Mandatory CSR Reporting for Denmark's Largest Companies

Hundreds of the largest private and state-owned companies and institutional investors in Denmark must include corporate social responsibility information in their annual financial reports beginning in 2010.

The Danish Parliament voted in mid-December to force the 1,100 largest enterprises to describe their corporate CSR or socially responsible investment policies, the ways in which they've been implemented and the results they've produced.

Auditors must verify the CSR/SRI information. To incentivize companies to join the U.N. Global Compact or U.N. Principles for Responsible Investment, the Danish government will allow members to refer in the annual reports to their Communication on Progress in lieu of reporting under the new rules.

"In the current financial crisis, it is more urgent than ever to promote greater transparency, especially in the field of environmental, social and governance performance," Donald MacDonald, chair of the U.N. Principles for Responsible Investments, said in a statement. "For investors, corporate responsibility and the proper management of extra financial risks is essential."

For the time being, reporting is voluntary. The purpose behind the proposal is to encourage Danish businesses to actively work on social responsibility, which, at the same time, could create better business opportunities. Gaining a reputation as a socially responsible business community will enable Danish companies to become more competitive globally, according to the proposal.

Denmark is following the lead of other European nations that have mandated CSR reporting, the Ministry of Economic and Business Affairs said. For example, all listed companies in France have had to divulge information about social and environmental conditions in their annual reports since 2001. United Kingdom companies have been required to report on social and environmental conditions since late 2007.