Norway's Transparency Act: here's what you need to know

Updated: May 2024

In the past years, mandatory due diligence initiatives have been introduced by a large number of governments all across the world. Norway is the latest in line to adopt its own mandatory human rights due diligence for large and mid-size companies operating in the country. The initiative, called the Norwegian Transparency Act,  was enacted to ensure that companies transparently comply with fundamental human rights and decent working conditions in their supply chains.

In this blog, we'll cover what it is, the companies affected, and how to comply. 

The Norwegian Transparency Act
The Norwegian Transparency Act (in Norwegian: "Åpenhetsloven") was adopted by the Norwegian parliament in June 2021 as an instrument to mitigate social washing and put an end to impunity for corporate human rights abuses. The act started to apply on July 1st, 2022, and obligates in-scope companies to identify and respond to real and potential negative impacts of their operations.

On top of that, companies are also required to transparently inform the general public about their implemented action plan and how they follow up their human rights responsibilities.

The Norwegian Transparency Act checklist for companies:

• Implement and carry out a due diligence process in line with the OECD Guidelines
  
• Publish your due diligence strategies
• Transparently communicate your human rights due diligence procedures, risks, activities, and findings on request
  
  

Who is affected by the Norwegian Transparency Act?

The Act applies to all larger companies domiciled in Norway, as well as foreign companies ​​selling goods and services in the country. “Larger companies” in this sense is defined through the Norwegian Accounting Act. Companies exceeding the threshold for at least two of the three criteria are covered by the act:

• An annual turnover of at least NOK 70 million;
• Balance of at least NOK 35 million;
• An average number of 50 full-time employees or the equivalent annual man-hours.

How to comply with the Norwegian Transparency Act?

For a company to successfully comply with the Norwegian Transparency Act it has to complete the three following steps:

1. Implement and carry out a due diligence process in line with the OECD Guidelines

First and foremost, companies must implement and carry out a human rights due diligence process to both identify and act upon actual and potential human rights risks for workers in their own operations and throughout their supply chains. The Norwegian Transparency Act is based on the OECD Guidelines for Multinational Enterprises, meaning that companies must implement measures and objectives in line with the OECD guidelines.

2. Publish your due diligence strategies

Companies are obligated to publish an annual report on their due diligence assessments on their website – no later than the 30th of June each year. The purpose is to ensure public access to the company’s due diligence efforts and action plans. To comply with this demand, the report must, as a minimum, include the following:

• A general description of the company’s structure, area of operations, guidelines, and procedures for handling actual and potential adverse impacts on fundamental human rights and decent working conditions;
  
  
• Provide information regarding actual adverse impacts and significant risks of adverse impacts that the enterprise has identified through its due diligence;
  
  
• Information regarding measures the enterprise has implemented or plans to implement to cease actual adverse impacts or mitigate significant risks of adverse impacts, and the results or expected results of these measures.
  
  

3. Transparently inform consumers on request

Lastly, sustainability can’t work without transparency. That’s why every person has the right to request any company’s information regarding how they address actual and potential adverse impacts pursuant. Companies are, as a main rule, obliged to provide the information no later than three weeks after the request. Ensuring transparency from companies makes it possible for investors, customers, and business partners to make fully informed decisions.

However, companies have the right to deny requests for information if the request doesn’t provide a sufficient basis for identifying what the request concerns, is clearly unreasonable, or related to personal or competitive data.

How to collect data for the Transparency Act in Worldfavor

Set up a supplier risk assessment process aligning with OECD guidelines in Worldfavor. Worldfavor enables greater visibility of your company’s true risk exposure through automated risk analysis of all your suppliers and sub-suppliers – regardless of your supply chain's size. Conduct due diligence on human rights and labor conditions, identify risks, and create a due diligence statement that aligns with the requirements of Åpenhetsloven. 

• Eliminate manual tasks and human error Worldfavor automates your risk assessment process in line with the OECD guidelines.
• Collect key data from suppliers and sub-suppliers seamlessly and automatically transform your findings into actionable insights.
• Quickly spot hidden risks in your supply chain about human rights and labor standards, forced and child labor, employment practices, business conduct, and more.
• Develop a remediation plan to cease, mitigate, and prevent risks. Track and review your process over time in your own dedicated dashboard.
• Easily communicate your process and findings publicly. Export and share your information externally in a standardized format. Just like your stakeholders want it.
  
  

Sounds interesting? Get in touch today to get a deeper insight into how you can use Worldfavor for your company's human rights progress!
Related blog posts you might like: 

• CHRB shows most businesses failing on human rights
• Why corporate transparency is so necessary
  
• How to mitigate risk – start assessing your sustainability