What is the Transparency Act?
The Transparency Act is a Norwegian law passed by the Storting, which entered into force on 1 July 2022. The aim of the Act is to promote businesses’ respect for human rights and decent working conditions, and to ensure the public’s access to information. The Act applies to larger enterprises domiciled in Norway, as well as larger foreign enterprises that offer goods and services in Norway and are liable to tax in Norway according to Norwegian internal legislation.
What is your duty?
The Transparency Act imposes an information duty on businesses and a duty to carry out due diligence assessments. These assessments must be explained in a report to be published no later than 30. June 2023. With the Transparency Act, everyone can demand information from the businesses about how they handle actual and potential negative consequences assessed in the due diligence assessments.
Why is the Transparency Act important?
The Transparency Act is important for several reasons:
Promote human rights and decent working conditions:
The aim of the Act is to increase companies’ respect for basic human rights and decent working conditions. This can help to reduce the risk of human rights violations and poor working conditions in supply chains and businesses.
Increased information and insight:
The Transparency Act ensures the public’s access to information about how businesses handle actual and potential negative consequences linked to their business. This can contribute to increased awareness and commitment from both customers, investors and other stakeholders.
Accountability and trust:
By requiring businesses to publish information about their due diligence assessments and measures to reduce negative consequences, the Transparency Act can contribute to increased accountability and trust in relation to their business practices.
Better basis for decision-making:
When information about companies’ responsible practices is available, both customers and investors can make more informed decisions about which companies they want to support or invest in.
Competition on equal terms:
The law helps ensure that all affected businesses must comply with the same requirements for transparency and accountability. This creates a fairer basis for competition and reduces the possibility that some businesses can gain unfair advantages by having worse working conditions or ignoring human rights issues.
The Transparency Act can motivate businesses to continuously improve their processes and practices, so that they can manage and reduce negative consequences in a more efficient way.
Overall, the Transparency Act contributes to increased transparency, accountability and awareness of human rights and decent working conditions in the business world. This can lead to more sustainable and ethically responsible businesses and better protection of workers and communities affected by their activities.
Who is the Transparency Act for?
The Transparency Act entered into force on 1. July 2022. and applies primarily to larger businesses domiciled in Norway. This includes both Norwegian and international companies operating in Norway, as long as they offer goods and services in the country and are liable to tax in Norway according to Norwegian internal legislation.
Companies covered by the Transparency Act
Businesses that are covered by Section 1-5 of the Accounting Act, or exceed the limits for two of the following three conditions, are covered by the Transparency Act:
- Revenue: NOK 70 million
- Balance amount: NOK 35 million
- Average number of employees in the financial year: 50 man-years
What obligations do traders have according to the law?
Companies that are subject to the Transparency Act or similar regulations are obliged to carry out due diligence assessments and report on them. The duty entails the following:
Identify and assess actual and potential negative consequences:
Companies must identify and assess how their activities and business relationships may affect human rights, decent working conditions and the environment.
Read more about due diligence assessments here: Due diligence assessments under the Transparency Act
Implement, monitor and evaluate measures:
After identifying and assessing the risks, companies must take measures to prevent, reduce and, if necessary, correct any negative consequences.
Companies must monitor and evaluate the effectiveness of the measures taken and make the necessary adjustments to ensure continuous improvement.
What information should you be able to provide?
Companies must publish a report that explains their due diligence process, findings and measures. This must be done in a clear and accessible way, by publishing the report on the company’s website.
Not sure how to enforce the Transparency Act? Read our guide here: Templates for the Transparency Act – a procedure for enforcing the Act’s requirements
Who can request information?
Companies must be prepared to respond to information requests from the general public, customers, investors or other stakeholders who want to know more about how the business handles actual and potential negative consequences identified through the due diligence process.
By meeting these obligations, companies contribute to increased transparency and accountability around their business practices, and they help promote respect for human rights, decent working conditions and the environment.
What you should do in your business now!
The Norwegian Consumer Protection Authority recommends that businesses start with these five points:
- Anchor accountability in the board
- Establish guidelines and corporate culture
- Establishment of a system for the Transparency Act to handle the duty to provide information
- Mapping of supply chains and other business relationships.
- Risk analysis of how big a risk there is of violations of basic human rights and decent working conditions internally, in the supply chains and vis-a-vis other business relationships.
You can find more about these five points on the Norwegian Consumer Protection Authority’s website here:
Get started with the Transparency Act – Forbrukertilsynet
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