The Netherlands is aligned with the Recommendation on the Terms and Conditions of Aid as it provides only grants.
OECD Development Co-operation Peer Reviews: Netherlands 2023
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OECD Development Co-operation Peer Reviews
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Annex B. Progress against OECD legal instruments under the responsibility of the DAC
Recommendations adopted by the DAC
Recommendation on the Terms and Conditions of Aid (1978) [OECD/LEGAL/5006]
Recommendation on Untying Official Development Assistance (2001) [OECD/LEGAL/5015]
Overall, the Netherlands is compliant with the DAC Recommendation on Untying Official Development Assistance (ODA). The share of untied ODA provided to countries covered by the Recommendation stood at 100% in 2021 DCD/DAC(2022)34/FINAL. The share of overall ODA that was reported as untied was 98.2%. The Netherlands has started to report both ex ante notifications of contract opportunities and ex post contract awards, where previously neither was reported, leading to improved transparency. Transparency could be enhanced further for reporting on instruments that mix ODA and non-ODA funding and primarily targeting Dutch businesses, such as the Dutch Good Growth Fund.
In 2021, 68% of contracts (in terms of value) reported by the Netherlands under different instruments in countries covered by the Recommendation and 53% of contracts in all countries were awarded to Dutch companies.
The approach to specific instruments funded by ODA raises questions regarding the commitment taken in the Recommendation to ensure that ODA is both de jure and de facto untied. While the Development Related Infrastructure Investment Vehicle (DRIVE) and Develop2Build (D2B) programmes are formally open to all companies (de jure untied), the government stated an ambition that 70% of contracts under these programmes will be implemented by Dutch businesses. The ongoing review of the Recommendation on Untying ODA carried out under the auspices of the WP-STAT1 will provide an opportunity for the Netherlands to clarify these possible tensions between de jure and de facto untying.
DAC Recommendation on Ending Sexual Exploitation, Abuse, and Harassment in Development Co‑operation and Humanitarian Assistance (2019) [OECD/LEGAL/5020]
A 2021 Sexual Exploitation, Abuse, and Harassment (SEAH) policy and the 2023-25 work plan promote zero tolerance for inaction, a survivor-centred approach, and partner organisation responsibility. A dedicated headquarters unit steers efforts, while all portfolio holders and missions have a responsibility to monitor partners. The Netherlands has initiated pilots for reporting SEAH in humanitarian responses with a view to developing guidance. It has integrated SEAH in staff training and explores pre-employment screening.
The Netherlands actively encourages multilateral organisations to strengthen internal systems to prevent SEAH and has contributed to harmonised language for UN-donor agreements.
Recommendation on the Humanitarian-Development-Peace Nexus (2019) [OECD/LEGAL/5019]
The Netherlands has integrated the principles of the DAC Recommendation on the Humanitarian-Development-Peace (HDP) Nexus into its policy environment. The ministry’s integrated mandate allows proximity and collaboration between humanitarian, development and political co‑operation.
Tailored working methods are in place to improve the quality and conflict-sensitivity of aid in fragile settings, including: adaptive programming and calculated risk-taking; adopting an integrated approach; engaging in critical but constructive dialogue; investing in the long term; and a strong focus on learning. The integrated approach that underpins its work in fragile contexts is gradually being strengthened in practice. Adaptive programming and modular approaches to programme design enable the Netherlands to scale up or down without withdrawing completely.
The Netherlands is seeking to advance the HDP Nexus approach at multilateral level, in particular through the UN New Way of Working (United Nations, n.d.[1]) in its migration and displacement programming. It aims to incentivise closer collaboration between organisations and agencies with humanitarian and development mandates for longer-term approaches.
The Netherlands provides predictable, flexible, and multi-year financing to its partners, allowing some flexibility across humanitarian, development and peace programming. Partners can draw on humanitarian allocations for resilience and early recovery programming to adapt to changing circumstances. The Netherlands also supports innovation by encouraging partners to explore and develop new approaches, for instance in security sector governance. Nevertheless, development financing cannot be repurposed as humanitarian, which limits flexibility. A recent IOB evaluation (IOB, 2023[2]) recommended “starting to work on future scenarios in order to position the Netherlands in debates on the urgent and forward-looking question of whether current ways of giving humanitarian aid will remain effective and appropriate in a vastly changing world”. This is especially relevant given the increasingly blurred boundaries between humanitarian and development needs in crisis settings.
Recommendation on Enabling Civil Society in Development Co‑operation and Humanitarian Assistance (2021) [OECD/LEGAL/5021]
Civil society is a key implementing partner for the Netherlands with support to CSOs high compared to the DAC average. Civil society organisations are key partners across both development and humanitarian activities and the Netherlands stands out for its support to groups focused on keeping civic space open, such as human and environmental rights defenders. Eighty-three per cent of ODA to and through CSOs are allocated to women’s institutions, have gender equality as a principal objective, or allocated to organisations that make gender equality a significant objective (compared to under 50% for the DAC average). Complementary sectors such as Rule of Law are a key focus for Dutch co‑operation.
The Netherlands has pursued innovative approaches to support local CSOs. Their Dialogue and Dissent policy framework, for example, has supported CSOs in partner countries in building political capacity to lobby and advocate (OECD, 2022[3]). One recipient under this framework was Leading from the South, a feminist funding alliance that supports feminist and women’s rights organisations. An evaluation of this programme found, among other positive outcomes, that it was successful in reaching women often overlooked by mainstream development and helped to fundamentally shift perceptions regarding the capacity of southern-led organisations to manage large grants.
Support to local civil society is channelled predominantly through consortium models. Recent innovations to make these models more responsive to local needs have included explicit reference in grant frameworks to ensuring that local actors have decision-making roles. Funding is flexibly managed where possible. The Netherlands also supports networks of civil society organisations and leverages opportunities to connect local actors to international platforms, for example through capacity building to enable women’s rights organisations to engage in a Conference of the Parties (CoP). Direct financing for local CSOs remains low and CSOs outside of the Netherlands rarely lead consortia due to eligibility requirements.
The Ministry of Foreign Affairs supports a number of CSO reflection exercises, sharing of good practice, and capacity building on accountability and transparency. The Netherlands’ strong focus on combatting SEAH also extends to their engagement with CSO partners, raising the bar for all stakeholders. Further clarity on options for government engagement would further contribute to collaboration and co-ordination with CSO groups and all levels of partner country government to avoid duplication and build mutual respect, trust and accountability as set out in Pillar THREE of the Recommendation (OECD, 2021[4]).
Recommendations adopted by the Council
OECD Recommendation on Policy Coherence for Sustainable Development (2019) [OECD/LEGAL/0381]2
The Netherlands is one of comparatively few DAC members with strategies, mechanisms and tools to consider the transboundary effects of its policies on developing countries. These instruments lead to progressive adjustments of policies, for instance on tax (see Box 7).
A dedicated action plan adopted by the government identifies policy priorities for action, determines objectives, planned actions as well as progress indicators (Government of the Netherlands, 2022[5]). Actions are reflected in strategic and policy documents. A recent evaluation recommends strengthening the action plan, including through more detailed planning, indicators and monitoring (IOB, 2023[6]).
Co-ordination between line ministries on transboundary effects is generally on an ad hoc basis around specific issues. The MFA plans to increase consultation with key ministries, notably to improve regulatory impact assessments. Many multi-stakeholder platforms bring together government, business, trade unions and civil society in sectors of high relevance for responsible business conduct. The government intends to step up awareness of the Sustainable Development Goals and for this purpose the MFA collaborates for instance with the platform SDG Nederland. However, investments in this area remain limited and different efforts are not yet co-ordinated.
The government annually reports to Parliament on progress achieved against the action plan. Spillovers are extensively discussed in national SDG reporting (Government of the Netherlands, 2022[7])and also part of statistical SDG monitoring (Statistics Netherlands, 2022[8]). Regulatory impact assessments (i.e. the “SDG test”) need to reflect concerns for developing countries, for which there is detailed guidance. The government has committed to taking action to improve the quality and usefulness of assessments. Evaluations regularly consider policy coherence, with some explicitly focusing on coherence in certain policy areas (e.g. tax and trade as well as forthcoming for food, water and climate).
Box B.1. Addressing policy coherence challenges: Tax
Long accused of being a tax haven, the Netherlands have placed taxation high on its policy coherence agenda since the adoption of the first policy coherence action plan in 2016 (Government of the Netherlands, 2016[9]). To implement this approach to policy coherence the Netherlands has established a whole-of-government approach to tax and development, with the Ministry of Finance taking the lead. In the initial phase, the Netherlands undertook a spillover analysis, adjusted tax treaties with developing countries, strongly engaged in international tax processes, provided development co‑operation in support of domestic revenue mobilisation and phased out tax exemptions in development co‑operation (OECD, 2022[10]). Subsequently, the Netherlands also reviewed domestic regulation, primarily to curb profit shifting via the Netherlands (Ministry of Finance, 2022[11]).
Source: Government of the Netherlands (2016[9]) Hulp, handel en investeringen; Brief regering; Actieplan en jaarrapportage Beleidscoherentie voor Ontwikkeling (Aid, trade and investment; Government letter; action plan and annual report on policy coherence for development), https://www.tweedekamer.nl/kamerstukken/brieven_regering/detail?id=2016Z11906&did=2016D24521; OECD (2022[10]), Tax Capacity Building: A Practical Guide to Developing and Advancing Tax Capacity Building Programmes, OECD Publishing, https://doi.org/10.1787/c73f126f-en; Ministry of Finance (2022[11]), Factsheet: Measures against tax avoidance and tax evasion, https://www.government.nl/topics/tax-avoidance/documents/leaflets/2021/03/03/factsheet-measures-against-tax-avoidance-and-tax-evasion
OECD Recommendation for Development Co‑operation Actors on Managing the Risk of Corruption (2016) [OECD/LEGAL/0431]
A Code of Conduct for Integrity (with an annex on Bribery of foreign public officials) sets out rules for staff. The Ministry of Foreign Affairs has clarified management, board, and audit roles for corruption management, using a three-lines model: a dedicated Fraud and Corruption Unit in the Ministry steers internal anti-corruption efforts; internal and external confidential advisors, as well as local advisors in larger embassies provide advice to staff; and project management staff receive specific training on identifying and reporting corruption risks. Other staff are also regularly informed of and trained on corruption risks. Considering similar training for partners could be important. Further information on managing the risk of foreign bribery in the context of ODA is available in the phase 4 review of the OECD Working Group on Bribery (OECD, 2021[12]).
Contracts require partners to report incidents immediately and include sanctions clauses. Information on incidences (short background, financial amounts subject to investigation and recovered) is published online and in the MFA’s annual report to Parliament.
Country strategies consider corruption albeit mostly from a fiduciary risk perspective. A dedicated analysis of broader corruption risks and how development co‑operation could help address those is not required but could support the Netherlands to better identify and mitigate non-fiduciary corruption risks. The Netherlands regularly exchanges with other donors and partners on anti-corruption efforts and promotes joint international action.
OECD Recommendation on Environmental Assessment of Development Assistance Projects and Programmes (2020) [OECD/LEGAL/0458]
All infrastructure projects are subject to the preparation and presentation of an elaborate Environmental and Social Impact Assessment (ESIA). In the case of a negative outcome, and where no mitigating measures can be taken, the project will not be approved. The Netherlands Commission for Environmental Assessment3 provides independent advice on complex projects financed by the Netherlands in developing countries. It also helps strengthen the capacity of authorities in partner countries to lead assessment processes.
The Dutch Entrepreneurial Development Bank, FMO, has a team of environmental and social officers that screen all investments. It also has an independent complaints mechanism.
OECD DAC Declaration on a new approach to align development co‑operation with the goals of the Paris Agreement on Climate Change (2021) [OECD/LEGAL/0466] (hereafter “the DAC Declaration”)
The Netherlands issued its first Global Climate Strategy in 2022 (Government of the Netherlands, 2022[13]). The strategy outlines the Netherlands’ ambition to step up climate action in international diplomacy, trade and financing, with an “ambition to play a pioneering role in achieving Paris goals and the SDGs”. It reaffirms the commitment to bring all funding flows in line with the Paris agreement.
The new trade and development policy “Do what we do best” commits to increasing climate finance (EUR 1.8 billion, equally shared across public and private finance) (Ministry of Foreign Affairs, 2022[14]). The Netherlands estimates that this corresponds to its fair share. The Netherlands also commits to achieving a share of 50% of adaptation finance. Under its new climate strategy, the Dutch Entrepreneurial Development Bank, FMO’s new climate action plan sets out a long-term goal to reach a net-zero portfolio by 2050 and portfolio targets of EUR 10 billion in climate action, including EUR 1 billion in carbon removal (FMO, 2022[15]).
Climate finance was evaluated in 2021 (IOB, 2021[16]). Public climate finance stems mostly from ODA budget lines on climate, agriculture and water, for which a Climate finance dashboard provides an overview (Ministry of Foreign Affairs, n.d.[17]). The Netherlands engages actively with multilateral organisations on climate finance, strongly advocating for adaptation finance and supporting efforts to mobilise private climate finance.
Private resources are also raised through FMO-managed instruments. These include a dedicated Dutch Fund for Climate and Development (DFCD), the facility Climate Investor One and Access to Energy Fund. Through Climate Investor One and the origination facility of the Dutch Fund for Climate and Development, the Netherlands supports potentially bankable projects in their early stage. The DFCD relies on a collaboration with two non-governmental organisations focused on the environment (WWF) and poverty reduction (SNV).
ODA grants are not used to finance fossil fuels. In 2021, FMO ended upstream and mid-stream investments and will progressively phase out downstream investments in fossil fuels (FMO, n.d.[18]). Regarding export support, the government enacted the phase out of support for all fossil energy production by 2023, allowing for a one-year transition period and exceptions that can cater to specific developing country needs. It also sets positive incentives for green exports.
The Netherlands supports developing countries’ access to climate finance through the NDC (Nationally Determined Contributions) partnership, which it chaired in 2020. It is also active on a just transition, enabling developing countries to benefit from opportunities of sustainable value chains, while also promoting responsible business conduct in raw material value chains.
The Netherlands has invested in mainstreaming climate action in development programming, using quality assurance processes, guidance and coaching.
The link between climate and biodiversity is clearly reflected in policies, which recognise the need to protect biodiversity to address climate change, and to adopt nature-based solutions. The Netherlands has specific funding commitments for biodiversity and forests. It also participated in the recent joint donor statement on international finance for biodiversity and nature.
Sustainable water management is a priority for the Netherlands. As co-host of the 2023 UN Water Conference, it focuses on the link between water and climate. In bilateral co‑operation, the Netherlands also targets management of river basins and deltas. The Netherlands does not have significant co‑operation with Small Island Developing States or on Oceans. The Netherlands engages actively on Oceans at the international level.
References
[21] Building Change (2022), Reactie Building Change op herziening Actieplan beleidscoherentie voor ontwikkeling (Building Change Reaction to the Updated Action Plan for Policy Coherence for Development), https://www.buildingchange.nl/reactie-building-change-op-herziening-actieplan-beleidscoherentie-voor-ontwikkeling/ (accessed on 22 March 2023).
[15] FMO (2022), Climate Action Plan, https://www.fmo.nl/l/en/library/download/urn:uuid:25c25d01-4d2b-4585-a5ca-dd5682de71fe/fmo+climate+action+plan_2022.pdf.
[18] FMO (n.d.), FMO takes important step in its Climate Action (SDG13) commitment, https://www.fmo.nl/news-detail/42c0e92e-830a-4b90-884f-5bbd3601a242/fmo-takes-important-step-in-its-climate-action-(sdg13)-commitment (accessed on 27 March 2023).
[13] Government of the Netherlands (2022), Global Climate Strategy, Ministry of Foreign Affairs and Ministry of Economic Affairs and Climate, https://www.government.nl/documents/publications/2022/12/22/global-climate-strategy.
[5] Government of the Netherlands (2022), Letter to Parliament on the action plan on policy coherence for development, https://www.government.nl/documents/parliamentary-documents/2023/02/06/letter-to-parliament-action-plan-on-policy-coherence-for-development (accessed on 27 March 2023).
[7] Government of the Netherlands (2022), Zesde Nationale SDG Rapportage (Sixth National SDG Report), https://www.rijksoverheid.nl/documenten/rapporten/2022/05/18/zesde-nationale-sdg-rapportage-nederland-ontwikkelt-duurzaam (accessed on 27 March 2023).
[9] Government of the Netherlands (2016), Hulp, handel en investeringen; Brief regering; Actieplan en jaarrapportage Beleidscoherentie voor Ontwikkeling (Aid, trade and investment; Government letter; action plan and annual report on policy coherence for development), https://www.tweedekamer.nl/kamerstukken/brieven_regering/detail?id=2016Z11906&did=2016D24521.
[6] IOB (2023), Better aligned? Evaluation of the action plan on policy coherence for development, https://english.iob-evaluatie.nl/results/action-plan-policy-coherence-for-development.
[2] IOB (2023), Trust, risk and learn- Evaluation humanitarian assistance given by the Netherlands, https://english.iob-evaluatie.nl/results/publications/reports/2023/02/07/evaluation-humanitarian-assistance-policy.
[19] IOB (2021), A taxing issue: Evaluation of the Dutch government’s policy on strengthening developing countries’ tax systems (2012-2020), https://english.iob-evaluatie.nl/results/tax-system-support.
[16] IOB (2021), Funding commitments in transition: Evaluation of Dutch climate finance for development 2016-2019, https://english.iob-evaluatie.nl/results/publications/sub-studies/2021/06/29/funding-commitments-in-transition---dutch-climate-finance-for-development-2016-2019.
[11] Ministry of Finance (2022), Factsheet: Measures against tax avoidance and tax evasion, https://www.government.nl/topics/tax-avoidance/documents/leaflets/2021/03/03/factsheet-measures-against-tax-avoidance-and-tax-evasion.
[20] Ministry of Finance (2021), High number of shell companies detrimental to the Netherlands, says Committee, https://www.government.nl/topics/tax-avoidance/news/2021/11/22/high-number-of-shell-companies-detrimental-to-the-netherlands-says-committee (accessed on 27 March 2023).
[14] Ministry of Foreign Affairs (2022), Do what we do best: A Strategy for Foreign Trade and Development Cooperation, Ministry of Foreign Affairs, https://www.government.nl/documents/policy-notes/2022/10/10/policy-document-for-foreign-trade-and-development-cooperation-do-what-we-do-best.
[17] Ministry of Foreign Affairs (n.d.), Public Climate Finance of the Netherlands Ministry of Foreign Affairs, https://public.tableau.com/views/ClimateNL/Climatefinance?%3AshowVizHome=no&%3Aembed=y (accessed on 27 March 2023).
[3] OECD (2022), In Practice: Netherlands’ strategic partnerships to strengthen civil society advocacy capacity, https://www.oecd.org/development-cooperation-learning/practices/netherlands-strategic-partnerships-to-strengthen-civil-society-advocacy-capacity-68164dc7/.
[10] OECD (2022), Tax Capacity Building: A Practical Guide to Developing and Advancing Tax Capacity Building Programmes, OECD Publishing, https://doi.org/10.1787/c73f126f-en.
[12] OECD (2021), Implementing the OECD Anti-Bribery Convention: The Netherlands Phase 4 Report, https://www.oecd.org/corruption/anti-bribery/Netherlands-Phase-4-Report-ENG.pdf.
[4] OECD (2021), OECD-LEGAL-5021 DAC Recommendation on Enabling Civil Society in Development Co-operation and Humanitarian Assistance, https://legalinstruments.oecd.org/en/instruments/OECD-LEGAL-5021.
[8] Statistics Netherlands (2022), Monitor of Well-being and the Sustainable Development Goals 2022, https://longreads.cbs.nl/monitor-of-well-being-and-sdgs-2022/.
[1] United Nations (n.d.), The New Way of Working, https://www.un.org/jsc/content/new-way-working (accessed on 6 April 2023).