CORPORATE SOCIAL RESPONSIBILITY IN GENERAL
1. CSR values and practices, including levels of support from government, business and the general public
The debate on CSR in Sweden has intensified in the past few years, and the growing concern for it is evident at governmental level, in business and among Swedes in general. Sweden has been committed to CSR issues for quite some time: for example, it has promoted environmental issues and worked for increased international co-operation on them, taking the initiative in 1972 by hosting the first UN Conference on the Human Environment in Stockholm. Recently, the dialogue between government and business on CSR has taken a new form, in a government initiative, Partnership for Global Responsibility. Another sign of the increased awareness of CSR is the government’s appointment in August 2002 of the Commission on Business Confidence. Several large export businesses and financial institutions have also shown a growing commitment to CSR by establishing their own CSR codes of conduct and by providing information on CSR in their annual reports. The Confederation of Swedish Enterprise has officially declared its approval of the principles of the UN Global Compact and the Guidelines for Multinational Enterprises published by the Organisation for Economic Co-operation and Development (OECD), and stated that it takes for granted that Swedish businesses respect human rights, and fundamental labour law principles and environmental standards, irrespective of where in the world they conduct their operations.
As regards popular concern for CSR, it is evident that there is an awareness of it among Swedish consumers. In a survey conducted in 1997, 99 per cent of respondents had on some occasion refrained from buying a product or products from a certain company, since they did not accept the values that the trademark represented. In a survey conducted in 2002, more than 70 per cent of respondents answered ‘yes’ to the question: should companies inform them about their engagement to society (Löhman & Steinholtz, Det ansvarsfulla företaget, pp. 51 and 53). Growing awareness of CSR is also visible in the fact that the market for eco-labelled products has become substantially larger over the past few years. Furthermore, Swedish business schools have recently invested more in education and research of CSR (Horn af Rantzien, Det globala ansvaret, p. 28).
2. Laws, statutes, government publications or other significant framework documents
In Sweden, CSR is generally considered to be based on voluntary obligations and Sweden has no consolidated legislation regarding CSR. However, there are several different domestic statutes which impose binding legal obligations upon companies which relate to areas within the CSR sphere. The government is encouraging the business community voluntarily to conduct their operations with a CSR focus. In 2002, the government invited companies to participate in the Partnership for Global Responsibility initiative, which promotes CSR through constructive co-operation between the government, business, employers’ and employees’ organisations and NGOs. The aim is, by the joint effort of these parties, to make Swedish companies ambassadors for human rights, decent economic and social conditions and a good environment. Another important aim is to strengthen Swedish companies’ ability to compete in this area. Within the framework of the Partnership for Global Responsibility, companies are encouraged to adhere officially to the OECD Guidelines and the principles of the UN Global Compact. Adherence can, for example, be achieved by a company integrating the OECD Guidelines into its objectives, annual reports and other official documents, and, for example, adopting the UN-supported model for reporting, the Global Reporting Initiative.
3. International treaties, conventions or standards
Sweden actively participates in international work within the CSR sphere and in different international institutions and agencies, and has adopted or ratified many conventions and treaties relevant to CSR issues. The OECD Guidelines and the UN Global Compact have, as mentioned above, influenced Sweden’s CSR-related work; the 1992 Rio Declaration on Environment and Development and Agenda 21 have also been of importance. Sweden participated in the follow-up UN World Summit in Johannesburg in September 2002 and signed the declaration for sustainable development issued by the UN. Sweden is a member of the EU, where important CSR initiatives include the Lisbon Summit in March 2000, the Council Resolution OJ 2003/C39/02 on corporate responsibility and the 2001 green paper Promoting a European Framework for Corporate Social Responsibility.
4. Non-statutory sources of liability for companies
Since Sweden is not a common-law country, there are no typical non-statutory sources of liability for companies as there are in the UK. However, there are some non-statutory rules and regulations worth mentioning. In Swedish labour law, the system of collective bargaining agreements between employers’ and employees’ organisations is of great importance. These agreements may regulate everything from general conditions for employment to certain provisions for the work environment, working hours etc, and companies may in various situations be held liable under their provisions. Such liability is independent of any potential liability under the Swedish labour law legislation. Furthermore, there are several boards in Sweden, both private and governmental, which issue guidelines and decisions that affect companies. The National Board for Consumer Complaints, for example, makes recommendations in individual cases that are not binding, but the vast majority of companies choose to follow them. Other institutions of interest in this context are the Securities Council and the Industry and Commerce Stock Exchange Committee, which deal with questions regarding good practice on the stock market.
5. Principal institutions, government agencies and/or major non-governmental organisations (NGOs)
The Ministry for Foreign Affairs is mainly responsible for the Partnership for Global Responsibility; apart from it, there is no specific governmental authority responsible for CSR issues. The National Contact Point, set up in accordance with the OECD Guidelines, is responsible to the Ministry of Foreign Affairs and handles reports on breaches of the OECD Guidelines. Another body that deals with CSR is the Swedish ICC group, Business in Society.
There are a large number of both national and international NGOs in Sweden that are active in many different areas of CSR, such as the environment and human rights, including Amnesty International, Human Rights Watch, Greenpeace, Swedish Red Cross, Save the Children Sweden, The Swedish NGO Foundation for Human Rights, the World Wildlife Fund, Swedish Society for Nature Conservation and Friends of the Earth Sweden. Among the NGOs dealing with CSR in more general terms, the organisation SwedWatch is particularly noteworthy. There are also organisations that provide CSR-related information to consumers.
SPECIFIC AREAS OF CORPORATE SOCIAL RESPONSIBILITY
In the following discussion, criminal liability for companies in different contexts is briefly described. It should be noted that a company, as a separate legal person, can not be subject to criminal liability under Swedish law. Instead, when a criminal offence is committed in the course of a company’s business, a natural person within the company may be held liable, since the penal system is based on the assumption that only individual natural persons can commit criminal offences and be punished for them. However, legal persons such as companies can be subject to sanctions or other serious legal consequences as a result of offences committed in connection with their activities. Such sanctions include, for example, non-criminal corporate fines contained in the Penal Code.
6. Human rights
The protection of fundamental human rights and liberties is mainly enshrined in Swedish constitutional legislation, ie the first two chapters of the Instrument of Government, the Freedom of the Press Act and the Fundamental Law on Freedom of Expression. In addition to this constitutional protection, there are statutes and regulations governing more practical matters. Direct responsibilities imposed on companies mainly arise from this additional legislation, which covers, amongst other things, the relationship between a company in its capacity as an employer and its employees, as discussed further in section 9 below. In addition, Sweden has signed and ratified most of the documents on human rights issued by the UN, the ILO and the European Council. For example, in 1995, the European Convention on Human Rights was incorporated into Swedish law.
Many Swedish companies have, of their own initiative, established codes of conduct that protect human rights; some also co-operate with NGOs on human rights and other CSR issues. Amnesty’s Business Group is one forum for co-operation between companies and NGOs on these issues.
The responsibility for protecting human rights in Sweden rests on the government, together with the municipal and local authorities and the courts. The current minister responsible for human rights is Laila Freivalds, also the Minister for Foreign Affairs. The government, as well as parliament, has also appointed several representative authorities, or ombudsmen, to supervise authorities’, companies’ and others’ observance of human rights in different respects, for example the Children’s Ombudsman. There are further examples in section 9 below.
7. Corruption
Transparency International has placed Sweden among the least corrupt countries in the world (number six out of 133 countries covered). Recently, however, two bribery scandals have been revealed in Sweden – one at the state-owned company Systembolaget, the government monopoly in alcohol retailing, the other at one of the companies that handles boat traffic between the mainland and the Swedish island of Gotland. These scandals highlighted the need for ongoing work against corruption. The legislation governing criminal liability for corruption mainly consists of the provisions of the Penal Code on bribery and taking bribes. Serious bribery crimes are punishable by a maximum sentence of six years’ imprisonment. Also in the context of bribery, an explicit prohibition regarding tax deduction for bribes or other undue payments was incorporated into the Income Tax Act in 1999.
Sweden participates on an international level in work against corruption; Sweden has ratified the OECD Convention on Combating the Bribery of Foreign Public Officials in International Business Transactions, and ratified the EU Corruption Convention and the Corruption Protocol to the EU Fraud Convention, and signed the UN Convention Against Corruption. More recently, in 2004, Sweden ratified the Council of Europe’s Criminal Law Convention on Corruption, the Council of Europe’s Civil Law Convention on Corruption and the Council of Europe’s Additional Protocol to the Criminal law Convention on Corruption. Sweden is also a member of the Group of States against Corruption (GRECO) that monitors the implementation of the Criminal Convention and the Additional Protocol. The responsibility for domestic legislation on corruption and for international issues concerning corruption lies with the Division for Criminal Cases within the Ministry of Justice.
A set of ethical guidelines used by Swedish companies, entitled The Use of Benefits to Promote Business Contacts and Relationships, were drawn up by The Institute Against Bribery, a non-profit organisation founded as early as 1923. The guidelines contain rules on best practice for Swedish and foreign companies and organisations in relation to the use of personal benefits in supplier, purchaser and other business relations.
8. Corporate governance and business ethics
Corporate governance issues have been high on the agenda in Sweden for more than a decade. Recent exposures of cartels and other corporate scandals, in Sweden as well as abroad, have brought corporate governance matters into the spotlight. In 2002, the Commission on Business Confidence, consisting of the former Minister for Finance Erik Åsbrink and, among others, representatives from the business sector, was appointed by the government to propose measures to increase the public’s confidence in the business sector.
The basis of Swedish corporate governance is the Companies Act. It has been under gradual revision for a long time and the government presented a proposal for a new Companies Act on 10 March 2005. The new Companies Act is proposed to enter into force on 1 January 2006. Other relevant statutes are, for example, the Act on Annual Financial Reporting and the Acts governing accounting and insider trading, and the Stock Exchange Rules. In the share market, most Swedish institutional investors have their own shareholder policy, but Sweden lacks a comprehensive and broadly accepted corporate governance code. In September 2003, a working group, the Code Group, was appointed by the government to draw one up. The group consists of representatives of, among others, the aforementioned Commission on Business Confidence, the Institute for the Accountancy Profession in Sweden (FAR), the Industry and Commerce Stock Exchange Committee, the Confederation of Swedish Enterprise and the Shareholders’ Association.
In April 2004, the Code Group presented the result of its work in the publication Swedish Code of Corporate Governance: A proposal by the Code Group. The general aim of the Code, which is expected to become effective during 2005, is to improve the governance of Swedish companies and thereby promote public confidence in the business community. Another important aim is to enhance the understanding and confidence of foreign investors and thus promote the Swedish business sector’s access to foreign risk capital. The Code is primarily written for Swedish listed companies. It should, however, also be of relevance for other types of unlisted companies. The Code contains a number of rules and guidelines that in many cases are not required by the Companies Act or other legislation. It lays down rules governing shareholders’ meetings and the board of directors. The official period for submitting comments on the proposal by the Code Group expired on 30 September 2004. This initiative to promote self-regulation of the business sector was kindly received, but most of the companies and organisations that commented on the proposal criticised the Code for being too detailed. Thus, the Code Group presented a revised version of the Code on 16 December 2004. The new revised Code is less detailed and some of the rules that were contained in the first version of the Code have now been abandoned. In the revised version it is proposed, for example, that the shareholders’ meeting shall appoint a nomination committee that, among other things, presents proposals for nomination of the chair and other members of the board of directors and auditors and their remuneration; that shareholders’ meetings approve policies for management salaries and remuneration; and that the board of directors is not to exceed the size that will allow it to employ simple and effective working methods, that it should have a broad competence base, that the majority of the members should be independent of the company and that at least two of them should be independent of the large owners. One further aim is to have an equal gender distribution. In addition, the Code includes extensive provisions regarding the information that companies should provide in connection with their annual reports. It is proposed that the Code be self-regulatory and that the principle of ‘comply or explain’ will apply. A company that follows the Code must attach a separate corporate governance report to its annual report, describing how the Code has been applied and, if certain provisions are not complied with, the reasons for such noncompliance. Such information shall also be provided on the company’s website. The task of monitoring whether companies observe the Code is proposed to be conducted by a semigovernmental body, the Council for Swedish Corporate Governance.
In addition to the Code, the Commission on Business Confidence has recently presented a document on business ethics, entitled The Business Sector and Confidence. The Commission proposes to take several measures in respect of corporate governance, in addition to the Code, in order to increase confidence in the business community. For example, it is proposed that provisions be incorporated into the Companies Act stipulating that shareholders’ meetings of public companies must decide on, for example, the principles for remuneration of the managing director and other managers and the level of the fees paid to the chairman and other directors. It is also proposed that the chairman of the board of directors be appointed by a shareholders’ meeting, and that provisions be inserted into the Companies Act and the Act on Annual Financial Reporting requiring public companies to disclose managers’ employment conditions in their annual report.
Among the NGOs dealing with corporate governance, the Association for Share Market Issues, to which the Industry and Commerce Stock Exchange Committee and the Securities Council are connected, is working to promote good practice within the business community. The aforementioned organisations have presented different provisions and guidelines for companies. The Board Academy, the Confederation of Swedish Enterprise and the Shareholders’ Association are also worth mentioning in this context. As regards international guidelines on corporate governance, the recently revised OECD Corporate Governance Principles are relevant. As a member of the EU, Sweden also participates in work involving corporate governance issues within the Union.
9. Corporate responsibility to employees
One characteristic of Swedish labour law is the great influence that employers’ and employees’ organisations and the collective bargaining system has on the regulation of employees’ conditions of employment. Employers’ and employees’ organisations play an essential part in the development of CSR. Large parts of Swedish labour law may be amended by collective bargaining agreements. It should also be mentioned that the parties of the labour market are represented in the Swedish Labour Court, which is the supreme court for labour disputes.
One central statute is the Co-Determination Act, which contains, for example, provisions concerning the relationship between employers and employees’ organisations. The Co-Determination Act imposes an obligation upon employers to negotiate with the relevant employees’ organisation all significant changes in its activities, before a decision is made about them. The Act also states that employers must supply the relevant trade union with continuous information on the company’s businesses. The Act on Board Representation for Private Sector Employees entitles the local trade union of a company that has at least 25 employees and is bound by collective bargaining agreement to appoint two (in some cases three) directors and deputy directors to the board. The Employment Protection Act regulates the individual employer-employee relationship and contains provisions regarding, for example, the employment contract and its termination.
The regulations on health and safety in the workplace are, chiefly, the Work Environment Act, a framework law. The Act itself does not contain any detailed provisions: these are instead introduced through regulations issued by the Work Environment Authority. According to the Act, employers and employees must collaborate to establish a good working environment. The employer has to take all precautions necessary to prevent employees being exposed to illness or accidents. The employer must systematically plan, direct and inspect activities in a manner that ensures that the work environment meets the requirements of the Act and of provisions made in accordance with the Act. If an employer breaches the Act, or regulations issued under it, he may in certain circumstances be liable to criminal fines, up to one year’s imprisonment or certain non-criminal fines.
The Working Hours Act regulates employees’ working time. Its main rule stipulates that the normal number of working hours per week must not exceed 40. Breaches of the Working Hours Act can result in criminal fines, up to one year’s imprisonment, liability for damages or an obligation to pay so-called overtime charges. There are several different Acts regulating the conditions under which an employee is entitled to be absent from work, some of which are briefly described here. The Annual Leave Act regulates an employee’s minimum right to 25 days holiday. The Parental Leave Act entitles employees with young children to certain types of leave for taking care of their children; provides that a person who has been employed by his or her employer for a certain period of time may be on full-time leave from work for 18 months after the birth of a child; and states that parents are entitled to reduce their working hours. Furthermore, the Act on Leave for Urgent Family Reasons grants employees the right to leave work for urgent family reasons related to illness or accidents. Finally, the Educational Leave Act gives employees, under certain circumstances, a right to leave for the purpose of undergoing education.
Sweden’s commitment to human rights is reflected in a large number of nondiscrimination Acts. All discrimination laws prohibit direct as well as indirect discrimination. The provisions in the Act on Equality of Opportunity at Work are divided between rules on active measures to be taken to promote equality between men and women in working life, and rules regarding prohibition against sexual discrimination and sexual harassment. The Act imposes obligations upon employers actively to promote equality between men and women. This obligation entails, for example, a duty to draw up annual plans for how equal opportunity is to be carried out in the workplace and to make an annual survey of pay differentials between men and women. The employer is also obliged to conduct investigations and take appropriate measures if it becomes aware that an employee has been the subject of sexual harassment. The prohibition on discrimination on grounds of gender applies to the process of recruitment and to the whole of an employee’s employment; an agreement containing provisions contrary to the Act is void; and an employer who is in breach of the Act is liable to pay damages to the employee.
Several Acts on discrimination in working life came into force in 1999, including the Act on Measures Against Discrimination in Working Life on Grounds Relating to a Person’s Ethnic Origin or Religion or other Belief, the Act on Prohibition of Discrimination in Working Life on the grounds of Sexual Orientation and the Act on Prohibition of Discrimination in Working Life of People with Functional Disabilities. In 2002, the Act on Prohibition of Discrimination of Part-Time Workers and Workers with Time-Limited Employments came into force, implementing two EC directives (1997/81/EC and 1999/70/EC). In July 2003, the Act on Prohibition of Discrimination came into force, prohibiting discrimination on grounds such as ethnic origin, religious or other beliefs, sexual orientation or disability in a wide range of circumstances. The Penal Code contains provisions that make criminally liable an employer found guilty of unlawful discrimination on grounds of race, colour, national or ethnic origin, religious belief or homosexuality. The penalty is a fine or imprisonment for a maximum of one year.
Sweden has signed and ratified most relevant international conventions and treaties which regulate working life. The domestic legislation set out above has also been affected by the extensive regulations regarding working life that have been adopted by the EU. The Ministry of Industry, Employment and Communication is responsible for the working life policy. The current Minister for Employment is Hans Karlsson. In order to supervise the discrimination laws, certain governmental authorities have been appointed, such as the Equal Opportunities Ombudsman, the Ombudsman against Ethnic Discrimination, the Ombudsman against Discrimination on Grounds of Sexual Orientation and the Disability Ombudsman. These authorities supervise the observance of the discrimination laws and are authorised to institute proceedings in the Swedish Labour Court against employers that are in breach of the legislation and to issue orders carrying financial penalties.
10. Corporate responsibility towards the environment
The Environmental Code, the main body of Swedish environmental law, came into force on 1 January 1999. The Code replaced 15 older statutes and consists of 33 chapters and almost 500 sections. These are mainly general environmental rules; detailed provisions are laid down in about 50 government ordinances and in regulations and guidelines issued by the Swedish Environmental Protection Agency, the government’s central environmental authority. The Environmental Code applies to all kinds of activities and types of environmental disturbance. There are also several statutes that run parallel to the Environmental Code in areas relating to the environment and health, including the Planning and Building Act, the Minerals Act, the Forestry Conservation Act, the Radiation Protection Act and the Electricity Act. Pursuant to the Environmental Code, liability to pay damages for personal injury, property damage or pure economic loss caused in the surrounding area by operations conducted on a property may, in certain circumstances, be imposed on, for example, the owner and user of the property on which the operations were conducted and contractors or similar persons who carry out work on the property. A person responsible for environmental damages is, as a general rule, subject to strict liability to pay damages. The liability for investigation and remediation of contaminated areas lies primarily with the person actually causing such contamination – the ‘polluter pays’ principle – and secondarily with the property owner of such contaminated areas.
The Environmental Code also contains extensive provisions regarding criminal liability. For example, persons can under certain circumstances be held liable for an environmental offence if they deliberately or negligently pollute land, water or air store waste or other matter in a manner that may give rise to health risks etc or cause substantial detriment to the environment as a result of noise, vibration or radiation. Environmental offences are punishable with fines or imprisonment for up to six years. The Environmental Code may also impose criminal liability, for example, on persons who handle chemical products without taking protective measures. On top of criminal liability, an obligation to pay environmental sanction charges can in some instances be imposed upon a company. Other Acts and regulations also contain provisions regarding the responsibility of producers, and impose an obligation on certain producers to take responsibility for the products that they produce or use in their business.
Since the first UN Conference on the Human Environment in Stockholm in 1972, Sweden has taken a leading role in the UN environmental programme. Moreover, Sweden has conducted the Agenda 21 action programme adopted by the 1992 UN Conference held in Rio de Janeiro (Summary of the National Strategy for Sustainable Development, Government communication 2001/02:172, p. 5). Sweden’s National Strategy for Sustainable Development was presented at the 2002 UN Conference in Johannesburg, and a revised version was published recently. The government’s goal is for the concept of sustainable environment to be reflected in all areas of its policy. One method for creating sustainable development is, according to the Strategy, dialogue and agreement between government and business. Besides the UN and the EU, Sweden participates in efforts to protect the environment conducted by, for example, the Nordic Council of Ministers, which has established its own Nordic Strategy for Sustainable Development, the World Health Organisation and Baltic 21 (Agenda 21 in the Baltic Sea region).
In addition to implementing agreements flowing from its EU membership, Sweden has signed a large number of regional and international agreements that affect environmental legislation, e.g. the 1960 Paris Convention on Third Party Liability in the Field of Nuclear Energy and the 1992 Basel Convention on the Control of Transboundary Hazardous Wastes, and has signed the additional Basel Protocol on Liability and Compensation. Sweden has ratified the 1992 Convention on Biodiversity, the 1997 Kyoto Protocol to the UN Framework Convention on Climate Change and the 2001 Stockholm Convention on Persistent Organic Pollutants, on which Sweden, together with the other Nordic countries and Canada, took the initiative.
In addition to the above legislation, the business sector has voluntarily adopted environmental management systems. The international environmental standard ISO 14000 and the European Community equivalent, the Eco-Management and Audit Scheme (EMAS), should be mentioned in this context. There are also several domestic eco-labels that are widely used, such as KRAV, Svanen and Bra Miljöval.
The overall responsibility for environmental legislation lies with the Ministry of Environment and the Minister for Environment, currently Lena Sommestad. There are also many authorities responsible for different environmental issues, such as the Swedish Environmental Protection Agency, the Swedish Radiation Protection Authority, the Swedish Chemicals Inspectorate, the Geological Survey of Sweden, the National Board of Forestry, the Swedish Board of Agriculture, the National Board of Housing, Building and Planning, the National Heritage Board and the National Board of Health and Welfare. Some examples of the large number of NGOs engaged in environmental issues have been given above.
11. Corporate responsibility to communities
A number of agencies and bodies work on issues regarding CSR towards communities. There are several co-operative projects in which business and various municipalities work together on local issues. For example, businesses engage with schools and participate in networks that aim at creating, among other things, a good environment and a good business climate in the communities. Government has taken measures to encourage companies to invest in economically weaker parts of the country, of which local growth programmes are an example. Under these programmes, regional partnerships consisting of representatives from different sections of society, including business, are working for sustainable development in different regions. There are also certain corporate grants such as regional development contributions, rural grants and employment contributions.
Governmental responsibility for sustainable development throughout all of Sweden rests primarily with the Ministry of Industry, Employment and Communication and the Minister for Communications and Regional Policy, Industry and Communication, currently Ulrica Messing. The Swedish Business Development Agency, a governmental agency, contributes to sustainable economic growth throughout the country.
12. Corporate responsibility for overseas activities
Companies that breach international conventions, national laws or their own codes of conduct, whether directly or indirectly, when conducting operations abroad, are from time to time exposed in the media. Such exposure is likely to damage the company’s trademark. In Swedish case law and legal literature, the applicability of ‘lifting the corporate veil’, has been discussed. The extent of its applicability is however uncertain. Although breaches of fundamental human rights in overseas activities brings the risk of negative media attention to Swedish companies, they face little risk of being held legally responsible in Sweden for their own or their subsidiaries’ overseas activities (Cronstedt, Det globala ansvaret, p. 83). SwedWatch and the Fair Trade Centre are prominent in discussions on corporate responsibility for overseas activities, and the International Council of Swedish Enterprise is also engaged in CSR issues as regards overseas activities.
13. Procurement
Public procurement in Sweden is mainly governed by the Act on Public Procurement, which is largely based on EC directives. The National Board for Public Procurement (known by its Swedish acronym, NOU) is the central government agency responsible for monitoring observance of the Act. The Committee for Ecologically Sustainable Procurement has initiated and developed specific guidelines and methods for the use of environmental criteria in public procurement, the Swedish Instrument for Ecologically Sustainable Procurement (the EKU instrument), implementation of which has been the responsibility of the Swedish Environmental Management Council from 2003.
14. CSR reporting and socially responsible investing
The Act on Annual Financial Reporting has since 1999 obliged companies that conduct activities requiring a permit or notification under the Environmental Code to provide information in their annual reports on the impact of their activities on the environment. The Ministry of Justice has recently proposed amendments to the Act on Annual Financial Reporting and other legislation based on the EC Directive (2003/51/EC); these changes will expand the duty of companies to report on environmental and other CSR issues. For example, it is suggested that Swedish parent companies should provide information in their consolidated financial statement on conditions regarding environment and employment in foreign subsidiaries. Furthermore, the Act on Financial Reporting requires companies to provide information in their annual report on employees’ absence from work due to illness; the division between male and female directors, managing directors and other members of the company’s management; the remuneration, pension and similar benefits to the board of directors and the managing director; and the severance provisions in employment agreements.
In addition to the statutory requirements on reporting, many companies voluntarily provide information on environmental issues in a separate sustainability report (Flening in Balans 2004, p. 19). Many companies have also expanded their environmental reporting to include social and ethical matters. However, according to an investigation by Deloitte in 2004 regarding 39 of 50 Swedish listed companies’ CSR reporting (in annual reports), the voluntary information that companies prefer to provide usually relates to corporate governance. According to Deloitte, more and more companies are providing relatively detailed information on these issues, yet there are still significant differences between companies, and there is great potential for improvement. The Institute for the Accountancy Profession in Sweden (FAR) was in 2004 the first in the world to draw up a standard for reviewing voluntary sustainability reports regarding companies’ environmental and social issues. This standard is based on, among other things, the international standard ISAE 3000, drawn up by the International Auditing and Assurance Standards Board (IAASB). In this context, it is also worth mentioning that the Swedish Society of Financial Analysts has issued guidelines regarding sustainable reporting.
Pension funds, insurance companies, banks and individual investors take greater account than before of ethical, environmental and social considerations. Some ethical funds do not invest in companies that deal with, for example, weapons, tobacco, alcohol, gambling or pornography, or companies that are in breach of fundamental labour law principles. Although the market for ethical funds is not significant in Sweden, almost all institutional investors in Sweden have their own ethical policies. The Swedish Sustainable Investment Forum (SWESIF) is a forum for parties working with or for sustainable investment in Sweden. It aims to compile and disseminate information on sustainable investment, contribute to developing knowledge of the area and establish a meeting spot for interested parties.
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