1. TRANSPARENCY IN CORPORATE REPORTING ASSESSING THE LARGEST LISTED AND NON-LISTED DANISH COMPANIES Alexandra Kemp, Marina Trocin, Rebecca Schmid, Sophie Ferdinand Ellgaard 14 June 2016

2. E XECUTIVE SUMMARY Combined Average Score 14-06-2016 2 D ANISH C OMPANIES EXCEL IN 1 ST AND 2 ND D IMENSION 20 Listed Companies A P Møller Mærsk, Carlsberg, Chr. Hansen Holding, Coloplast, Danske Bank, DFDS, DSV, FLSmidth & Co.. GN Store Nord, ISS, Lundbeck, Novo Nordisk, Novozymes, Pandora, Rockwool International, Royal Unibrew, Scandinavian Tobacco Group, SimCorp, Vestas Wind Systems, William Demant Holding 10 Non-listed Companies Arla Foods, Danfoss, Danish Agro, Danish Crown, Dansk Supermarked Group, DLG, DONG Energy*, Grundfos, LEGO, United Shipping & Trading Company * DONG Energy is planning to list on the Copenhagen Stock Exchange on June 9 2016, i.e. just prior to the date of issuance of this report. ACP Average Score OT Average Score CbC Average Score 56 % 75 %89 %3 %

3. A GENDA 14-06-2016 3 1 2 3 4 5 6 7 Anti-Corruption Programme Organisational Transparency Country-by-Country Reporting Methodology Comparison Listed vs. Non-listed Companies UN Global Compact Comparison Global TRAC 2014 report 8 Recommendations

4. 1. M ETHODOLOGY 14-06-2016 4 T HE 4-S TEP TRAC M ETHODOLOGY CREATES E NGAGEMENT Company Selection Data Collectio n Data Review Final Scoring

5. 2. A NTI -C ORRUPTION P ROGRAMME 14-06-2016 5 ACP D IMENSION IS OF HIGH C OMPANY I NTEREST AS SHOWN BY IMPROVED S CORES ACP Ranking 2014 ACP Ranking 2016 75 % 63 % Averag e 100 % 96 % Top * * By a regrettable error on our side, we have incorrectly given Pandora an ACP score of 96%. The correct ACP score for Pandora is a perfect 100%. The combined score for Pandora is thus 67%.

6. 2. A NTI -C ORRUPTION P ROGRAMME 14-06-2016 6 I MPROVEMENTS ACHIEVED FOR INTRODUCING C ODES OF E THICS FOR THIRD P ARTIES, T RAINING AND G UIDELINES FOR SPECIFIC P AYMENTS 2014 to 2016 1. Zero-tolerance statement 2. Compliance with laws commitment 3. Leadership support 4. Code applies to all employees incl. directors 5. Code applies to agents 6. Code applies to suppliers

7. 2. A NTI -C ORRUPTION P ROGRAMME 14-06-2016 7 I MPROVEMENTS ACHIEVED FOR INTRODUCING C ODES OF E THICS FOR THIRD P ARTIES, T RAINING AND G UIDELINES FOR SPECIFIC P AYMENTS 7. Training Programme 8. Gifts, Hospitality, expenses 9. Prohibition of facilitation payments 10. Prohibition of retaliation for reporting 11. Confidential reporting Channel 12. Regular programme monitoring 13. Disclosure of political contributions 2014 to 2016

8. 2. A NTI -C ORRUPTION P ROGRAMME 14-06-2016 8 I NTERNATIONAL C OMPARABILITY REQUIRES D IRECTORS TO BE EXPLICITLY INCLUDED Question 4: Does the company’s code of conduct / anti-corruption policy explicitly apply to all employees and directors? Question 7: Does the company have in place an anti-corruption training programme for its employees and directors? Rewarded 0.5 points if Directors are not explicitly mentioned International Comparability > Local Adaptation Target employed AND elected Directors

9. 3. O RGANISATIONAL T RANSPARENCY 14-06-2016 9 D ANISH C OMPANIES REMARKABLY IMPROVED OT R EPORTING IN 2016 15/2 0 24/30 89 % 67 % Averag e 100 % 75 % Top

10. 4. C OUNTRY - BY -C OUNTRY R EPORTING 14-06-2016 10 T HE 3 RD D IMENSION GIVES LEEWAY FOR I MPROVEMENT 15/20 scored 0% 22/30 scored 0% 3 %2 % Averag e 60 % 20 % Top

11. 5. L ISTED VS. N ON -L ISTED C OMPANIES 14-06-2016 11 L ISTED C OMPANIES REPORT MORE TRANSPARENT ACP Average Score OT Average Score # of positive CbC Scores 59 % 81 %93 %7 / 8 Combined Average Score * By a regrettable error on our side, we have incorrectly given Pandora an ACP score of 96%. The correct ACP score for Pandora is a perfect 100%. The combined score for Pandora is thus 67%. *

12. 5. L ISTED VS. N ON -L ISTED C OMPANIES 14-06-2016 12 N ON -L ISTED C OMPANIES ARE NEVERTHELESS AMONGST THE L EADERS ACP Average Score OT Average Score # of positive CbC Scores 49 % 63 %83 %1 / 8 Combined Average Score

13. 6. UN G LOBAL C ONDUCT 14-06-2016 13 L ISTED AND N ON -L ISTED C OMPANIES ALIKE SIGNED THE UN G LOBAL C ONDUCT

14. 6. UN G LOBAL C ONDUCT 14-06-2016 14 T HE A VERAGE S CORES OF S IGNATORIES ARE HIGHER, SIGNIFICANTLY IN THE 1 ST D IMENSION DimensionSignatoriesNon-SignatoriesAll companies # of companies24630 % of companies80% ACP*82%46%75% OT*91%83%89% CbC*4%2%3% Overall*59%44%56% * Average Score achieved in Danish TRAC 2016 report

15. 7. C OMPARISON WITH G LOBAL TRAC 2014 REPORT 14-06-2016 15 D ANISH C OMPANIES EXCEL IN ACP AND OT R EPORTING IN G LOBAL C OMPARISON Combined Average Score OT Average Score CbC Average Scores 38 % 70 %39 %6 % ACP Average Score Combined Average Score ACP Average Score OT Average Score CbC Average Score 56 % 75 %89 %3 % Danish TRAC 2016

16. 8. R ECOMMENDATIONS 14-06-2016 16 T HERE ARE 7 W AYS FOR C OMPANIES TO IMPROVE T RANSPARENCY IN R EPORTING Prepare for the threats of going global and operating in different countries Make policies and code of conducts visible to employees in a common language Train employees in order to increase the impact of their policies Continuously review and strengthen the anticorruption practices Engage in making financial information of every country available Assign a compliance team or create a compliance department Join the United Nations Global Compact or a similar anticorruption initiative

17. 8. R ECOMMENDATIONS Set an example and induce transparency behaviour in order to increase trust Approve legislation that will require companies to share information Reward companies who promote best practices 14-06-2016 17 T HE D ANISH G OVERNMENT CAN PUSH T RANSPARENCY IN R EPORTING

18. 8. R ECOMMENDATIONS Investigate companies and make no assumptions Demand higher transparency and more financial information Demand more legislations regarding ethical behaviour 14-06-2016 18 C IVIL S OCIETY CAN S UPPORT THE I NCREASE IN T RANSPARENCY IN R EPORTING

19. 8. R ECOMMENDATIONS 14-06-2016 19 I NVESTORS CAN PULL MORE T RANSPARENCY IN R EPORTING Demand corporate reporting information Add information about ethical practices into investment risk ratings Establish standardized forms of accounting and financial reports to ensure the maximum transparency between the two parties

20. S UMMARY - A GGREGATED R ANKING 14-06-2016 20 T HE D ANISH C OMPANIES SCORE BETWEEN 0% AND 67% * By a regrettable error on our side, we have incorrectly given Pandora an ACP score of 96%. The correct ACP score for Pandora is a perfect 100%. The combined score for Pandora is thus 67%. *

21. S UMMARY – I NDIVIDUAL R ANKING 14-06-2016 21 T HE AGGREGATED L EADERS ALSO LEAD IN EACH D IMENSION ’ S R ANKING ACP Leader s Arla Foods, Coloplast, Danske Bank, Lego, Novo Nordisk, Pandora OT Leader s Arla Foods, Carlsberg, Chr. Hansen Holding, Coloplast, Danfoss, Danish Agro, Dansk Supermarked Group, DFDS, DLG, DSV, FLSmidth & Co., Grundfos, ISS, Lego, Lunbeck, A P Møller Mærsk, Novo Nordisk, Novozymes, Pandora, Rockwool International, Royal Unibrew, SimCorp, Scandinavian Tobacco Group, William Demant Holding CbC Leader s Danske Bank

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