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New guidelines in Denmark for gender composition of management

Denmark
04.04.23
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Written by
Norrbom Vinding, the largest labour and employment law practice in Scandinavia and the market leader in Denmark.
The Danish Business Authority has published updated guidelines on target figures and policies for the gender composition of management and for reporting on this issue.

Parliament adopted a bill in spring 2022 that aimed to promote a more equal gender distribution in management and create more transparency about it. The amendment strengthens the current rules and introduces a number of new initiatives for large companies. It entered into force on 1 January 2023. 

Based on the amendment, the Business Authority has now published updated guidelines on target figures and policies for the gender composition of management and for reporting on this issue. The guidelines are an important tool in companies’ work with target figures and policies for the gender composition of management. 

Target figures and policies for other levels of management

Under the previous rules, large companies had to set target figures for the proportion of the underrepresented gender in their top management body (i.e. the board of directors) and establish a policy to promote the underrepresented gender at other management levels. 

With the amendment, companies subject to the rules for large enterprises in reporting class C and all businesses in reporting class D must now also set target figures for the other management levels. ‘Large enterprises’ are defined as businesses that exceed two of the following criteria for two consecutive financial years: a balance sheet total of DKK 156 million, a net turnover of DKK 313 million, and an average of 250 or more full-time employees during the financial year.  

The amendment clarifies that the other management levels consist of the two management levels below the top management body: the first level will usually be the executive board, and the second level will be individuals with personnel responsibilities reporting directly to the first level of management (i.e. the executive board). 

In addition, according to the amendment, when businesses reach their defined target, they must then set a higher target figure for the underrepresented gender. New target figures must be set when the time horizon for the target figures expires and until a gender balance of 40/60% has been achieved. 

The enhanced requirements also extend the reporting requirements for target figures and policies to include a range of new information and key figures, including the main actions taken by the company to meet the target figures. 

The gender target report must be included in the company’s management report when the annual report is published, and it is no longer sufficient for it to be available on the company’s website. In addition, it is no longer possible to adopt overall targets and policies for a group as a whole. Therefore, each company in the group must set its own target figures and establish its own policy, which must be published in the company’s own management report. 

The Business Authority’s updated guidelines

When setting target figures, businesses must take into account the circumstances in each business or industry at the time the target figures are set. In addition, the target figures must be ambitious and realistic, and the Business Authority thus emphasises that they are not quotas.  

In addition, the guidelines clarify that companies should avoid setting long-term deadlines for achieving the target figures. For example, they state that a target of 10% of the underrepresented gender within a period of three years is preferable to a target of 40% within a period of 15 years. The time horizon for achieving the target for the top management body should be set at a maximum of four years. 

The gender target reporting in the annual report should, as a general rule, take the form of a single statement and not be given in several places in the management report. 

The new enhanced rules entered into force on 1 January 2023, and the guidelines of the Business Authority indicate that the target figures must be established at the latest at the first board meeting after 1 January 2023. The strengthened reporting requirements will apply in connection with the preparation of the annual report from 2023. 

The Business Authority’s updated guidelines (in Danish) can be found here. 

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Authors
Yvonne Frederiksen
Yvonne Frederiksen
Partner - Denmark
Norrbom Vinding