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On 16th December 2008 the Danish parliament adopted “Act amending the Danish Financial Statement Act (Accounting for CSR in large businesses)”.

The aim of the law is to inspire businesses to take an active position on CSR and communicate this to the outside world. The statutory requirement is part of the first National Action Plan for Corporate Social Responsibility (May 2008) and is intended to improve the international competitiveness of Danish businesses.  The law requires large businesses in Denmark to account for their work on Corporate Social Responsibility (CSR). In 2013 a new requirement was introduced into the law making it mandatory for businesses to also expressly account for their policies for respecting human rights and for reducing their climate impact.

Danish businesses are free to choose whether or not they wish to work on CSR. However, the statutory requirement means that the businesses must account for their policies on CSR, or state that they do not have any.

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.

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?

The businesses that are covered by the statutory requirement have to state:

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

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

On 12th June 2012 the Danish parliament adopted an amendment to the Financial Statement Act so that businesses in the future have to expressly account for the topics human rights and climate impact reduction regardless of whether or not these are included in the businesses’ CSR policies. If these two topics are not included, the businesses must therefore in the future expressly declare this. The aim of this amendment to the reporting requirement is to inspire more businesses to actively include these two topics in their CSR-policies.