Denmark Distances Itself From Adherence to ESG Criteria With Israeli Arms Deal

Denmark has in recent years made efforts to enhance its image as a champion of ESG and business ethics. In certain sectors this has been successful, not least in tech. But the country’s ongoing liaison with an Israeli arms dealer has brought into question its approach to ethics and human rights.

ESG doctrine has, over the last ten years, become a widely accepted benchmark for business practices and sustainable investment initiatives. Adhering to robust ESG criteria has generally been seen as a crucial component of domestic and foreign policy, procurement and diplomacy, not only in terms of public relations, but as a fundamental tool that governments can deploy to support the advancement of human rights around the world. Denmark (and the Scandinavian countries in general) boasts a long-standing reputation as bastions of social democratic business ethics. A recent deal, however, threatens to bring it all crashing down.

Ostensible transparency

For five years in a row, Denmark finished top of Transparency International’s Corruption Perceptions Index, attesting to zero-tolerance approach to corruption, its commitment to business ethics, clean investments and social responsibility. “It’s genuinely a pleasure. To have our house in order is a fundamental aspect of our international ability to be competitive,”said Jesper Olsen, the head of Transparency International Denmark. One major flaw, however, in the CPI index, is that it deals uniquely with a corruption inside countries, and does not take into account a state’s dealings with foreign actors. Denmark, conscious of the unblemished image it seeks to maintain within the international community, has made real efforts to position itself as a leader in the Western world when it comes to the upholding of ethical doctrines in social and commercial policy. “The fight against corruption is important. Utmost respect to journalists and all others who are fighting corruption. Denmark is on your side,” said Lars Rasmussen, then Prime Minister, at the opening of the International Anti-Corruption Conference held in the Danish capital, Copenhagen, back in 2018.

Shady dealings with an Israeli firm

A recent procurement deal by the Danish Ministry of Defence has however brought into question Denmark’s cemented, irreproachable reputation in terms of business ethics. The deal with Israeli firm Elbit Systems for a delivery of ATMOS howitzers to replace the Ukraine-bound French-made CAESAR cannons throws many unanswered questions into the air, not least with regards to the revival of a deal so vehemently opposed back in 2015, when international geopolitical dynamics were somewhat different. According to the Danish media channel Altinget, there are plans to buy 19 ATMOS howitzers for 105 million euros [DKK 805.2 million] and eight PULS systems for 127 million euros [DKK 942.7 million].

According to United Nations principles, States have a responsibility to ensure that companies from which they purchase equipment do not contribute to human rights violations, a principle recognised under the name of "State duty to protect". The organisation Mellemfolkeligt Samvirke (International Cooperation), believes that the Ministry of Defence should use a clause in the contract to investigate Elbit's human rights record. "If this answer does not comply with international guidelines, the Ministry of Defence has every right to cancel the contract and re-tender,"said Troels Borrild, policy advisor to the Mellemfolkeligt Samvirke, back in 2017, in referenced to the failed Elbit deal of 2015.

Elbit has emerged as one of the leading arms suppliers to the IDF in recent years, notably supplying 85% of the IDF’s drone fleet (its subsidiary UTCAS caused uproar in the United Kingdom for its links to the deadly drone attacks on Palestinians in the Gaza Strip in 2014 and 2021). It has been linked to a plethora of war crimes and crimes against humanity through its services to the IDF, including the provision of an electronic detection fence system to the Apartheid Wall in the occupied West Bank. Israeli media has reported that Elbit drones were in use and the company’s personnel were part of the operation room of a special drones unit deployed during Israel’s 11-day onslaught against Gaza in May 2021 which led to the deaths of 248 individuals and left over 1,900 injured.

Concerns surrounding the deal

In light of the above-mentioned commitment to business ethics in Denmark, the multi-million dollar deal with Elbit raises a number of questions for the Danish government. Although Mette Frederiksen’s government has decided to go ahead with the deal, this has not stopped a number of private actors voicing their opposition and refusing to deal with the Israeli firm. Danske Bank, for example, has decided not to invest in the Israeli company because it is "involved in the supply of electronic equipment that is used in conflict with human rights standards," the bank writes on its website… Admirable from its CEO, Carsten Rasch Egeriis. Denmark’s two biggest pension funds, FA Pension and Danica Pension, have refused to invest in the company due to its continued involvement in the supply of surveillance equipment in the West Bank.

Why is it the case, then, that the Danish MoD has apparently fast-tracked the procurement process for Elbit, when such acquisitions usually take years to pass through a robust system of checks and balances? Is the Danish government convinced that the ATMOS systems meet their specific requirements and will perform better than the CAESARs, on which Danish artillery units are already well trained, knowing that the Elbit-produced systems have been tested on Palestinians in the occupied territories? Martin Lidegaard, the spokesman for the Danish Social Liberal Party (Radikale Venstre), announced back in 2015, when the original deal was derailed by widespread public outcry, that “If the accusation is correct, I do not think that Elbit Systems can get the order. I have clearly told the other parties in the settlement circle that we do not want a company that breaks international law – or contributes to it – to supply the Danish [military].”

The success of the opposition back in 2015 was noteworthy for its unity, transparency and ability to rally the public by focusing on ethical concerns. "It is very worrying that Denmark is buying arms from the Israeli defence industry. Israel is a very brutal occupying power, accused of serious war cimes, and I just don't think Denmark should buy weapons from that country,”exclaimed Nikolaj Villumsen MEP, member of Enhedslisten and the European United Left/Nordic Green Left group at the time. Such dissenting voices in 2023 are few and far between, and one must question as to why this is the case. For a country so devoted to its clean international image, why has there been so little political debate regarding the deal in 2023? Why does the opposition remain so apathetic? The Danish government should be focusing on total transparency in the matter, and it would be to the credit of such the outspoken voices of 2015, who had distinguished themselves in such a positive way, and are still active in the Danish parliament, to bring such a debate back to the public square.