Norway’s Transparency Act came into force in July 2022. The Act requires in-scope companies to conduct due diligence on human rights and decent work risks in line with OECD due diligence guidance. Companies will be required to publish the results of their due diligence for the first time by 30 June 2023.
The Act includes a right to information provision which allows stakeholders to request information from companies on their due diligence, products and services. The right to information provision is already in force and companies should already have systems in place to manage information requests.
About the Norway Transparency Act
- The Norway Transparency Act (the Act) came into force in July 2022.
- It sets out a duty for companies covered by the Act to (i) conduct human rights due diligence, (ii) publish an annual report on due diligence, and (iii) respond to requests by stakeholders under the right to information provision.
- The Act covers larger companies domiciled in Norway, and large foreign companies selling products and services in the country. Both supply chain and own operations are covered, from raw material to finished product, all sub-contractors, and all business partners. The law will likely not cover downstream relationships associated with the end of life of a product, but will likely include recycled items (e.g., recycled fabrics used for a final product) where these are incorporated into the supply chain upstream.
- The requirement to conduct due diligence follows OECD due diligence guidance but is limited to human rights and decent work. Due diligence on living wages is specifically called out. The Act covers environmental risks where these have an adverse human rights impact.
Companies are required to publish the results of their due diligence by 30 June each year, with companies reporting for the first time in 2023. This reporting period aligns with the requirements of the Norwegian Accounting Act. Companies are also expected to publish an updated report if there are significant changes to the company’s risk assessments.
- The provision on right to information enables all stakeholders, both those in Norway and outside of Norway, to request information from companies on their due diligence, including on specific products and services. Companies won’t be required to share their production sites with stakeholders.
Companies must respond unless they have a firm basis for not doing so, but these are overridden if the request relates to adverse impacts on fundamental rights that the company knows about. The principle of proportionality applies under the Act and larger businesses will have to go further and provide a more comprehensive response to stakeholders.
- The Consumer Protection Authority (CPA) is responsible for monitoring compliance with the Act. CPA has the right to impose sanctions for breaches, but the intention is that sanctions are a last resort. We expect the CPA to exercise its power when it comes to the right to information provision.
Implications for companies
- The Act’s regulator, the Consumer Protection Authority (CPA), has stated that it understands that companies need the opportunity to familiarise themselves with the provisions of the new law. However, it expects companies to be in the process of applying the Act now, to have the systems in place to receive and respond to information requests, and to have started assessing the full scope of human rights risks across their supply chains.
- Companies should ensure that they have the necessary systems to respond to right to information requests. We expect to see strong and coordinated submissions by civil society. Civil society is already familiar with the usage of a similar provision in Norway’s Environmental Information Act and has been able to influence companies and investors through this provision.