CORPORATE SOCIAL RESPONSIBILITY IN GENERAL
1. CSR values and practices, including levels of support from government, business and the general public
Danish businesses are generally subject to detailed regulatory requirements in areas related to CSR, eg protection of the environment and protection of employees and the working environment. It has been said that these regulatory requirements have diminished the space for voluntary initiatives by the business community. Nevertheless, the Danish government has taken a number of initiatives to promote CSR, starting in the early 1990s with a campaign by the Ministry of Social Affairs to encourage an inclusive labour market.
Danish courts have also, since the early 1990s, recognised that businesses have other stakeholders than their shareholders. In a landmark case from 1991 the Danish Supreme Court held that a company was entitled to sue certain of its shareholders in connection with a claim by the company that an agreement on voting rights entered into by the shareholders constituted a violation of the company’s articles of association. In a commentary, the Chief Justice of the Supreme Court explained that the court’s decision was based on the belief that, even though the dispute in question concerned shareholder interests, the company’s other stakeholders could have a legitimate interest in the outcome and that the company was therefore entitled to institute legal proceedings against the shareholders. The Chief Justice referred to creditors, employees, consumers and society in general as potential stakeholders. According to the commentary, companies may have a duty of loyalty to such stakeholders.
In the business community, awareness of CSR is rising and an increasing number of large Danish companies have specific CSR policies. According to a survey on CSR in the supply chain, published by PricewaterhouseCoopers in September 2004, just below 40 per cent of purchasers believed that in future CSR issues will have an increasing impact on their choice of suppliers. Of the companies participating in the survey, 28 per cent already had a CSR code of conduct. In another survey conducted in 2004, involving managers in the Oresunds region, 87 per cent of respondents believed that companies should meet higher standards than those set by legislation.
2. Laws, statutes, government publications or other significant framework documents
There is no general framework legislation on CSR and so far the Danish government has emphasised its voluntary character. When government initiatives have taken the form of ‘hard’ law, it has primarily been to ensure transparency in reporting on CSR, or to allow public authorities to impose social clauses on companies that receive public grants or enter into contracts with public authorities. Since the early 1990s, the Danish government has tried to involve the business community on various levels in promoting CSR. The Ministry of Social Affairs, the Ministry of Economic and Business Affairs and the Ministry of the Environment have been especially active in this respect. Among the more recent government publications are ‘Social-ethical Accounts’ published by the Ministry of Social Affairs in 2001, ‘Social Accounts – Inspiration for Small and Medium Sized Companies’ published by the Ministry of Employment in 2002 and ‘Ethics in Business’ published by the Ministry of Economic and Business Affairs in 2002. The government supports a number of labelling arrangements, which give companies the right to place specific labels on their products if they fulfil certain requirements. The most well known labels today relate to protection of the environment.
3. International treaties, conventions or standards
As an EU member, Denmark has been influenced by CSR initiatives taken by the EU, including the green paper from 2001, the communication document of 2002 and the council resolution of 2003. CSR was proclaimed as one of the main priorities for the Danish government during its EU presidency in the second half of 2002. During its EU presidency the Danish government organised a conference on CSR together with the European Commission.
Denmark supports the Guidelines for Multinational Enterprises published by the OECD and in order to promote them, the Ministry of Employment has published separate guidance on them, including information on how to raise a complaint in Denmark regarding non-compliance with the guidelines by a multinational enterprise. The Danish national contact point for the OECD guidelines includes representatives from the Danish government, the labour unions and an employers’ association. So far 17 Danish companies, including many of the largest Danish listed companies, have volunteered to participate in the UN Global Compact. These companies have thereby committed themselves to implementing, as part of their business, the Global Compact principles on human rights, labour standards, the environment and anti-corruption.
4. Non-statutory sources of liability for companies
The Danish Supreme Court has recognised that companies may have a duty of loyalty towards other stakeholders than their shareholders even though such a duty of loyalty is not set out in legislation, as discussed above, in section 1. However, there is very limited case law on CSR and it remains to be seen how far this duty of loyalty reaches.
5. Principal institutions, government agencies and/or major non-governmental organisations (NGOs)
There is no specific Danish government agency charged with the oversight of CSR. Rather, responsibility for CSR issues are divided between several ministries, such as the Ministry of Employment, the Ministry of the Environment and the Ministry of Economic and Business Affairs. In 1997, the Danish government founded the Copenhagen Centre as a think tank with a focus on national and international CSR initiatives. The centre publishes reports and has instituted the Network Award with the purpose of acknowledging outstanding CSR initiatives. Many unions and NGOs work to promote CSR within their specific fields of interest, as detailed in section 6 below.
SPECIFIC AREAS OF CORPORATE SOCIAL RESPONSIBILITY
6. Human rights
Denmark has ratified many human rights conventions and Danish popular concern with human rights aspects of CSR continues to be high. In the 1990s, there were a number of cases in which Danish businesses had to change their conduct with respect to human rights abroad due to pressure from the media, NGOs and the general population. One of the most widely publicised of these culminated in 1996 in the decision by Carlsberg, the Danish brewer, to withdraw from a joint venture in Burma.
In 1999, the Danish government, together with the Danish Institute for Human Rights, the Confederation of Danish Industries and the Industrialisation Fund for Developing Countries founded the Human Rights and Business Project. Its most important initiative to date has been the development of the Human Rights Compliance Assessment, a tool that businesses can use to assess the impact of their operations from a human rights perspective. For its part, Amnesty International has founded the Amnesty Business Club as a forum for information and dialogue between Amnesty and the business world. One of its main initiatives has been the development of a checklist, based on the UN Declaration on Human Rights, for companies that wish to promote human rights and establish guidelines with respect to human rights.
7. Corruption
In Transparency International’s Corruption Perceptions Index for 2004, Denmark was listed as the third least corrupt country. Corruption within Denmark is not, therefore, generally an issue that receives much attention. However, the Confederation of Danish Industries has taken initiatives to encourage Danish companies to avoid corruption when working abroad, including the publication of guidelines and arranging conferences on the subject.
Denmark has ratified several international conventions on bribery and corruption. Bribing of public officials in Denmark or abroad is a criminal offence under the Danish Penal Code. Since 1998 it has followed from the Danish Tax Assessment Act that expenses relating to bribing of public officials in Denmark or abroad cannot be deducted for tax purposes.
8. Corporate governance and business ethics
In 2001, the government appointed four prominent business leaders to a committee, called the Nørby Committee after its chairman, with the mandate of investigating whether corporate governance recommendations were needed in Denmark. In December 2001, the committee published a set of recommendations for corporate governance in relation to companies listed on a Danish stock exchange. At present, the only stock exchange in Denmark is the Copenhagen Stock Exchange. One of the Nørby Committee’s recommendations relates to CSR – ie that companies adopt a policy for their relationship with stakeholders, including for instance their vision, values and mission. Guidelines for how companies report environmental and social issues may be an element of such policies. It is further recommended that the board of directors of a company ensures that interests and roles of the company’s stakeholders are respected in accordance with the policy.
The Copenhagen Stock Exchange recommends that Danish listed companies in their annual reports mention their approach to the Nørby Committee’s recommendations, and an updated version of the Nørby Committee report is expected to be published within the next year. It is anticipated that the Copenhagen Stock Exchange will adopt a principle of ‘comply or explain’ with respect to recommendations in the new report.
Since the late 1980s, several Danish companies, assisted by academics, have worked to implement so-called ethical accounts with the aim of uncovering the ethical goals of the business and its ability to implement such goals. As described below in section 14, companies are now permitted to include as part of their official annual reports supplementary reports on CSR, including a description of their ethical goals.
9. Corporate responsibility to employees
The Danish labour law system is largely based on collective agreements entered into between groups of employees and employers. Many such agreements contain so-called social chapters, describing the possibilities of entering into agreements on jobs for employees with reduced working capacity, including such employment terms which deviate from the general provisions of the collective agreements.
In 2001, the Act on Social Clauses with regard to public grants was adopted by the Danish Parliament. In Danish context a social clause is understood to be a clause containing obligations intended to promote an inclusive labour market. The Act allows public authorities to impose conditions in the form of social clauses for providing grants to associations, trusts, companies etc. Such conditions shall have the purpose of furthering an effective labour market by (i) assisting job seekers in finding work, (ii) servicing private and public employees looking for manpower or to maintain employees, (iii) assisting recipients of cash benefits or unemployment benefits in becoming employed and (iv) supporting persons who due to limitations in their ability to work have a specific need for assistance in obtaining work. For instance, social clauses may take the form of a requirement on the recipient of a grant to adopt policies promoting an inclusive labour market, a requirement that the recipient strives to employ a certain percentage of persons on specific terms, or a requirement that the recipient has a written policy setting out how persons of different ethnic origin will be treated equally.
The Danish Consumer Information Centre, which is attached to the Ministry of Economic and Business Affairs, operates a CSR Scorecard, which is intended to encourage businesses to promote corporate responsibility related to employees’ rights and safety and health at work: so far only 33 businesses have registered with the Scorecard. In 2000, the Ministry of Employment launched the Social Index as a tool for companies to self-assess their CSR towards employees; this arrangement envisages companies obtain certification from the ministry, but very few have done so. Finally, the work of many labour unions work to promote CSR in relation to employees should be noted.
10.Corporate responsibility towards the environment
Under the Act on Protection of the Environment certain polluting companies have an obligation to publish so-called ‘green accounts’, with information on environmental issues. These green accounts must cover the same period as the annual financial accounts and must be submitted to the Danish Commerce and Companies Agency together with the annual accounts. The green accounts are made publicly available through the Agency, which may also impose fines on the management and the board of directors of companies that do not file green accounts on time. A Ministerial Order defines the types of companies that must publish green accounts, and the information that they must contain.
11.Corporate responsibility to communities
The subject of the integration of refugees and immigrants in Denmark by ensuring that they are integrated into the labour market has been at the centre of public debate in Denmark for some time. The Ministry for Refugees, Immigrants and Integration has undertaken various projects, some in partnership with the private sector, to promote the integration of refugees and immigrants. The Ministry of Social Affairs is involved in projects designed to help deprived urban areas. Some of these projects are intended to be carried out as partnerships involving private entities, such as local Chambers of Commerce or housing associations.
12.Corporate responsibility for overseas activities
Under the Penal Code the Danish courts generally only have a right of punishment with respect to actions (i) carried out in Denmark, or (ii) carried out by persons who are naturalised Danes or are resident in Denmark, if the act is also punishable pursuant to legislation of the country in which it was committed. This principle may be departed from in respect of the violation of obligations imposed by Danish law that must be fulfilled abroad; it also does not apply when the act is covered by an international convention under which Denmark must prosecute offenders. In these ways, a Danish company may be held legally responsible for activities abroad – but Danish courts are generally very reluctant to hold a Danish parent company responsible for the act of a subsidiary. They may be able to do so, however, if the subsidiary’s activities are in reality conducted by the parent company, or if the parent company has neglected to supervise the subsidiary properly and Danish courts have jurisdiction. Public opinion will often force Danish parent companies to ensure that their foreign subsidiaries respect human rights, workers’ rights etc. In several instances Danish labour unions and NGOs have succeeded in persuading Danish companies to change the manner in which they conduct business abroad.
13. Procurement
In 2000, during the budget negotiations, an agreement on so-called social clauses was reached between a majority of the political parties represented in the Danish Parliament. A social clause contains obligations intended to promote an inclusive labour market, as explained above, section 9. In the background of this agreement was the belief that an increased use of social clauses in connection with tender offers could expand the use of public-private partnerships and ensure co-operation between the public sector and the private sector on CSR. Municipalities and counties (larger administrative districts) were therefore encouraged to increase their use of social clauses in tender offers.
The Ministry of Economic and Business Affairs in 2000 published a set of detailed guidelines regarding the use of social clauses. A government Circular on Tender Offers with respect to Governmental Operations and Construction Work was adopted in 2002; it follows from this that certain CSR-related requirements may be included in tender offers in the form of social clauses related to employees, the environment or the working environment, and that requirements may be included with respect to hiring disabled persons. All such requirements must respect EU rules on equality of treatment. The authorities may in connection with tender offers insert as a social clause an obligation for the supplier to answer some of the questions on CSR contained in the Social Index, as discussed above, section 9. The use of social clauses in tender offers is becoming more frequent, although it is still not widespread.
14.CSR reporting and socially responsible investing
The Annual Accounts Act allows companies to include as part of their annual report supplementary reports giving a ‘true and fair’ view on CSR, matters relating to employees and knowledge, environmental matters and the company’s ethical goals. It is a further requirement that the supplementary reports include a description of the methods and measurement basis used in preparing them.
In connection with the implementation in Denmark of the EU Directive no. 2003/51 of 18 June 2003, the Annual Accounts Act was amended to impose an obligation on larger companies to include in their annual reports certain non-financial information, such as information on the environment or employees. The obligation only applies if such nonfinancial information is necessary to understand the development, result and financial position of the company. The amendment became effective on 1 January 2005.
Many pension companies have investment policies according to which they make a commitment only to invest in companies that behave in an ethically correct manner in the countries in which they operate. The first Danish mutual fund that markets itself as an ethical fund was established in 2001.
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