CSR and Reporting in Denmark 2nd Year 2011

8/3/2019 CSR and Reporting in Denmark 2nd Year 2011

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Corporae Social Responsibiliyand Reporing in Denmark

Impact of the second year subject to the legal requirements

for reporting on CSR in the Danish Financial Statements Act


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Foreword

ForewordThe Danish governmen considers i vial ha Danish business and indusry akes CSR iniiaives

o improve social condiions, human righs and labour sandards, as well as he environmen and

climae. This is necessary o creae a beter Denmark and o ensure ha Denmark can conrib-

ue o globalisaion wih a human ace and he susainable managemen o our shared resources.

CSR is also benecial o businesses botom lines. A new sudy rom Harvard Business School

shows ha CSR reporing srenghens invesors condence in a business. CSR has become a

condiion o he marke, where Danish businesses have he compeiive advanage o long-erm

experience rom complying wih high sandards in inernaional erms in such areas as HR and

environmenal managemen. We can and mus use his oensively.

I am hereore pleased ha o large Danish businesses comply wih he legal requiremen

rom 9 concerning openness in heir CSR work, and ha he qualiy o he inormaion is

higher han las year. There is sill room or improvemen, and unorunaely here will always

be businesses ha ail o do as hey should. I am hereore also pleased ha he Finance Ac or

makes i possible or me o esablish a mediaion and complains body or good corporae

governance.

I am convinced ha greaer openness regarding CSR is he bes course or boh sociey and

or business and indusry. o large Danish businesses have go i righ! This model mus beshared wih oher counries. The governmen will also work or his a EU level, no leas during

Denmarks EU Presidency in he rs hal o .

Ole Sohn

Miniser or Business and Growh

November


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Execuive summary

Executive summaryCBS has jus compleed his years survey o he qualiy o large and sock-exchange lised busi-

nesses CSR reporing according o he CSR requiremens in he Danish Financial Saemens Ac,

which were adoped in , and which he businesses repored under or he rs ime in .

The requiremens enail ha businesses mus eiher disclose heir CSR policies, how hey imple-

men hem, and wha hey have achieved; or sae specically ha hey do no have CSR policies.

In overall erms, he survey shows ha he qualiy o he businesses inormaion on CSR in he

nancial saemen is seadily increasing. However, here are sill some businesses ha do no

ully mee he legal requiremens.

As a naural consequence o he ac ha his is he second year o legal reporing, he number o

businesses reporing or he rs ime has decreased rom o . As mos businesses are

hus reporing or he second consecuive year he reporing pracice has improved signican-

ly. This means, overall, ha he Ac has encouraged o large Danish businesses o be more

open abou heir CSR iniiaives.

O he reporing businesses, sae ha hey work on CSR and ha hey do no. There

is hus a small increase in he number o businesses (rom 9 in he nancial year 9) ha

sae ha hey do no work wih CSR. In saisical erms he change is no signican, however.

There are sill a small number o businesses () ha do no ull he legal requiremen a all,

since hey ail o sae wheher hey have CSR policies or no.

Chart 1: Compliance wih he requiremen o reporon CSR in he annual repor

Annual repors wih no inormaion on hebusiness CSR work (non-compliance wih helegal requiremen)

Subsidiaries where he paren businessrepors or he enire Group (compliance wihhe legal requiremen)

Annual repors wih inormaion on hebusiness CSR work (compliance wih he legalrequiremen)

87 %

6 % 7%

The business saes ha i does no workwih CSR

The business saes ha i works wih CSR

87 %

13 %

Chart 2: Deails o wheher he business workswih CSR or no


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Execuive summary

More repor on policies, implemenaion and resuls

There has been a signican improvemen in he businesses abiliy o ranslae policies ino ac-

ions and o describe he achieved resuls. In he nancial saemens, more businesses re-

por on policies a (9) ; on acions a (); and on achieved resuls a 9 ().

Table 9

Wihou subsidiaries

Policies 9 9

Acions 9

Resuls 9

Aer eliminaion or subsidiaries ha do no repor separaely, bu reer o CSR inormaion in

he paren business consolidaed nancial saemens, which he Ac permis, he survey shows

ha 9 repor on policies, 9 repor on acions, and describe resuls achieved.

Relaively high degree o consisency in he businesses inormaion

I is no sucien o disclose policy in one area, aciviies in anoher, and resuls in a hird. I a

business repors on is environmenal policy, or example, he inormaion on aciviies and re-

suls mus cover he same area. The survey reveals a relaively high degree o consisency in he

businesses inormaion. For o he businesses sudied, however, here was no inormaion

consisency.

Chart 3: Consisency o he repor beween he hree dimensions o he Ac

Full consisency in reporing o hehree dimensions o he Ac

No consisency in reporing o hehree dimensions o he Ac

Some consisency in reporing ohe hree dimensions o he Ac

47 %

15 % 38%

)The gures in parenhesis reer o he gures or he nancial year 9.


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Execuive summary

The businesses repor on more opics

The environmen and climae (9) and social condiions a Danish workplaces () are sill

by ar he mos common opics o he policies repored. The picure is he same or ranslaing

policies ino acions and resuls in hese areas.

On he oher hand, here is a signican increase in he number o businesses reporing acions

wihin human righs ( compared o in he nancial year 9) and wihin labour sand-

ards ( compared o in he nancial year 9).

Even hough his is no a legal requiremen, several businesses also disclose heir expecaions

o uure work on CSR (9 compared o ) and he organisaional saus o his work (

compared o 9). The inormaion on organisaional saus is imporan as i gives an impression

o how rmly he CSR work is anchored in he organisaion, which invesors in paricular consid-

er imporan, c. he ollowing evaluaion by ATP.

Chart 4: Breakdown o opics on reporing policies, ranslaing policies ino acions and resuls achievedrom CSR work

70

60

50

40

30

20

10

0

Number

Policies

Environmen and climae

Human righs

Labour sandards

Ani-corrupion

Social condiions a Danish workplaces

Translaion o

policies ino acions

Resuls achieved

rom CSR work

Topic


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Execuive summary

Several businesses apply inernaional sandards

The ac ha more businesses are beginning o work wih and repor on more parameers may

be relaed o how more businesses have signed up o he UN Global Compac ( compared o

in he nancial year 9). The UN Global Compac is based on he UN and ILO convenions

and declaraions in he areas o human righs, labour sandards, he environmen and ani-cor-

rupion and hus provides inernaional guidelines or CSR. I gives businesses a clear and com-plee ramework as he basis or heir CSR iniiaives. There is an increase rom 9 o in

he number o businesses ha ull he legal requiremen by reerring o heir annual UN Global

Compac Communicaion on Progress repor.

There has also been an increase in he number o businesses ha repor on he basis o he Glob-

al Reporing Iniiaive (GRI) ( compared o 9 in he nancial year 9). GRI is a recognised

inernaional CSR and susainabiliy reporing sandard. The cornersone o GRI is a ramework

ool ha oulines principles and indicaors ha businesses and organisaions can use o meas-

ure and repor on heir environmenal and social perormance. Boh he UN Global Compac and

GRI are hus imporan ools in businesses CSR work.

Large unlised businesses are approaching he lised businesses level

Comparison o he sock-exchange lised businesses wih he large unlised businesses indicaes

ha, as las year, he lised businesses show signicanly beter perormance. The survey also

shows, however, ha he unlised businesses are caching up wih he lised businesses level. The

legal requiremen hus seems o have conribued o a signican qualiy improvemen in large

unlised businesses openness wih regard o CSR.

Table : Lised Unlised

Apply inernaional CSR principles o heir reporing 56 % (9) 0 % ()

Repor in accordance wih GRI 0 % () % ()Repor on uure expecaions o CSR work 69 % () 40 % ()

In , o he lised businesses (compared o 9 in he nancial year 9) apply iner-

naional CSR principles as he basis or heir CSR work and reporing. The equivalen gure or

he large unlised businesses has increased rom o in relaion o he previous years

repors. O he lised businesses, (compared o in he nancial year 9) repor in ac-

cordance wih GRI, while he equivalen share o he unlised businesses has increased rom

o . I should also be noed ha hese elemens are no par o he legal requiremen, bu re-

fec how he businesses wish o provide urher inormaion on a volunary basis.

9 (compared o las year) o he lised businesses describe heir uure expecaions o

he work, while he equivalen share o he oher businesses is (compared o las year).

Invesors view o reporing

As was he case las year, he Danish Commerce and Companies Agency has also his year reques-

ed ATP o assess seleced businesses in order o evaluae he developmen in he qualiy o

he businesses legal CSR repors (see Appendix ).

ATPs overall evaluaion is ha he businesses legal CSR reporing has improved rom las year.

The impression is ha several businesses have refeced careully on how he legal CSR repor

can be inegraed ino he businesses oher CSR communicaion. For a ew businesses, howev-er, here is sill signican room or improvemen.


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Execuive summary

Sill in signifcan breach o he Ac

Businesses ha ail o disclose any CSR inormaion mus be considered o be in signican

breach o he requiremens o he Ac. This is he case or o he businesses covered by

he survey.

I mus also be considered a signican breach i here is no consisency o any ype in he CSRinormaion disclosed by he businesses. This is he case or o he businesses covered by

he survey.

Finally, i mus in principle be considered a signican breach i no inormaion on achieved re-

suls is disclosed, as his inormaion is key o assessing a business acual achievemens. I

should be noed, however, ha hal o he businesses may no have begun o work sraegically

wih CSR unil las year, in line wih he new legal requiremen ( were rs-ime reporers in

he nancial year 9, and in he nancial year ). I can hereore ake some ime or

concree resuls o be achieved. In such cases he business mus, however, give reasons or ail-

ing o disclose resuls.

Las year, he Danish Commerce and Companies Agency emphasised an audiors duy o com-

men on errors and omissions in a business CSR repor as par o he audiors saemen on he

managemens review. However, he survey did no reveal any examples o audiors commening

on errors and omissions ound in businesses CSR repors.

In uure, he Danish Commerce and Companies Agency will hereore sharpen is ocus on en-

suring ha businesses and audiors comply wih heir respecive legal obligaions. This will be in

ocus when he Danish Commerce and Companies Agency conrols he nancial saemens o

lised businesses, and as par o he public supervision o audiors.

Businesses experience wih he legal reuiremen

The qualiaive par o he survey ocuses on businesses experience in his second year o CSRreporing on he basis o he legal requiremen. The inerviewed businesses were also inerviewed

las year as rs-ime reporers.

Compared o he repors rom he nancial year 9, here have been posiive changes in acu-

al reporing and he reporing process.

Mos o he businesses sae ha hey spen less ime on reporing han las year, as he proce-

dures are now esablished. Mos o he businesses also managed o complee he repor wihou

he assisance o consulans and audiors. Hal o he businesses are inspired by oher business-

es. A ew o he businesses hus respond ha hey did no nd reporing o be challenging, as i

has become a naural par o heir work. Mos o he businesses are also pleased wih he new

guide rom he Danish Commerce and Companies Agency, which more han hal o hose asked

use as he basis or heir reporing.

Finally, i would seem ha reporing has had a posiive impac on he businesses CSR iniia-

ives. The number o businesses saing ha CSR is an inegral par o heir business sraegy

has hus doubled. Some o hem have concree plans o srenghen he work on CSR/reporing.

Oher businesses have no plans or his, however, bu expec o mainain heir CSR reporing a

he presen level.


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Abou his repor

In he Danish Parliamen (Folkeing) adoped an amendmen o he Danish Financial Sae-

mens Ac. This amendmen obliges all large businesses o disclose CSR inormaion in heir an-

nual repors. Businesses mus repor on he ollowing hree dimensions: ) CSR policies; ) how

hese policies are ranslaed ino acions; and ) wha he business has achieved as a resul o

working wih CSR, and any uure expecaions o he work. I he business does no have any

CSR policies, his mus be expressly disclosed. The business audior mus perorm a consisen-

cy check o esablish wheher he reporing requiremen has been complied wih. The objecive

o he legal requiremen is o inspire businesses o ake an acive approach o CSR and o com-

municae heir eors o all sakeholders. This will help o improve he inernaional compeiive-

ness o Danish commerce and indusry.

This repor presens he key conclusions rom a survey o he implemenaion o he new legal

requiremen in he annual repors or o sock-exchange lised businesses and large busi-

nesses in reporing class C. The survey comprises a quaniaive and a qualiaive sudy and was

planned and execued by he Copenhagen Business School on behal o he Danish Commerce

and Companies Agency.

The repor is he second o is ype, as a similar repor was published in . I included he key

conclusions o a survey o he implemenaion o he legal requiremen in he annual repors rom

he nancial year 9, i.e. aer he rs year wih he legal requiremen in orce. The survey ohe second years legal CSR reporing has he specic purpose o considering changes and im-

provemens in reporing pracice. The developmen in he individual businesses annual repors

has hereore been considered, which means ha his survey covers he same group o businesses

as was included in he rs years survey. The reporing is subjec o ongoing comparison wih he

resuls o he previous years survey, so ha i is easy o char any improvemen or deerioraion.

About this report


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Abou his repor

Jus as las year, he repor is divided ino he ollowing hree secions:

Par : The businesses reporing pracices

This par describes he businesses compliance wih he legal requiremen and heir reporing

pracice in broader erms. The descripion is based primarily on a quaniaive survey o busi-

nesses repors ( o all businesses subjec o he requiremen). The same businesses were

also included in he survey, when hey were seleced randomly rom among he approxi-

maely , businesses ha are subjec o Secion 99a. (Las year businesses paricipaed,

bu due o disconinuaions/acquisiions or declining revenue his year i has only been relevan

o include ou o hese ). The purpose o he quaniaive survey o he annual repors was

o gain a represenaive picure o he businesses compliance wih he legal requiremen, and he

scope and deph o he businesses CSR reporing, as well as he developmen in pracice rom

he 9 o he nancial years.

Par : Businesses experience wih he legal reuiremen

This par describes a small group o businesses experience wih he legal requiremen. The de-

scripion is based on a qualiaive sudy o experience wih compliance wih he legal requiremen

among nine businesses ha in heir annual repors included CSR repors or he second ime.

The same nine businesses were inerviewed las year, which was he rs year ha hey led CSR

repors. (Las year en businesses were inerviewed, bu one o hem did no wish o paricipaein he survey his year.) The same businesses were inerviewed in order o invesigae heir ex-

perience rom reporing las year, he changes hey have made in heir reporing or he -

nancial year, and heir plans or he developmen o heir reporing pracice.

Par : General evaluaion

Based on he conclusions in Pars and , his par ocuses on a number o overall assessmens

o how he legal requiremen has uncioned in pracice in he second year aer he enry ino

orce o he amendmen o he Ac.

Again his year, ATP was asked o assess a number o randomly seleced businesses CSR re-

pors. ATPs assessmen is based on he same businesses reporing reviewed by ATP las year

and is presened in Appendix .

The individual sudies on which his repor is based are available a

www.samundsansvar.dk


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Par : The businesses reporing pracices 9

The objecive o his par o he repor is o describe he exen o which he businesses com-

ply wih he legal requiremen and heir reporing pracice in more general erms. The descrip-

ion is based primarily on a quaniaive sudy o o he annual repors ha are subjec o

he legal requiremen. The purpose o his par o he survey is, in paricular, o perorm a com-

parison wih las years resuls in order o assess wheher progress has been made in he busi-

nesses reporing pracice.

Mos businesses address CSR in heir annual repors

The legal requiremen saes ha businesses mus supplemen he managemens review wih

a CSR repor. As Char shows, 9 o he businesses ha are subjec o he legal requiremen

disclose wheher hey work wih CSR or no, while do no comply wih he Ac as hey ail o

disclose anyhing a all abou heir CSR. O he 9, are subsidiaries ha ull he legal re-

quiremen via a paren business ha discloses CSR inormaion or he enire Group.

The reporing businesses hus consiue o he businesses covered by he survey. o

he reporing businesses sae ha hey work wih CSR, while sae ha his is no he case.

The businesses

reporting practices

PART 1

Chart 1: Compliance wih he requiremen o reporon CSR in he annual repor

Annual repors wih no inormaion on hebusiness CSR work (non-compliance wih helegal requiremen)

Subsidiaries where he paren business

repors or he enire Group (compliance wihhe legal requiremen)

Annual repors wih inormaion on hebusiness CSR work (compliance wih he legalrequiremen)

87 %

6 % 7%

The business saes ha i does no workwih CSR

The business saes ha i works wih CSR

87 %

13 %

Chart 2: Deails o wheher he business workswih CSR or no


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Comparison wih las years resuls shows a sligh deerioraion or boh quesions. Las year, he

share o businesses ha did no disclose anyhing on CSR was , and he share ha saed ha

hey did no work wih CSR was 9. In saisical erms he increases are no signican, however.

More businesses repor on CSR policies, how he policies are ranslaed ino acions and he

resuls achieved rom CSR work

The repor mus include inormaion on he business CSR policies, how he business ranslaes

is CSR policies ino acions and he business assessmen o he resuls o is CSR work during

he nancial year, as well as any uure expecaions o CSR work.

Las years survey showed ha here were problems in geting he businesses o repor across

all hree dimensions. 9 o he businesses hus described heir CSR policies, described

how heir policies were ranslaed ino acions, and only described wha had been achieved

rom heir CSR work.

Based on he gures signican progress has been made or all hree dimensions. In he

nancial saemens more businesses hus repor on policies, on acions and especially on

achieved resuls, c. Table .

Table 9

Wihou subsidiaries

Policies 9 9

Acions 9

Resuls 9

As a naural consequence o he ac ha his is he second year o legal reporing, he number o

businesses reporing or he rs ime has decreased rom o . As mos businesses are

hus reporing or he second consecuive year, he reporing pracice has improved signicanly.

In paricular, ar more businesses repor resuls. This is probably relaed o he ac ha a large

proporion o he reporing businesses, i.e. , repored or he rs ime las year, and per-

haps only hen began o have a more sraegic ocus on CSR. They have hereore perhaps no

been able o see concree resuls o heir eors ye. In such cases he business mus, however,

give reasons or ailing o disclose resuls.

However, hese gures should no be aken as an expression o he number o businesses ha

comply wih he wording o he Ac. A signican proporion o he businesses ha do no de-

scribe heir policies, acions and resuls are subsidiaries whose repors are included in heir re-specive paren businesses annual repors.


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Chart 3: Consisency o he repor beween he hree dimensions o he Ac

Full consisency in reporing o hehree dimensions o he Ac

No consisency in reporing o hehree dimensions o he Ac

Some consisency in reporing ohe hree dimensions o he Ac

47 %

15 % 38%

Aer eliminaion o subsidiaries ha do no repor separaely, bu reer o CSR inormaion in heparen business consolidaed nancial saemens, which he Ac permis, he survey shows ha

9 repor on policies, 9 repor on acions, and describe resuls achieved, c. Table .

I mus also be saed ha ATP assesses ha he businesses legal CSR reporing has improved

rom (see Appendix ).

ATP nds ha a signicanly higher number o businesses presen an overview o heir busi-

ness' CSR policies. I is hereore even easier o ideniy he businesses wih clear poenial or

improvemen in his area. In addiion, ATP nds ha more businesses han las year adequae-

ly describe how hey ranslae policies ino acions, alhough some o he businesses sill have

poenial or improvemen. Finally, ATP nds examples o exemplary repors ha explicily de-

scribe he resuls achieved during he year, as well as repors in which even a basic descripion

o aciviies is lacking.

There hus seems o be clear agreemen beween he quaniaive survey and ATPs qualiaive

assessmen: mos o he businesses show a srong CSR reporing improvemen, bu a minoriy

sill shows signican deciencies.

Relaively high degree o consisency in he businesses inormaion

Pursuan o he Ac, i is no sucien o disclose a policy in one area, aciviies in anoher, and

resuls in a hird. I a business repors on is environmenal policy, or example, he inormaion

on aciviies and resuls mus cover he same area. As a consequence o las years problems wih

compliance wih his par o he legal requiremen, his years survey was supplemened wih aquesion regarding consisency.

Las years emphasis on his aspec by he Danish Commerce and Companies Agency appears o

have had a posiive eec. The survey hus shows a relaively high degree o consisency in he

inormaion disclosed by he businesses. A oal lack o inormaion consisency was only ound

or o he businesses sudied, c. Char .


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More businesses repor on human righs and labour sandardsOn preparing he repor, a useul benchmark or many businesses will be how hey comply wih

he UNs en CSR principles. These principles are divided ino our areas: human righs, labour

sandards, he environmen and ani-corrupion.

Char shows ha he environmen and climae (9) and social condiions a Danish workplac-

es () are sill by ar mos common opics when CSR policies are repored. This also applies

o ranslaing policies ino acions and achievemens as a resul o CSR work.

On he oher hand, more and more businesses are reporing on human righs and labour sand-

ards. In February he Danish Commerce and Companies Agency conduced a survey o ,

Danish businesses CSR perormance. The survey showed ha he environmen and climae are

among he opics ha Danish businesses engage wih he mos. A he same ime, he business-

es nd i more dicul o work wih he hree oher areas covered by he UN Global Compac (i.e.

human righs, labour sandards and ani-corrupion).

I is hereore very posiive ha his years survey shows ha a larger share o businesses includes

human righs and labour sandards in heir CSR repors. There has been a signican increase in

he number o businesses reporing on human righs (, compared o in he nancial year

9) and labour sandards (, compared o in he nancial year 9).

The gures in he char are absolue gures, as several businesses repor on more han one opic.


Chart 4: Breakdown o opics on reporing policies, ranslaing policies ino acions and resuls achievedrom CSR work

70

60

50

40

3020

10

0

Number

Policies

Environmen and climae

Human righs

Labour sandards

Ani-corrupion

Social condiions a Danish workplaces

Translaion opolicies ino acions

Resuls achievedrom CSR work

Topic


14/28


Even hough his is no a legal requiremen, several businesses also disclose heir expecaions

o uure CSR work ( compared o ) (Char ) and he organisaional saus o he work

( compared o ) (Char ). The inormaion on organisaional saus is imporan as i gives

an impression o how rmly he CSR work is anchored in he organisaion, which invesors in par-

icular consider imporan, c. he ollowing assessmen by ATP.

Anoher imporan disclosure ha is no a legal requiremen is inormaion concerning risks and

dilemmas in relaion o he business CSR work. Mos businesses will encouner challenges and

diculies in heir CSR aciviies. A business ha openly discloses inormaion on hese acors

will increase he credibiliy o is CSR reporing signicanly. o he businesses disclose such

inormaion, which is he same as las year (Char ).

Chart 5: Reporing onexpecaions o uureCSR work

Does no repor

Repors

Does no repor

Repors

Does no repor

Repors

56 %

44 %

Chart 6: Reporing on wherein he businessorganisaion srucureCSR work is placed

77 %

23 %

Chart 7: Reporing on non-nancial risks anddilemmas

83 %

17 %


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More businesses ulfl he legal reuiremen via heir accession o he UN Global Compac

The legal requiremen saes ha he CSR repor mus be published as par o he managemens

review, or reerence mus be made o he repor in he managemens review. The acual CSR re-

por may be atached as a supplemenary review o he managemens review, published on he

business websie, or provided as a UN Global Compac Communicaion on Progress repor.

Wih one excepion, all o he businesses (99) ha repored ha hey work wih CSR ul-

l he legal requiremen by including he repor, or a reerence o i, in he managemens review.

O hese, make reerence in he managemens review o he repor on he business websie.

o he businesses reer o an appendix in he annual repor, while o he businesses re-

er o heir annual UN Global Compac Communicaion on Progress repor. This is a signican

increase rom he previous years gure o 9. Several businesses publish heir CSR repor in

several ways. Jus one business reerred in is annual repor o Principles o Responsible Inves-

men (PRI).


Chart 8: Placemen o CSR repor

Secion o he managemens review

Appendix o he managemen's saemen

Appendix o he annual repor (CSR repor)

Websie repor

UN Global Compac Communicaion on Progress

UN PRI Communicaion on Progress

120

100

80

60

40

20

0

Number

nancial year9 nancial year

Publicaion


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Indicaors are sill no very prevalen bu several use GRI

As was he case las year, he businesses sill mosly provide a qualiaive descripion o wha

heir CSR work has achieved. (compared o in he nancial year 9) o he business-

es apply quaniaive indicaors o heir reporing. There has been an increase in he number o

businesses ha repor on he basis o he Global Reporing Iniiaive (GRI) ( compared o

9 in he nancial year 9).

0% o he businesses have signed up o he UN Global Compac

I is now very common o apply inernaional CSR principles, such as he UN Global Compac, GRI

or he OECD guidelines or mulinaional companies, as inspiraion or he businesses reporing.

(compared o in he nancial year 9) apply such guidelines as a source o inspira-

ion. o he businesses have signed up o he UN Global Compac. This is a signican in-

crease rom he previous year, when o he businesses had signed up, or had plans o do so.

I is likely ha in uure more and more businesses will ull he reporing requiremen by sub-

miting a progress repor o he UN. The legal reporing requiremen may hus have been a key

reason or more businesses signing up o he UN Global Compac, which ATP considers posiive.

Large unlised businesses are approaching he lised businesses level

Comparison o he sock-exchange lised businesses wih he oher large businesses ha are

subjec o he reporing requiremen shows ha, in keeping wih las year, he lised businessesare perorming signicanly beter. The survey also shows, however, ha he unlised business-

es are caching up wih he lised businesses level.

In , (9) o he lised businesses apply inernaional CSR principles in heir repor-

ing. The equivalen gure or he oher large businesses has increased rom o in re-

laion o he previous years repors. O he l ised businesses, (compared o las year)

repor in accordance wih GRI, while he equivalen share o he oher businesses has increased

rom o .

Table : Lised Unlised

Apply inernaional CSR principles o heir reporing 56 % (9) 0 % ()

Repor in accordance wih GRI 0 % () % ()

Repor on uure expecaions o CSR work 69 % () 40 % ()

Even hough i is no par o he legal requiremen, 9 o he lised businesses (compared o

las year) describe heir uure expecaions o CSR work, while he equivalen share o he

oher businesses is (compared o las year). This means ha, again, here is a signi-

can increase or he oher large businesses.


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Audiors saemen on he managemens review

Las year he Danish Commerce and Companies Agency emphasised an audiors duy o com-

men on errors and omissions in a business CSR repor as par o he audiors saemen on he

managemens review.

The audiors saemen on he managemens review includes he managemens CSR repor and

is an inegral par o he audiors overall saemen on he managemens review, no mater how

he business publishes he repor. The execuive order on approved audiors saemens (Dan-

ish Execuive Order on Saemens Made by Sae-Auhorised and Regisered Public Accoun-

ans) saes ha he audiors saemen mus include a descripion o any signican errors,

missaemens and omissions in he managemens review prepared by he managemen and o

which he audior becomes aware. The guidelines o he Execuive Order also sae he ollow-

ing: Errors, missaemens and omissions may also include a missing iem or iems o inorma-

ion ha is/are required by law o be given in he managemen review Errors may include ha

legally-required inormaion in he managemen review is no given in he correc way. The audi-

or is expeced o nd errors, missaemens and omissions on he basis o his or her reading o

he managemen review. I is presupposed ha he audior is aware o he regulaions underly-

ing he managemen review, e.g. requiremens o he managemen review in he Danish Finan-

cial Saemens Ac

Wih regard o his year's survey, in o he annual repors he businesses concerned do no

repor a all on CSR in he managemen's review (including ailing o sae ha he business does

no have a CSR policy), and he audior should have commened on his.

In addiion, he audiors o he businesses ha have disclosed cerain CSR inormaion, bu no

repored on all hree dimensions o he legal requiremen (i.e. policies, ranslaion ino acions

and resuls achieved rom he work), should have commened on his. Businesses wih CSR poli-

cies are required o repor on all hree dimensions and he audior is required o commen i his

is no he case. Even hough he Danish Commerce and Companies Agency las year emphasised

he audior's duy o commen on such circumsances in he audiors saemen he survey has

ound no examples o an audior adding a qualicaion o he managemen's review in cases where

he business' CSR repor has errors and omissions. In oher words, here are a number o exam-

ples o audiors saemens ha do no ull he legal requiremens.

The Danish Commerce and Companies Agency will hereore sharpen is ocus on ensuring ha

businesses and audiors comply wih heir respecive legal obligaions. This will be in ocus when

he Danish Commerce and Companies Agency conrols he nancial saemens o lised busi-

nesses, and as par o he public supervision o audiors.


I mus be noed ha as rom he nancial year beginning on Sepember or laer managemens re-views are no longer required o be audied, bu he audior mus insead provide a saemen. In he same

way, as rom he nancial year beginning on January 9 or laer, businesses are required o provide aCSR repor. The precise scope o he businesses reporing obligaion and he audiors duy o provide asaemen may hus have been subjec o some uncerainy.


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This par describes he businesses experience wih compliance wih he legal requiremen. This

descripion is based on a qualiaive sudy o experience wih compliance wih he legal require-

men involving nine businesses ha in he nancial year were reporing on CSR in heir man-

agemens reviews or he second ime. This is a repeiion o an equivalen survey o he nancial

year 9 ha ook place in .

Las years survey opics were based on how i was he rs ime ha he businesses inerviewed

were required o repor under Secion 99a. The opics were he businesses experience wih com-

pliance, barriers o reporing, applicaion o inernaional CSR principles, and he adminisraive

consequences o he legal requiremen.

This year, he survey ocused on changes and improvemens in reporing pracice. In more con-

cree erms, he inerviews conduced illusrae he businesses experience wih reporing las

year, he changes hey made in heir reporing or he nancial year , and heir plans or he

developmen o heir reporing pracice.

The same businesses as las year are inerviewed. The number o businesses inerviewed his year

is nine, however, compared o en las year, as one business did no wish o paricipae in he sur-

vey again. I mus be emphasised ha his group o businesses is oo small o be considered o

be saisically represenaive o he businesses subjec o he reporing obligaion.

Improvemen in he ualiy o he repors

A majoriy o he businesses inerviewed believe ha here have been posiive changes regard-

ing he acual repors and he reporing process compared o he nancial year 9.

Several businesses emphasise ha his year hey have ocused on improving he inormaion

collecion sysem or he repor, and ha hey have ne-uned heir reporing. One business has

ocused more on CSR reporing compared o he repor or 9. This enails ha he

business has decided o increase is openness concerning he CSR challenges and he policies

or which he business has no quie succeeded in anchoring he policies and ranslaing hem

ino acions, i.e. supplier relaions and ani-corrupion.

Businesses experience

with the legal requirement

PART 2

Par : Businesses experience wih he legal requiremen


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Par : Businesses experience wih he legal requiremen

Three businesses respond ha hey have no made any changes, while one responds ha he

only reporing change rom 9 is he updaed gures, which he business sees as a deeriora-

ion rom las year.

Twice as many businesses inegrae CSR in heir sraegy

This year, eigh o he businesses inerviewed sae ha CSR is an inegral elemen o heir busi-

ness sraegy. This is a doubling rom las year, when his was rue o only our businesses.

CSR as a business case

Four businesses acively consider he business case or CSR, i.e. wheher CSR is worhwhile. Two

o hese businesses rae CSR o be an imporan par o sales work, while he oher wo believe

ha i is unknown wheher CSR is worhwhile in business erms, because he markes are no ye

considered o be maure enough.

CSR is no par o execuives perormance-based pay

Any increased moivaion o inegrae CSR in he inerviewed businesses business sraegies

is no relaed o perormance-based pay oered o execuives or ohers wihin he organisaion

in reurn or achieving he business' CSR arges. Only one o he businesses hus oers peror-

mance-based pay or ullmen o CSR arges.

Even hough eigh o he businesses, as saed above, have inegraed CSR in heir business sra-

egies, ve o he businesses have no deermined when a resul arge is relaed o CSR. This is

illusraed by he ollowing ciaion concerning when resul measuremen is relaed o he gen-

eral business sraegy or he CSR sraegy:

No, no or CSR, bu he managemen are measured on he basis o saf condiionsand ehical acors.

Exernal inspiraion

As in he previous year, he businesses have o a grea exen sough exernal inspiraion or heir

repors. Four businesses sough inspiraion in repors rom oher Danish and inernaional busi-

nesses, and businesses known or heir CSR reporing.

The majoriy o he businesses inerviewed had made use o he Danish Commerce and Compa-

nies Agencys updaed guide The CSR Repor pracical guidelines and inspiraion as he ba-

sis or heir reporing. The guide was a ool o undersanding he scope o he Ac. The majoriy

rae he guide as useul.


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I is good.

I is very precise (he new guide o Secion 99a). I like he communicaion rom he Da-nish Commerce and Companies Agency. I nd i very precise and pragmaic, and no

oo resricive. I sill hink ha one o he bes hings abou how we've chosen o do

his in Denmark is ha i isn oo resricive. I hink ha really helps hings along.

However, one business hinks he guide is oo exensive.

Fewer businesses han las year needed exernal assisance in preparing heir CSR repor. Seven

businesses hus used neiher audiors nor consulans. Las year a majoriy o businesses asked

heir audiors or advice in order o ge a grasp o he scope and ramework o he legal require-

men. This year, only one business did so.

Response o las year's reporing

All o he businesses sae ha hey did no receive a direc response o heir CSR reporing in

heir 9 annual repors. However, hree businesses sae ha hey received an indirec re-

sponse via general enquiries and reacions o heir CSR work. Ye hese reacions did no spe-

cically concern CSR reporing in annual repors. I should be noed, however, ha he ac hahe businesses only received a limied response does no necessarily imply a lack o ineres in

he businesses' CSR inormaion.

Less ime spen on reporing

Compared o las year, he businesses spen less ime on preparing he repors. Several busi-

nesses sae ha he rs year o reporing is always more demanding han he ollowing years.

I is among oher hings saed ha:

I is more a mater o rouine his year.

I has mosly been a quesion o copy and pase.

Two businesses respond ha hey have spen a l itle more ime on reporing, as hey have ocus-

ed on improving inernal inormaion collecion procedures. Anoher wo businesses believe he

ime consumpion o be unchanged.

Fuure plans

In relaion o uure CSR work our businesses will develop and improve heir eors and have

very concree plans or how his will ake place. Five businesses expec o mainain CSR repor-

ing a he same level in he nex nancial year.

Par : Businesses experience wih he legal requiremen 9


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The legal requiremen or all large businesses o repor on CSR in heir annual nancial sae-

mens is a new requiremen in Denmark, and is also an innovaion in inernaional erms. By com-

parison, businesses have been subjec o he obligaion o le nancial repors or so many years

ha his has become an esablished rouine. We hus have limied experience wih legal CSR re-

poring, and hese repors are dieren in naure o nancial repors. Fullling he new require-

men can hereore naurally be a special challenge or he businesses involved.

I hereore came as no surprise ha CBS survey las year, he rs year ha he businesses re-

pored under he new requiremen, showed ha many businesses did no ull a number o he

undamenal requiremens. Based on he experience rom his survey, he Danish Commerce and

Companies Agency has subsequenly prepared a revised guideline and a new websie o assis

businesses.

CBS survey o he second year o CSR reporing shows ha in a number o areas here have been

signican improvemens in reporing pracice.

Beter repors in a number o respecs

In he course o he rs wo years o he legal requiremens exisence, o he businesses

repored on CSR or he rs ime. Several businesses repor on policies, implemenaion and re-

suls, and here is greaer consisency beween he inormaion or he dieren areas. The busi-nesses also repor on more opics, and many businesses apply inernaional sandards as he

basis or heir work wih and reporing on CSR. The legal requiremen has also conribued o large

unlised businesses beginning o approach he lised businesses level o qualiy o CSR reporing.

Posiive developmen has hus been seen in a large number o areas, and in ha respec he

amended Ac mus be considered o be a success. I has proved o be a caalys or he business-

es openness on CSR and perhaps also or incorporaing CSR in heir business sraegies. The in-

erview-based elemen o he CBS survey shows ha, in his group o businesses, eigh ou o

nine now work sraegically wih CSR, compared o our ou o en in 9. I mus be empha-

sised, however, ha his group o businesses is oo limied o be considered o be saisically

represenaive o he businesses subjec o he reporing obligaion.

General evaluationPART 3


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...bu here are sill reporing defciencies

Conrary o he Ac, o he businesses ail o disclose in heir managemens review wheher

hey work wih CSR. O he businesses reporing on CSR, here are sill a number ha do no dis-

close heir acual policy, how i is implemened, and wha hey have achieved, or where here is

a lack o inormaion consisency. Especially wih regard o he lack o inormaion on achieved

resuls his mus be considered o be a signican deciency since i makes i dicul or users

o he nancial saemens o assess he business eors.

The audiors have a duy o remark on errors and omissions in a repor, bu according o he sur-

vey, none o he nancial saemens ound o have a CSR repor subjec o errors and omis-

sions carried an audior's remark o his eec. This mus also be considered a signican breach.

In connecion wih is inspecion o nancial saemens, and as par o he public supervision o

audiors, he Danish Commerce and Companies Agency will be aware o such signican errors

and omissions in CSR repors and will ake he appropriae acion i necessary.



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Appendix : Ac on CSR reporing

Act on CSR reportingAppendix

The Danish Parliamen (Folkeinge) adoped he proposed "Bill o amend he Danish Financial

Saemens Ac (Accouning or CSR in large businesses)" on December . The legal re-

quiremen commenced on January 9 and has eec rom he nancial year saring Janu-

ary 9 or laer. The amendmen means ha larger businesses mus repor on heir work wih

CSR in he annual repor. The objecive o he legal requiremen is o inspire businesses o ake an

acive approach o CSR and o communicae his o heir surroundings. This is inended o conri-

bue o improving he impac o Danish rade and indusry in he inernaional compeiive arena.

The legal requiremen applies o larger businesses in accouning class C and lised companies and

sae-owned companies in accouning class D. Large businesses in accouning class C are busi-

nesses which exceed a leas wo o hree size limis:

Toal asses/liabiliies o EUR 9. million

Ne revenue o EUR . million

An average o ull-ime employees

According o he legal requiremen, subsidiaries are no obliged o repor on CSR i he paren

company repors on CSR on he groups behal.

The same reporing requiremen has also been inroduced or insiuional invesors, muualunds and oher public limied nance businesses (nancial insiuions and insurance businesses,

ec.) ha are no subjec o he Danish Financial Saemens Ac. For hese businesses, he le-

gal requiremen has been inroduced in execuive orders issued by he Danish Financial Supervi-

sory Auhoriy (Finansilsyne).

Wha has o be repored?

Businesses wih CSR policies mus include he ollowing inormaion in heir repor:

. CSR policies, including any sandards, guidelines and principles or CSR used by he business. How he business ranslaes is CSR policies ino acions, including any sysems or procedures

used

. The business evaluaion o wha i has achieved as a resul o CSR iniiaives during he nan-cial year and any uure expecaions

I he business has no CSR policy, his mus be explicily disclosed.


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Appendix : Ac on CSR reporing

How is he inormaion o be published?

The CSR repor mus be included in he managemen review secion o he annual repor bu can

also be published in he ollowing ways:

The repor is published as par o he managemen review

The repor is published as an appendix o he managemen review, and clear reerence mus

be made in he managemen review

The repor is published on he business websie and clear reerence made in he managemen

review

The repor is published as a UN Global Compac or PRI Communicaion on Progress repor

and clear reerence made in he managemen review

The repor is published as a supplemenary repor o he annual repor and clear reerence

made in he managemen review

Where he las menioned bulle poin is concerned, businesses ha prepare an independen

repor on heir CSR work may atach his as a supplemen o he annual repor or publish i on

he business websie. This presupposes, however, ha he repor complies wih all he above-

menioned requiremens.

Audiors saemen on he reporThe audiors saemen on he CSR repor is an inegral par o he audiors overall saemen on

he managemen review. This is rue regardless o he orm o publicaion he business chooses

o use.

I he business has chosen o publicise he legally-required CSR repor on he is websie, he au-

dior is subjec o special obligaions, pursuan o Secions and o Execuive Order no.

o //9 on publicaion o business managemen repors and CSR repors on businesses

websies, ec. The audior is obliged o check he ollowing:

Tha he managemen review conains inormaion saing ha he business has chosen o

publicise he repor on he is websie, including a reerence o he URL address a which he

repor is published

Tha he CSR repor is published under he name Legally-required CSR repor, pursuan o

Secion 99a o he Danish Financial Saemens Ac, ha he repor conains inormaion o

he eec ha i is an inegral par o he managemen review secion o he business annual

repor, and saes he relevan nancial year

I he business chooses o reer o a UN Global Compac or PRI Communicaion on Progress re-

por, he audior is obliged o check ha he business complies wih he condiions or uilising

his excepion, including he ollowing:

Tha a publicly-available Communicaion on Progress repor has been prepared or he rele-

van nancial year Tha he managemen review includes correc reerence o where he relevan repor is pub-

licly available


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Appendix : ATPs assessmen o businesses CSR repors

The ollowing assessmen has been prepared by he Head o Responsible Invesmens Ole Buhl,

ATP.

The Danish Commerce and Companies Agency has requesed ATP o assess seleced busi-

nesses in order o evaluae he developmen in he qualiy o he businesses legal CSR repors.

In ATP conduced a similar assessmen o hese businesses.

Invesors one among several sakeholders

By way o inroducion, i is imporan o sae ha when hey prepare heir legal CSR repors

businesses are in a siuaion where hey are required o balance several consideraions and sake-

holders.

The ollowing consideraions solely address he opics on which proessional invesors wih an

ineres in a business CSR iniiaives will require more inormaion in connecion wih a legal

CSR repor.

There can be considerable variaion in invesors' ocus on heir assessmen o businesses CSR

iniiaives. The ollowing is based on ATPs approach:

ATP believes ha ocus on CSR in connecion wih invesmens can proec and increase reurns

on ATPs invesmens. Invesing in a business wih a business-oriened approach o CSR repre-

sens an opporuniy o increase he value o ATPs invesmens. In conras, any business ha ails

o ocus on CSR especially he basic principles and norms apparen rom inernaional conven-

ions, ec. presens a risk ha could jeopardise he value o ATPs invesmens. ATPs invesor-

specic expecaions o businesses legal CSR repors refec hese consideraions.

Grea variaion in he businesses repors

There is sill considerable variaion in how he dieren businesses prepare heir CSR repors.

As saed las year, rom an invesor viewpoin his variaion is no in isel problemaic.

There is a clear endency or more businesses o allow he annual Global Compac Communica-

ion on Progress o serve as he legal CSR repor.

In conras o las year, by ar he majoriy o he businesses are very explici on where heir le-

gal CSR repor is anchored in heir organisaions.

LEGAL REqUIREMENT 1:

The business CSR policies, including any CSR sandards, guidelines or principles applied by he

business.

Compared o las years survey a considerably larger number o businesses have used he legalrepor o presen an overview o he business' CSR policies.

ATPs assessment of 20

businesses CSR reports

Appendix


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The general rend is ha he businesses have now ound a good way o comply wih he Acs re-

quiremen in a clear and well-considered way.

I is hereore even easier o ideniy he businesses wih clear poenial or improvemen in his

area han in he comparison made las year.


How he business ranslaes is CSR policies ino acions, including any sysems or procedures

used.

As highlighed in las years comparison, ATP considers he descripion o he organisaional an-

choring o boh he policies and he underlying principles and procedures o be a key aspec o

he assessmen o he businesses' CSR iniiaives.

More businesses han las year give an adequae accoun o hese organisaional aspecs, al-

hough some o he businesses sill have poenial or improvemen.

A derived eec o he ac ha several businesses in line wih legislaion - reer o heir Glob-

al Compac Communicaion on Progress as heir legal CSR repor is ha here is less ocus in he

legal repor on he business organisaional anchoring o CSR.


The business assessmen o wha i has achieved as a resul o CSR iniiaives during he nan-

cial year, and any uure expecaions o hese iniiaives.

In his respec here is sill considerable variaion in he qualiy o he legal CSR repors.

There are examples o exemplary repors ha explicily describe he resuls achieved during he

year, as well as repors in which even a basic descripion o aciviies is lacking.

Considering he businesses overall, he rend is a moderae improvemen wih regard o his le-

gal requiremen.

Conclusion

In overall erms, ATP assesses ha he businesses legal CSR reporing has improved rom las

year. The impression is ha more businesses have refeced careully on how he legal CSR re-

por can be inegraed ino he businesses oher CSR communicaion. For a ew businesses, how-

ever, here is sill signican room or improvemen.

The legal reporing requiremen may urhermore have been a key reason or more businesses'

accession o he Global Compac, which ATP considers posiive.

Appendix : ATPs assessmen o businesses CSR repors


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Corporae Social Responsibiliy and Reporing in Denmark

Impac o he second year subjec o he legal requiremens or reporing on CSR in he Danish Financial Saemens Ac

Published by he Danish Commerce and Companies Agency

PDF-version can be accessed a www.CSRgov.dk

The repor has been prepared by he Danish Commerce and Companies Agency in collaboraion wih Copenhagen

Business School.

For urher inormaion please conac:

Danish Commerce and Companies Agency

+

[email protected]

The conen o his repor may be reproduced on acknowledgemen o source.


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CSR and Reporting in Denmark 2nd Year 2011

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