The Transparency Act

OVERVIEW

Norway’s Transparency Act requires certain companies to carry out due diligence activities to ensure they are operating responsibly, respecting both human rights and decent working conditions.

Importantly, the Act applies to a large range of companies (see below), and the due diligence requirements of the Transparency Act apply to a company’s entire supply chain. The Act is also unique in that it requires companies to respond to information requests about how they address potential and actual impacts on human rights and decent working conditions.

This last point in particular makes the Norwegian Transparency Act different from similar laws, such as Germany’s Supply Chain Due Diligence Act or the UK’s Modern Slavery Act.

The Act comes into effect on1 July 2022. Companies must publish their first reports by 30 June 2023.

APPLICABILITY

Companies registered in Norway, and foreign companies that must pay taxes in Norway, that meet at least two of three criteria:

• At least 50 full-time employees (or equivalent annual man-hours)
• An annual turnover of at least NOK 70 million (£5.9 million, or US $7.94 million)
• A balance sheet sum of at least NOK 35 million (£2.95 million, or US $3.97 million)

REQUIREMENT SUMMARY

Companies need to conduct human rights due diligence activities on their operations and their entire supply chain, including business partners – “any party in the chain of suppliers and sub-contractors from the raw material stage to a finished product”, according to the current text of the Act.

This means they need to take steps to identify, address, prevent and limit violations of human rights or decent working conditions – whether potential or actual impacts. Required activities include implementing the appropriate policies, processes such as risk assessments, and providing or cooperating with efforts to provide remedy for any violations.

The Act also requires companies to report on all of these activities and make this information available on their corporate websites, promoting transparency.

Companies are legally obliged to respond to information requests from members of the public about the risks relating to human rights and decent working conditions in their operations, and their related due diligence activities.

The Act says that the level of due diligence activity should be in proportion to the size of a business and the severity and likelihood of violations. Look at the United Nations Guiding Principles on Business and Human Rights (UNGPs) for more information on what this means in practice.

CONSEQUENCES OF NON-COMPLIANCE

If companies covered by the scope of the law don’t comply with it, they could face fines or injunctions that limit their business activity. These fines and injunctions haven’t been defined yet, but we know they will reflect the severity, scope and impact of an issue.

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