A legal overview on ESG regulation in the Netherlands

This development is mainly driven by legislation from the European Union, which aims to align economic activities with climate objectives, human rights standards, and long-term sustainable value creation. As a result, companies, directors, and investors face an increasingly complex regulatory and liability landscape.

European regulatory framework

The European Green Deal forms the cornerstone of ESG regulation, with the objective of making the EU climate neutral by 2050. This ambition has been translated into binding legislation, in particular through the European Climate Law, which establishes climate neutrality as a legal obligation.

Key ESG instruments include the Corporate Sustainability Reporting Directive (CSRD), which expands non-financial reporting obligations, and the EU Taxonomy Regulation, which introduces a classification system for environmentally sustainable economic activities. The Sustainable Finance Disclosure Regulation (SFDR) imposes transparency requirements on financial market participants, while the Corporate Sustainability Due Diligence Directive (CSDDD) introduces obligations to identify, prevent, and mitigate adverse human rights and environmental impacts throughout the value chain.

ESG and Dutch corporate governance

In the Netherlands, ESG obligations are further shaped by national corporate governance standards and directors’ duties under Dutch law. For listed companies, the Dutch Corporate Governance Code (DCGC) plays a key role under the comply-or-explain principle.

The DCGC emphasises long-term value creation and requires boards of directors to integrate ESG considerations into corporate strategy, risk management and internal control systems. Directors are expected to identify ESG risks, assess their impact on the continuity of the company and address these risks in annual reporting. Supervisory boards oversee this process.

These governance expectations are reinforced by the CSRD, which introduces mandatory European sustainability reporting standards (ESRS). ESG reporting has therefore evolved into a standardised and assurance-backed accountability mechanism.

Shortcomings in ESG governance or disclosure may be relevant when assessing whether directors have fulfilled their duties. Where ESG risks are foreseeable, failure to address or disclose them adequately may lead to a finding of mismanagement, particularly if financial, operational, or reputational damage occurs.

Enforcement and litigation risks

ESG-related enforcement and litigation are increasing in the Netherlands. Climate litigation seeks to compel companies to align their business models with climate objectives, while greenwashing claims challenge the accuracy and substantiation of sustainability disclosures. ESG considerations therefore increasingly intersect with directors’ duties, disclosure obligations, and tort law.

Conclusion

ESG regulation in the Netherlands is characterised by rapid legal developments and increasing enforcement and litigation risks. Despite ongoing efforts to simplify the framework, ESG obligations continue to have significant implications for corporate governance, reporting and liability.

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Nico van der Peet is the head of Thuis Partners’ business law and corporate litigation department. He counsels on corporate structures, participations, and joint ventures. His activities include litigation relating to shareholder disputes, decision making, and liability.