Da­nish Firms Trail in Re­a­di­ness for New Eu­ro­pe­an ESG Stan­dards

Simon Taylor, Senior Director and Co-Founder of Position Green, once again highlights the widening gap in ESG preparedness, with a focus on the critical data that companies must now provide under evolving regulations. Findings from the latest ESG100 Report reveal that while leading European companies are advancing steadily towards European Sustainability Reporting Standards (ESRS) compliance, Danish firms, particularly smaller ones, continue to struggle with meeting the stringent requirements.

Shifting from Compliance to Strategy

Taylor encourages the urgent need for businesses to go beyond mere compliance and integrate sustainability into their core strategies.

“Too many companies see this as a tick-box exercise, when in reality, these reporting standards should form the foundation of corporate strategy.”

As investors and analysts increasingly rely on ESRS data to inform their evaluations, the quality and context of that data have become more crucial than ever. The EU Taxonomy, Sustainable Finance Disclosure Regulation (SFDR), and the Corporate Sustainability Due Diligence Directive (CSDD) are reshaping the landscape. These frameworks aim to redirect private investment towards sustainable activities, thereby driving meaningful corporate action. 

“The EU has committed to reducing emissions by at least 55% by 2030, and achieving this will require trillions of euros in private investment. Reliable, comparable and consistent data from corporates is essential to guide this investment."

The ESG100 report analysed ESRS preparedness among the top 100 listed companies in Denmark, Sweden, Norway respectively, and companies in the STOXX All Europe 100 index. The findings revealed significant disparities between the countries:

• Danish companies were the least prepared, meeting only 44% of the ESRS criteria on average, compared to 71% among companies in the European top 100. “This reflects a real challenge for Denmark, particularly for its smaller companies, which lack the resources to keep up with larger competitors.”
• Denmark outperformed its Scandinavian peers in linking executive pay to emissions targets, with more companies incorporating emissions reductions into CEO compensation. “When a company ties executive pay to emissions targets, it signals that sustainability is truly embedded in their corporate strategy.”
• Danish companies lag behind in reporting on Scope 3 emissions and biodiversity efforts, both critical areas under ESRS. “It’s concerning that only 56% of the top 100 listed Danish companies report on Scope 3 emissions, especially considering the growing investor focus on supply chain transparency.”

To learn more and access the ESG100 report, please click here.

Human Rights and Supply Chains – A Blind Spot for Scandinavia

Human rights due diligence, driven by the Norwegian Transparency Act, is gaining momentum in Norway, but Denmark and Sweden are falling behind. 

Additionally, supply chain reporting remains a weak point for Scandinavian companies. Only 43% of Danish firms conduct supplier audits. “This is a governance blind spot for many companies, and it’s something that will need to change as ESRS regulations come into full effect.”

Notably, 97% of companies in the EU100 conduct supplier audits, highlighting a major gap between Danish and EU counterparts.

From Whistleblowing to Strategic Importance

Taylor references a case study from Arla, one of the first companies to publish an ESRS sustainability statement for FY2023. Arla experienced a 284% increase in whistleblowing reports after launching its system, which highlighted the importance of companies properly contextualising their data. 

“When data like this emerges, it’s essential for companies to provide strategic context. Otherwise, these figures can be misinterpreted and potentially damage corporate value.”

Standardised reporting now makes it clear when companies are omitting important disclosures, such as biodiversity or human rights issues. 

A Strategic Imperative

As regulatory pressures intensify, Taylor stresses the importance of viewing ESRS not just as a compliance exercise, but as a strategic imperative.

“The companies that embrace ESG as part of their DNA will thrive in the next decade, just as those that adapted early to AI have.”

With the first ESRS-compliant reports due in early 2025, and many companies already feeling pressure from investors, Danish firms must urgently improve their reporting capabilities. 

“Denmark needs to catch up, particularly smaller businesses that are struggling with limited resources.”

Nature-related disclosures are gaining momentum, with the Task Force on Nature-Related Financial Disclosures (TNFD) becoming an important part of corporate reporting. Yet only 31% of Danish companies have a nature policy in place, compared to 72% of European companies. This is an area that will need immediate attention as investors become more attuned to biodiversity and ecosystem impacts.

The future promises to be challenging for Danish companies, but as Taylor points out, “ESG is no longer optional; it’s the new normal. Companies that fail to prioritise transparency and sustainability will be left behind, and the consequences will ripple far beyond the boardroom."