DENMARK Law and Practice Contributed by: Flemming Elbæk, Helle Ina Elmer, Mads Lund and August Reinhold, HaugaardBraad
reductions in greenhouse gas emissions in line with EU climate policy. 6.3 Incentives, Exemptions and Penalties There are no specific incentives or exemptions in Danish legislation that directly reward “good environ- mental citizenship” as such. The framework is instead designed around compliance and enforcement. How- ever, certain environmental tax mechanisms – for example rebates on CO₂, energy or NOx taxes where companies adopt cleaner processes, capture and store CO₂, or enter into energy-efficiency agreements – can to some extent be considered incentives. Con- versely, non-compliance with environmental approv- als or laws leads to administrative sanctions, fines and possible criminal liability, which function as penalties for “bad citizenship.” 6.4 Shareholder or Parent Company Liability In general, a criminal case must be brought against the company that committed the violation. However, Dan- ish corporate criminal liability rules also allow for both the subsidiary and the parent company to be pros- ecuted if the subsidiary’s unlawful acts are effectively the result of decisions taken by the parent company. This can happen where the parent has exercised con- trol to such an extent that it can be regarded as having committed, or at least co-committed, the offence. In practice, this requires a factual link between the deci- sion-making at parent level and the unlawful conduct. Other stakeholders such as banks and shareholders are not considered “operators” and cannot be held liable for environmental breaches simply by virtue of Denmark’s ESG framework is largely anchored in EU law, with national authorities responsible for imple- mentation and supervision. The key pillars are the EU Corporate Sustainability Reporting Directive (CSRD) and European Sustainability Reporting Standards (ESRS), the EU Taxonomy, the Sustainable Finance Disclosure Regulation (SFDR) and the EU Emissions Trading System (EU ETS). National targets, including Denmark’s Climate Act, reinforce EU requirements with ambitious emission-reduction goals. financing or owning shares. 6.5 ESG Requirements
• Reporting – large and listed companies must include sustainability information in their manage- ment reports under CSRD/ESRS, including taxon- omy indicators. Financial institutions report under SFDR. • Monitoring – sustainability disclosures are subject to limited assurance by auditors; authorities also review annual reports and stock exchange disclo- sures. • Supervision – the Danish Business Authority ( Erhvervsstyrelsen ) oversees CSRD compliance; the Danish Financial Supervisory Authority ( Finan- stilsynet ) monitors SFDR; and the Danish Energy Agency ( Energystyrelsen ) administers EU ETS. • Enforcement – tools include administrative orders and fines, sanctions and registry controls under ETS, and penalties or reprimands for deficient cor- porate or financial reporting. The EU’s “stop-the-clock” Directive postpones appli- cation timelines under both the CSRD and the Corpo- rate Sustainability Due Diligence Directive (CSDDD). In practice, the next two CSRD reporting “waves” are deferred by two years, while CSDDD is delayed by one year – member states must now transpose by 26 July 2027, with company-level application starting on 26 July 2028 and then phasing in by company size. 6.6 Environmental Audits There is no universal, stand-alone legal duty for all companies to undergo a periodic “environmental audit”. Instead, audit-like obligations arise in specific regimes. Large energy-consuming enterprises must conduct mandatory energy (and climate) audits/man- agement in accordance with Statutory Order No 761 of 18/06/2024, which implements the EU Energy Effi- ciency Directive. EU ETS-covered operators must submit annual emis- sions reports verified by an accredited third-party veri- fier before surrendering allowances.
7. Personal Liability 7.1 Directors and Other Officers
As a rule, enforcement is initiated against the legal entity under corporate criminal liability. In practice,
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