Norway’s Transparency Act went into effect on July 1, 2022. Companies covered by this legislation must disclose the due diligence assessments they conduct, and anyone who requests information is entitled to a response. The purpose of the law is to promote respect for human rights and decent working conditions, as well as to ensure the public has access to relevant information. In essence, it’s about preventing negative impacts on people both within and outside the organization.
Who Does the Transparency Act Apply To?
The Transparency Act applies to what Norway’s Accounting Act defines as large and medium-sized enterprises—businesses that meet at least two of the following criteria:
- Annual turnover exceeding NOK 70 million (MNOK)
- A balance sheet total exceeding MNOK 35
- An average of at least 50 employees during the financial year
If your company meets two out of these three criteria, you fall under the Transparency Act. This also includes foreign companies offering goods and services in Norway and subject to Norwegian taxation.
Three Key Elements of the Transparency Act
Previously, it was enough to conduct legal operations, but now you must document the legality of your business activities and also impose requirements on your suppliers. The Transparency Act isn’t just something you can address in the weeks leading up to the June 30 reporting deadline—it demands continuous effort and should therefore be incorporated into your internal control system.
- Conduct Due Diligence
You must assess whether the company operates responsibly in terms of human rights and working conditions, following the OECD’s guidelines. The goal is to identify any risks of violations and implement measures to reduce or compensate for potential negative consequences. - Report on Your Due Diligence Assessments
The company must describe its organizational structure, areas of operation, policies, and procedures. You should disclose both actual and potential negative impacts, including indirect risks through your supply chain, as well as any measures you have taken or plan to take. This report is attached to the annual report and must be updated when significant changes occur. - Public Right to Information
This due diligence report must be published, typically on the company’s website. Anyone can request details on how you perform due diligence for a particular product, service, or the business as a whole. You have three weeks to respond, extended to two months if the request is particularly extensive. Norway’s Consumer Authority (Forbrukertilsynet) can impose daily fines or penalties for non-compliance.
Practical Due Diligence
Mapping your supply chain is often the most challenging aspect of the Transparency Act, especially for organizations with hundreds or even thousands of suppliers. Many Norwegian companies are already in a strong position because they comply with national rules on basic human rights and decent working conditions.
A good starting point is to identify where risks are highest—specific countries, industries, or product categories—and then decide on concrete measures. Complying with the Transparency Act is an ongoing process involving multiple parts of the organization throughout the year.
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How Day-to-Day Compliance Is Carried Out
It’s essential that responsibility for this doesn’t fall to a single employee without real influence. Because the act often affects multiple business areas, key personnel must have ownership of the tasks related to the Transparency Act.
Digital Tools as Support
Purchasing teams, for example, need adequate knowledge of the law and tools that enable them to follow up with suppliers independently. Policies and guidelines are well and good, but they need to be anchored in the company’s operations and integrated into actual workflows.
Much Already in Place Under Norwegian Law
Some may view human rights as somewhat abstract, but in Norway, a range of legal provisions already ensures compliance with these requirements. This makes it easier to spot any gaps, as you have a more concrete benchmark of what to measure against.
Handling Information Requests
Requests for information must be taken seriously. You have three weeks to respond, so make sure inquiries don’t land in the wrong inbox. A dedicated section on your website explaining how you handle human rights—and where to direct queries—can save time.
Standard Templates
It’s a good idea to create templates for responding to information requests. That way, you can quickly deliver a professional, consistent explanation of your strategies, policies, and measures. Keep in mind that the Transparency Act stipulates both identifying and addressing risks—and that you can provide evidence of these efforts.
The Transparency Act Can Open New Business Opportunities
Although the act involves additional work, it can also create value:
- Enhanced Reputation: Customers and employees alike appreciate when a company takes human rights and working conditions seriously.
- Reduced Risk: Unscrupulous suppliers often carry higher operational risk. By excluding them, you avoid financial and reputational damage.
- Competitive Advantage: A well-managed supply chain gives you a stronger position in both domestic and international markets—especially since more countries are enacting similar laws.
How to Comply with the Transparency Act in Business Online
The Transparency Act requires ongoing work across different parts of the company. Business Online offers a special Supplier Evaluation add-on that simplifies systematic assessments of each supplier. The system automatically assigns a score based on completed questionnaires, making it easy to pinpoint areas of concern.
In Business Online, you can also create templates for responding to information requests. Each template is assigned a version and revision number, and the latest approved version is always easily accessible in the document library. This minimizes response time and ensures that all replies are kept up-to-date.
Your company’s compliance with the Transparency Act can be documented in your compliance manual, stored within the Business Online QHSE module. Here, you can collect and categorize all necessary policy documents.
If you’d like more information on how to maintain compliance with the Transparency Act using Business Online, feel free to reach out for a consultation.