CSR (corporate social responsibility) describes companies’ social and environmental responsibility. Big companies are required to provide an account of their CSR-policy.
What is CSR (Corporate Social Responsibility)?
CSR is an abbreviation for corporate social responsibility (a company’s social duties) and describes the strategies employed by companies in order to fulfill their social and environmental obligations. In Danish law, CSR refers to societal responsibilities. Companies can take CSR-measures for purely philanthropic reasons, because they are legally required to or as part of a marketing strategy aimed at ethical consumers.
CSR refers to the creation of wealth for both the companies and society, because it pays off to tackle ethical and social challenges in accordance with the international principles, as described by the OECD, among others. This includes the regard for human rights, the fight against corruption and safeguarding of workers’ rights. Furthermore, one should protect the environment by producing in a sustainable way or by taking compensatory measures, while keeping in mind consumer rights. This can prove to be a competitive advantage that may be worth including in a due diligence or SWOT-analysis.
This has also become an essential factor for companies with regard to globalization and the individual countries’ legislation, which can vary significantly. As a result of the GDPR, there is a renewed focus on equality and data ethics, meaning an ethically responsible way of handling personal data.
CSR has however received its share of criticism. The left wing (for example Slavoj Zizek) has often pointed to it as a marketing ploy. It is important to remember that this kind of “green washing” can be in conflict with marketing practices if you can not prove your claims. Several liberal voices, Milton Friedman for instance, have criticized CSR for being contradictory to a company’s goal of maximizing profits.
CSR and legislation
According to the Financial Statements Law, the biggest Danish companies are required to provide an account of their socially responsible efforts in their annual financial statement. However, this is only required of companies in accounting category C and D.
In § 99a of the law it says: “Big companies are required to include an account for their social responsibilities in the management report (...) Companies’ social responsibilities refer to the regard for human rights, social issues, environmental and climate-related issues and the fight against corruption being incorporated into their business strategy and activities.”
Here, you have to account for your business model and the measures and policies put into place to fulfill your social obligations. If none of these are present, you have to provide an explanation. The account has to furthermore include a risk analysis of the different business activities. If a CSR-policy is in place, it has to be adopted by the company’s direction or supervisory board at a general assembly to become official company policy.
The responsibility for spreading and supporting Denmark’s CSR-strategy lies with the Center for Social Responsibility, which was founded in 2007.