Danish Law on CSR Reporting

From 2009, large businesses in Denmark are required to account for their work on corporate social responsibility. There is a statutory requirement from 2009 that large businesses in Denmark must take a position on CSR in their annual reports.

The Danish Parliament (Folketing) adopted the proposed "Act amending the Danish Financial Statements Act (Accounting for CSR in large businesses)" on 16 December 2008.

Under this amendment, in future large businesses must account for their work on CSR in their annual reports.

The aim is to inspire businesses to take an active position on social responsibility and communicate this. The statutory requirement is part of the Government's action plan for CSR (May 2008) and is intended to help improve the international competitiveness of Danish trade and industry.

Which businesses are covered by the Act?

The Act covers large businesses in accounting class C, and listed companies and state-owned companies in accounting class D. Large businesses in accounting class C are businesses that exceed at least two of the following three size limits:

• Total assets/liabilities of DKK 143 million
• Net revenue of DKK 286 million
• An average of 250 full-time employees

Subsidiaries are exempt from having to report on social responsibility if the parent company does so for the entire group.

The same reporting requirement has also been introduced for institutional investors, mutual funds and other listed financial businesses (financial institutions and insurance companies, etc.), not covered by the Danish Financial Statements Act. For these businesses, the requirement has been introduced in Executive Orders issued by the Danish Financial Supervisory Authority.

What has to be reported?

Businesses covered by the statutory requirement must report on:

1. The business's social responsibility policies, including any standards, guidelines or principles for social responsibility the business employs.
2. How the business translates its social responsibility policies into action, including any systems or procedures used.
3. The business's evaluation of what has been achieved through social responsibility initiatives during the financial year, and any expectations it has regarding future initiatives.

If the business has not formulated any social responsibility policies, this must be reported.

How is the information to be reported?

The report on social responsibility must be included in the management review section of the annual report.

Alternatively, businesses may include the report on social responsibility in a supplement to the annual report, or on the business's website. However, the management review must indicate where the report has been published.

If a business has acceded to the UN Global Compact or Principles for Responsible Investment (UN PRI), it is sufficient to refer to the progress report that members are required to prepare.

Businesses which prepare a sustainability report or similar report on their social responsibility initiatives may refer to this in their management review – however, this report must fulfil the reporting requirements (see above).

When did the Act enter into force?

The Act entered into force on 1 January 2009 and applies to financial years beginning on 1 January 2009 or later.