The Transparency Act - fundamental human rights and decent working conditions
On 14 June 2021, the Parliament passed the new Transparency Act. The Transparency Act shall promote companies' respect for fundamental human rights and decent working conditions and ensure the public access to information on how companies handle negative consequences for fundamental human rights and decent working conditions.
The Act applies to larger enterprises which are domiciled in Norway, and which offer goods or services in or outside Norway, as well as foreign enterprises which are taxable in Norway, and which offer goods or services in Norway. Larger enterprises means enterprises that are covered by the Accounting Act § 1-5, which mainly means listed companies, or companies that meet at least two of the following three conditions:
- Sales revenue exceeding NOK 70 million
- Balance sheet total exceeding NOK 35 million
- The average number of employees in the financial year exceeds 50 man-years
1. Duty to perform due diligence assessments
The companies covered by the Transparency Act must carry out due diligence assessments in accordance with the OECD's guidelines for multinational companies. The due diligence assessments only apply to matters on which the business has a certain impact, which presupposes a certain connection between the business and the risk.
According to OECD guidelines, due diligence assessments for responsible business consist of six steps:
- Anchor accountability in policies and management systems. The guidelines should be adopted by management and include the entire business, supply chain and business associates.
- Map and assess negative impact / damage from own business, supply chain and business relationships. This is about first forming an overall risk picture, and then prioritizing risk areas for more thorough mapping and measures.
- Based on the findings in step two, the company shall develop and implement plans and routines to stop, prevent or reduce negative impact / damage.
- Monitor implementation and results. The key is to ensure that the company has enough information to assess whether the measures work.
- Communicate with affected interests how the company has handled the negative impact / damage.
- Provide for, or cooperate with, recovery and compensation where required.
2. Duty to account for the due diligence assessments
The companies must publish a report on the due diligence assessment. The report must be updated and published by 30 June each year. The statement must at least contain:
- A general description of the company's organization, area of operation and guidelines for dealing with potential or actual consequences for human rights and decent working conditions.
- Information on actual negative consequences and significant risk of negative consequences for fundamental human rights and decent working conditions.
- Information about measures the company has implemented or plans to implement to stop actual negative consequences or limit risk, and the result or expected result of the measures.
3. Duty to provide information
The company must provide information on how the company handles actual and potential negative consequences for fundamental human rights and decent working conditions to anyone who submits a written request. This includes both general information and information related to a particular product or service that the business offers.
4. Guidance, supervision and penal sanctions
The Norwegian Consumer Authority will provide guidance on the Transparency Act and supervise that the provisions of the Act are complied with. In the event of repeated violations of the law, a violation fee may be imposed. The amount of the fee shall be determined according to the seriousness, extent and effect of the infringement. In addition, companies that do not comply with decisions given by the Norwegian Consumer Authority may be fined.
The Act will probably not enter into force until 2022, but the final date has not been adopted.