New Transparency Act

The Norwegian parliament adopted the Transparency Act

Social sustainability: New Transparency Act will require companies to actively identify and manage negative influence on human rights and working conditions.

New Act adopted

The proposition for a new transparency act has this week been discussed by the Norwegian parliament, and the proposal was adopted. The objective is to enhance the respect of companies for fundamental human rights and decent working conditions. Furthermore, it will ensure public access to information on how companies handle these issues.

What companies will the new Act apply to?

Duties under the Act will apply to “larger” Norwegian companies that offer goods and services in Norway and abroad. In other words, the majority of companies. It will also apply to foreign companies that are taxable in Norway

A “larger” company is as defined by the accounting act.

What impact will the Transparency Act have on larger companies?

In recent years, awareness of companies' responsibility for working conditions and the fundamental human rights for workers who are part of long supply chains has increased. The issue has been on the agenda for some time, and international measures such as the UN Principles on Business and Human rights (UNGP) and the OECS`s guidelines for multinational companies have been implemented. These are guidelines that many companies are already familiar with and adhere to. The Transparency Act is not meant to replace the guidelines. Instead, the guidelines and the Act are meant to complement each other.

The guidelines are considered “soft law”, which means they are not legally binding. Violation of the obligations under the Transparency Act will, however, lead to sanctions from the Norwegian Consumer Agency as an infringement fine or coercive fine.

The Transparency Act will in short terms impose the following on companies:

  • Duty to carry out due diligence assessments.
  • A duty to account for the assessment
  • A duty to provide information to anyone requesting it (with a few restrictions)

Due diligence assessments

Duty to carry out due diligence assessments for companies pursuant to section 4 shall be performed in accordance with the OECD's guidelines for multinational companies. The assessment criteria are thus dynamic, so that it becomes important to stay up to date on any changes of these guidelines.

Assessments must be made on a regular basis, and entail:

  • To include accountability in company guidelines
  • Mapping out actual and potential negative consequences for fundamental human rights and decent working conditions when there is a connection between the company and the hazard
  • Implement measures to prevent or limit negative consequences. Measures and results have to be followed up
  • Communicate with affected interested parties about how negative consequences have been handled
  • Provide or cooperate on recovery or compensation when needed.

How comprehensive the due diligence assessment will be depends on, among other things, the company's character, and context.

The OECD's introduction and guide will form a good starting point for the assessments. The Consumer Agency as the control authority for the Transparency Act will also have a guiding function. It will be important during the starting phase to establish an effective system for due diligence assessments, and legal assistance could be useful.

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