When all is regulated, innovation perishes

The Amsterdam Economic Board, ORAM and ROM InWest invited entrepreneurs and governments to discuss the role of businesses in solutions to societal issues such as health, the labour market and sustainable energy. And what they need from the government.

The reason for the meeting is the report by the Dutch Scientific Council for Government Policy (WRR) ‘Doing Good. Towards larger social contributions by businesses’. Read the news release about this report.

“The business reality is that corporate social responsibility does not pay. Non-sustainable solutions are cheaper and consumers are not encouraged to make conscious choices. The government provides the wrong incentives, pampers established business and regulations are weak.”

– Dr. Marthe Hesselmans, co-author of the report

Views on the recommendations

University of Amsterdam professor Arnoud Boot, project chair of the WRR report, offers his views on the report’s recommendations during the meeting.

  • Derailing measures

Transitions seem bigger in this day and age because of the enormous gains we have accumulated. We have more to lose. Implementing measures and more measures is derailing business. The government can focus on increasing corporate social responsibility, but they shouldn’t offer the solutions.

  • Business talks

Established businesses and governments rail at each other, instead of engaging in conversation; sustainable players are not even consulted at all. Companies should not be considered pariahs because it is politically convenient.

  • Right investments

Financial institutions are an integral part of society, you need to engage with them. A public-private bank with private shareholders and private capital can ensure that existing instruments are used effectively for social and affordable solutions and the money is not used for political purposes. In addition, it can provide a long-term orientation that is less susceptible to political changes.

Consistent and workable policies

The various discussion tables reflected on the report’s issues and recommendations. The main points that emerged during the meeting are a long-term vision with long-term laws and regulations for companies with a clear goal, in step with the speed at which businesses operate, leaving creative solutions to companies, procurement with sustainable preconditions for a level playing field, supervision of e.g. environmental permits to provide perspective, consistent policy for financing and no more pilots.

Several perspectives are offered by large companies, startups, funds, intermediary organisation, governments, educational institutions, foundations and interest groups. The established (often larger) companies expect support from the government to make their businesses more sustainable and get the necessary funding. They also call for long-term policies. The government should also comply with its agreements. They stress the importance of a positive business climate for these companies.

Mark de Boer, Vice President of Sustainability at Albemarle, spoke about their plant in Amsterdam North where the city wants to build nearby housing, even though the Association of Dutch Municipalities (VNG) has set clear guidelines about the distance between residential housing and companies like Albemarle.

Startups are focused on growing their innovation/product and having to compete with providers of less sustainable/healthier and often cheaper products. Through long-term purchasing agreements with both public and private parties, they are trying to enforce more commitment to sustainability and health .

Anouk Snelders, founder Health Food Wall, explained that entrepreneurs understand very well which way we are moving as a region. In a tender, you can ask entrepreneurs to comply with 80% plant-based nutrition. Making Health Food Wall a serious option as a supplier of snacks.

Entrepreneurial government

Entrepreneurs are preoccupied with the future. An entrepreneurial government would get what businesses need: a rapid implementation of workable rules with a clear goal. The government has a lot of knowledge, but completely different timelines. If startups do not feel supported, they are more likely to find another way to organise joint solutions without government or seek their own (foreign) funding.

Key takeaways

  • Lots of knowledge in government, but fragmented, communications inadequate, many staff changes

  • Too many different projects and pilots

  • Long-term laws and regulations with clear and workable goals are needed

  • Proportionate supervision and enforcement of rules

  • There should be more public-private cooperation at the policy level

  • Welcome new companies, instead of inviting the usual suspects

  • Tightening criteria on CSR in government procurement & tendering is low-hanging fruit

  • The government is inconsistent: environmental permits at businesses are barely enforced, while inspection and control in healthcare & education is rigged in detail

  • As a startup, it takes a disproportionate time commitment to participate in a Growth Fund application, which would favour large established companies.

Look differently, act differently

Businesses and governments need to relate to each other very differently. Governments should engage with innovative players, empathise, and not take over the role of businesses in innovation. In short: Look differently, act differently. This creates space for entrepreneurs to take their role in creative solutions for health, the labour market and renewable energy.

24 November 2023

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