Are supervisory board members and internal supervisors aware of their role in safeguarding integrity and the pitfalls involved in handling reports? The Dutch Whistleblowers’ Centre recently published a report on this subject. However, we suspect that this report underestimates the importance of having an independent and/or impartial person to handle these reports.
In May, the Whistleblowers’ Centre (Huis voor klokkenluiders) published a report on the role of supervisory board members in overseeing integrity. The guide is intended to make supervisory board members aware of their role and responsibilities with regard to integrity. The brochure can also be used by directors (or ethics & compliance officers and integrity managers) to involve their supervisory board members more closely in the subject of integrity. It is written for both the public and private sectors and is relevant not only to members of supervisory boards (RvC) but also to members of a Supervisory Council (RvT).
Brochure for supervisory board members and regulators
Among other things, the brochure advises supervisory board members and regulators to:
- Monitor the organisation’s culture
- Gain an understanding of the key integrity risks
- How these risks are managed
- Be aware of the roles and responsibilities of the various stakeholders
- And, in particular, of their own exemplary role.
- To be familiar with the policies and procedures relating to integrity, as well as
- The role of the commissioner in the reporting procedure
- And to put the subject of integrity on the agenda at least once a year
The Huis’s report refers
What does the Corporate Governance Code say?
According to the Code, good corporate governance and effective oversight are essential for confidence in the board and its oversight. “This includes the board acting with integrity and transparency…”. Breaches of integrity can pose a risk to the achievement of strategic objectives and may even jeopardise the company’s survival. The Code therefore states that attention must be paid to social safety, the ability to discuss issues openly, and the possibility of reporting (suspected) misconduct and irregularities, as well as signals from whistleblowers. As the Supervisory Board oversees these processes, the management board must keep the supervisory directors informed. Furthermore, if a (suspected) instance of misconduct or an irregularity concerns the conduct of a director, an employee must be able to report this directly to the chair of the Supervisory Board.
Is this sufficient?
But does the chair of the Supervisory Board actually know how to deal with such a report? These procedings often go wrong in this regard; take, for example, the recent uproar surrounding the court ruling that the dismissal of the director of the Dutch Photography Museum (Nederlands Fotomuseum) was unlawful. Or the latest investigation report from the Whistleblowers’ Centre. These cases exemplify the importance of an independent and impartial person to receive and follow up on reports.
For large organisations, it makes sense for this role to be assigned to the Ethics & Compliance Officer or Integrity Manager. But how do you safeguard their independence? It is high time that this is enshrined in the Corporate Governance Code. The Association for Compliance Professionals has been advocating for this for 10 years, and the Whistleblower Protection Act is yet another good reason to enshrine this in the code now.
As such, the independence of report handlers can be enshrined in a charter, and employees should have a (second) reporting line to the Supervisory Board, so that they cannot simply be silenced or dismissed by the management board. Just like the Internal Auditor, the Ethics & Compliance Officer plays an essential role in safeguarding sustainable value creation for all stakeholders.
Supervisory boards have a vested interest in having a competent integrity officer
It is, moreover, also in the interests of the supervisory board members themselves that they receive sound advice on this matter. Do they, for example, know that revealing the identity of a whistleblower carries fines and a prison sentence of up to one year? The latest research report from the Dutch Whistleblowers’ Authority shows that this can easily go wrong.
Handling whistleblower reports properly and promoting integrity therefore also reduces the liability of directors and supervisory board members.
In its brochure, the Whistleblowers’ Centre does indicate that the board may appoint an integrity officer. If there is insufficient expertise in this area within the Supervisory Board, then, in our view, an independent integrity officer should be brought in under the Whistleblowers’ Protection Act.
However, not all organisations have the resources to appoint a capable, independent Ethics & Compliance Officer or Integrity Manager, or to appoint an experienced Ethics & Compliance Officer to their Supervisory Board. We are, incidentally, seeing the first signs that the latter is becoming increasingly common in the larger corporate sector. Smaller organisations can, of course, also appoint an experienced, independent third party such as The Integrity Coordinator to handle reports.
If you would like to find out more about this, please join our course. Or engage us as an external, independent integrity coordinator.
