University of Vaasa - Vaasan yliopisto

whether Danfoss is considered good at CSR because of its ability to learn and to be
proactive in response to changes.
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It was shown that the drivers for the environmental focus was mainly having to meet
local environmental regulations, and due to health and safety concerns on the
community living around the factory and the employees who were exposed to
environmental hazards. In the beginning, it seemed that Danfoss must have been
facing some pressures from the local authorities to meet with environmental
standards, and thus Danfoss had to secure its first permission to discharge cleaned
wastewater in 1965, which is essentially a “license to pollute” at controlled amounts.
Subsequently, in the 1970s, Danfoss had set up its own environmental laboratory to
monitor its own emissions rather than solely relying on government agencies, which
was done amidst growing environmental awareness globally. To take this step further,
the company also set up an internal team for toxic handling.
In this sense, this leap from just getting an environmental permit to establishing its
own monitoring systems can be considered as a form of risk management whereby it
learns to be proactive and is able to use this as a means to protect its interest. For
example, if the local environmental agency made a mistake in measuring the
discharge of a certain pollutant, this could be cross‐checked with Danfoss’
environmental laboratory, so this affords both parties to have meaningful discourse
in the event of a dispute. Furthermore, this step taken by Danfoss serves as an
indication of positive reflex to the pressures that it must be facing, namely the
community, its employees, local authorities, and environmental organizations. This
makes it evident that Danfoss has learned the inadequacy of merely obtaining
environmental permits and thus it took the initiative, despite it not being required by
law, to monitor its environmental impact that also serves as a means for risk and
reputation management.
Throughout 1980 to 1990s, apart from reducing environmental impacts to its
surroundings, Danfoss also began to focus on improving the environmental quality of
its products. There were more efforts in making products that are
environmental‐friendly and energy‐efficient. This is particularly interesting as the
general situation within Denmark was that there were more concerns about cleaner
production efforts for environmental protection, whereas Danfoss was already
thinking about making cleaner products. The company collaborated and engaged in
dialogue with local authorities in green initiatives, thus increasing its knowledge in
social and environmental matters. In 1992, Danfoss endorsed the ICC Charter for
Sustainable Development which saw its first voluntary participation with an
international NGO whereby Danfoss was required to improve its environmental
performance. Danfoss was one of the first companies to formulate an environmental
policy and had been making environmental reports since 1995, which later
incorporated sustainability elements due to its participation in GRI in 1998. It is
postulated that these developments are probably due to the increasing environmental
awareness and the amounting pressures Danfoss must be facing, both locally and
internationally. There is a definite change, particularly in the products and processes,
in that the company had shifted from finding end‐of‐pipe solutions to a
pollution‐prevention approach. This decision could have been influenced by its prior
experience in complying with environmental standards and in monitoring its
environmental impacts. There is a great possibility that the organization had learned