The pressure on companies to demonstrate respect for human rights is increasing as the link between long-term value creation and a prudent approach to human rights risks is becoming increasingly established.

In recent years the European Union has introduced a range of regulatory initiatives which, in different ways, seek to address the impacts that businesses have on hu-man rights and labour rights. Two of the main developments in this area are the Corporate Sustainability Due Diligence Directive (CSDDD) , which includes a man-datory due diligence obligation with respect to human rights, and the Corporate Sustainability Reporting Directive (CSRD) , which concerns disclosures on a range of sustainability matters including human rights from a double materiality per-spective.

It is increasingly important for companies and investors alike that companies demonstrate that they understand and navigate the business opportunities and risks related to the corporate duty to respect human rights and labour rights. Fail-ure to do so may leave the company vulnerable to operational disruptions, litiga-tion risk and increased scrutiny by supervisory authorities as well as reputational risk and loss of license to operate in the eyes of customers, employees, investors, and business partners. Companies that have begun to prepare for the comprehen-sive reporting requirements on human rights due diligence early on will likely gain a competitive advantage when the EU regulatory initiatives become national law in a few years.

The EU regulatory initiatives are largely based on the corporate duty to respect human rights as described in the United Nations Guiding Principles on Business and Human Rights (UNGPs). The UNGPs have set out the international standard of practice for companies to respect international human rights (including labour rights) by identifying, preventing, mitigating, remedying, and reporting on human rights impacts associated with their business activities – commonly known as human rights due diligence . Companies that are operating (directly or through the value chain) in conflict-affected areas are, furthermore, expected to perform heightened human rights due diligence in light of the increased risk of human rights violation in these areas.

However, studies show that companies have not taken the necessary steps to demonstrate sufficient implementation of human rights due diligence processes in their operations. Both the Corporate Human Rights Benchmark and the Danish Institute for Human Rights (DIHR) has examined the public reporting of a num-ber of large companies and provided an analysis of the human rights policies and self-reported human rights due diligence practices of these companies in 2020 and again in 2022 . These analyses indicate that more progress needs to be made in this area. This is also the case for Carlsberg A/S.

Carlsberg A/S is a signatory to the UN Global Compact and the company commits to support the UN Universal Declaration of Human Rights and the UNGPs. By strengthening its ability to document its human rights due diligence and risk management processes, the company would stand to benefit and ensure compli-ance with the comprehensive new reporting requirements under the new EU legislation.

Given that Carlsberg A/S and its supply chain business partners operate in geo-graphic territories and depend on sectors with a high risk of adverse impact on human rights, it is important that the company can account for the necessary due diligence processes applied to handle these risks.

We therefore encourage the board and fellow shareholders to consider their support for this proposal.