Get ready for Norway's new Human Rights Due Diligence law
What is the Norwegian Transparency Act?
The Norwegian Transparency Act requires large companies selling products and services in Norway to carry out human rights due diligence in line with the OECD Guidelines from July 1st, 2022. The new act obligates companies to conduct human rights and decent work due diligence and follow-ups throughout their supply chain and business relationships – and to be able to communicate it externally with consumers.
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 the 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.
So what exactly does the new legislation mean for companies operating in Norway? In this blog, we will cover everything companies need to know about Norway’s new human rights due diligence law and how to successfully prepare for it!
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 will enter into force on July 1st, 2022, and obligates companies covered by the Act 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. Companies violating the law, or even failing to meet the requirements, face the risk of injunction or fines. So don’t wait until the last minute to start complying – get started today!
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 NOK;
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.