks, dependence on raw materials, supply chain risks and reputation all bear on the lasting success of the enterprise. The board may not ignore them. See also our page on corporate social responsibility.

The duties of the board and the supervisory board

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For the board, this means that sustainability risks form part of ordinary decision-making. Not as a separate chapter, but as a factor in investment, purchasing, product development and financing.

In practice that calls for three things. You identify the risks that are material to your enterprise. You weigh those risks in decisions of any significance. And you record that assessment.

Recording it is not a formality. In any later review, for example in inquiry proceedings (enquêteprocedure) or in liability proceedings, the question is whether the board was able to form a reasonable judgement. A file showing that the subject was discussed and weighed is then decisive.

The supervisory board (raad van commissarissen) supervises and is guided by the same interest (Article 2:140(2) and Article 2:250(2) BW). It must therefore be able to probe critically on sustainability risks. That presupposes expertise within the board, or access to external expertise.

The Corporate Governance Code 2025

The Monitoring Committee published the updated Code on 17 March 2025. The Code applies from the financial year beginning on or after 1 January 2025. It operates on the comply or explain principle: you follow the principles and best practices, or you explain with reasons why you depart from them.

Two points stand out.

Sustainable long-term value creation. This is the central concept of the Code. The board develops a view on long-term value creation and a strategy to match. In doing so, it takes the interests of stakeholders into account. The explanatory notes have been updated in the light of European sustainability legislation.

The risk management statement. The 2025 Code introduces this statement as the successor to the earlier in-control statement. The board states in writing how the internal risk management and control system is designed, how it works and how effective it is. The statement covers operational risks, compliance risks and reporting risks. The audit committee reports to the supervisory board on the supporting analysis.

Certification process

That last point touches sustainability directly. Sustainability data have become reporting data. Anyone who makes a statement about them must have the underlying processes in order. You can read more on our page on sustainability and the Corporate Governance Code.

Reporting obligations

The Omnibus I package entered into force in March 2026 and narrowed the scope of European sustainability reporting considerably.

Instrument	Threshold	Application
CSRD	More than 1,000 employees and more than EUR 450 million net turnover	First report on financial years from 1 January 2027
CSDDD	5,000 employees and EUR 1.5 billion turnover	Application from 26 July 2029
VSME	Voluntary standard for SMEs	Ceiling for information requests from the value chain

For many companies this means the direct reporting obligation falls away. The indirect pressure remains. Large customers and banks ask for data. Against that stands the value chain protection. Companies with no more than 1,000 employees on average need not supply more than the VSME standard requires. A contractual provision that goes further is not enforceable.

For listed companies and financial undertakings, the Taxonomy Regulation also comes into play. For more on how to organise reporting in practice, see our pages on the CSRD and ESG reporting.

Liability

The risks run along four lines.

Internal liability. Under Article 2:9 BW, a director is liable to the company for improper performance of duties, provided that he is seriously at fault. Structurally ignoring material sustainability risks may fall within that.
External liability. Article 6:162 BW provides the basis for claims by third parties. The Hague Court of Appeal gave judgment on 12 November 2024 in the case of Milieudefensie against Shell. In the court's view, large companies owe a duty of care to contribute to preventing dangerous climate change. The court imposed no specific reduction percentage, because the global standard was not granular enough to be applied directly to a single company. It did hold that compliance with existing regulation is not exhaustive.
Reporting. Misleading information in the management report or the annual accounts may lead to liability. Article 2:139 BW and Article 2:249 BW are also relevant here.
Right of inquiry. The Enterprise Chamber (Ondernemingskamer) may find mismanagement. A structural lack of attention to material risks may weigh in that assessment.

Claims law plays a part as well. Incorrect sustainability claims can lead to claims from investors or interest groups, in addition to their consequences under consumer law.

Frequently asked questions

Must the board place sustainability above profit? No. The board is guided by the interest of the company and the enterprise connected with it. Sustainability is a factor you must weigh, not an objective that automatically takes precedence.

(Legal) consequences

Does our company still fall under the CSRD? Only with more than 1,000 employees and more than EUR 450 million net turnover. If you are below that, the direct obligation lapses. The first report covers financial years from 1 January 2027.

Does the Corporate Governance Code also apply to companies that are not listed? The Code is aimed at listed companies. Many other companies apply it voluntarily, because it offers a workable standard for governance and risk management.

Contact

Would you like the sustainability aspects of your duties as a director, your governance or your reporting reviewed? Contact Law & More in Eindhoven or Amsterdam. We advise directors and supervisory directors on their obligations and risks, in Dutch and in English.

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Sustainability in corporate law: board duties and reporting