Norwegian Transparency Act
The Norwegian Transparency Act (Åpenhetsloven) is a law requiring larger enterprises to conduct human rights due diligence and ensure decent working conditions across their supply chains. Entering into force on 1 July 2022, the Act grants the general public the right to request information about how companies address actual and potential adverse impacts on fundamental human rights and decent working conditions. This legislation moves beyond voluntary reporting, making supply chain transparency a legal obligation for companies operating in or selling to the Norwegian market.
Why it matters
For procurement professionals, the Norwegian Transparency Act represents a critical shift in how supply chain data must be managed and disclosed. It is not enough to simply know your suppliers; you must now be prepared to share that knowledge with consumers, trade unions, and journalists upon request.
Compliance with the Act is essential for several strategic reasons:
- Legal compliance and market access: The Act applies to larger enterprises that are resident in Norway, as well as foreign enterprises that offer goods and services in Norway and are liable to tax there. Failure to comply can result in enforcement penalties and fines from the Norwegian Consumer Authority.
- Managing human rights risks: The Act specifically targets fundamental human rights and decent working conditions. By adhering to its requirements, procurement teams can systematically identify and mitigate risks such as forced labour, unsafe working environments, and inadequate wages, protecting the organisation from operational and reputational damage.
- Meeting stakeholder demands for transparency: Uniquely, this Act includes a “right to information.” Any person can ask your company for information about how you address adverse impacts. Being prepared for these requests builds trust with stakeholders and demonstrates a genuine commitment to ethical sourcing.
- Operational efficiency: The due diligence required by the Act aligns with the OECD Guidelines for Multinational Enterprises. Implementing these processes streamlines your approach to risk management, allowing you to address issues proactively rather than reactively.
How it works / key points
Enterprises must embed responsible business conduct into their policies and management systems. This involves establishing clear guidelines for suppliers and internal teams regarding human rights and decent working conditions.
You must identify and assess actual and potential adverse impacts on fundamental human rights and decent working conditions. This requires mapping your supply chain and evaluating risks related to your own operations, your supply chain, and your business partners.
Where risks or adverse impacts are identified, companies are obligated to implement measures to cease actual adverse impacts or mitigate potential ones. This might involve revising supplier contracts, collaborating on corrective action plans, or changing sourcing strategies to avoid high-risk areas.
You must track the implementation and results of your measures. This ensures that the actions taken are effective and that they are actually reducing risk or improving conditions for workers.
Companies must publish an annual account of their due diligence by 30 June each year. This report must be easily accessible on the company’s website. Additionally, companies must respond to information requests from the public within three weeks.
Examples
A Norwegian fashion retailer receives a request from a consumer asking about the working conditions in the factories producing their t-shirts. Because the retailer has mapped its supply chain and conducted due diligence under the Act, they can respond within the three-week deadline, providing clear information about their suppliers' labour standards and the specific measures taken to ensure decent wages.
During a risk assessment, a seafood company identifies concerns about unsafe working conditions in its packaging supply chain, such as inadequate protective equipment and emergency preparedness. In compliance with the Act, the procurement team collaborates with the supplier to implement a corrective action plan, including providing safety training, updating safety protocols, and conducting independent audits. Progress is tracked and reported in the company’s annual statement.
An electronics firm establishes a third-party whistleblowing channel accessible to workers in its component factories. This mechanism allows the company to identify adverse impacts directly from the source, fulfilling the Act's requirement to track and address issues related to decent working conditions.
About Sedex
Sedex is a global technology company that specialises in data, insights and professional services to empower supply chain sustainability. Our platform, tools and services enable businesses to easily manage and improve their environmental, social and governance (ESG) performance to meet their supply chain sustainability goals.
