DENMARK - Danish pension funds will have until the end of 2009 to comply with new legislation requiring the inclusion of corporate and social responsibility (CSR) activity in the management's review of the annual report.

An action plan published by the Danish Government and the Danish Commerce and Companies Agency (DCCA) in May outlined 30 initiatives to promote CSR and strengthen efforts to ensure Denmark is associated with responsible growth. (See earlier article: Denmark to publish CSR action plan)

A key initiative is to legislate to ensure the 1,000 largest Danish businesses, institutional investors and unit trusts are required to report on their CSR policies and how they put them into practice, and must also state if they have not yet established CSR policies.

At present, pension funds which include social, environmental or ethical considerations in investment policies have to include a description in the annual report, but the law only requires them to state how consideration of these issues impacts on investment policies.

Changes to the law to make the reporting mandatory for companies is expected to be approved in October 2008, and although the rules for investors will not need to be voted on in parliament - as it only needs some alterations to the current law - they will be changed at the same time as the law for companies is passed in October.

Christina Wolfeld Gehring, head of section at the Centre for Corporate Social Responsibility (CENSA) in Denmark, said as the rules are expected to apply for a company's management review for 2009, pension funds "will have a least one year to change their reporting methods as most of them will not finish their management review until the end of 2009".
She added the rules require pension funds to also state whether they follow any CSR standards or are members of initiatives such as the UN Global Compact, or UN Principles for Responsible Investments, and also allows schemes to state specific CSR activities they have undertaken in the past year and what effect they have had.
However, Wolfeld Gehring said the duty to report "does not mean that the government will decide or interfere in businesses' actual business and management strategies or investors' investment strategies".

She said: "It is still left to each business owner and management to decide how to operate their business, just as investors and pension fund managers decide - in dialogue with their members - how their funds are to be invested.

"The duty to report is designed to urge businesses and investors to actively and constructively consider how their core competences match the global challenges they face. Businesses and investors need to consider the international agenda actively, which is exactly what the duty to report should motivate them to do. However, they must determine independently how they concretely decide to counter the challenges and opportunities inherent in globalisation," she added.

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