In July 2022 the Norwegian Transparency Act came into effect, requiring all “larger enterprises”, as defined by the Act, operating in Norway to publish a written Due Diligence Report, assessing the risk of negative impacts to fundamental human rights and decent working conditions throughout their business and supply chain. What does this mean for your company?
Avoid penalties by adhering to the Norwegian Transparency Act
The Consumer Authority in Norway is responsible for monitoring compliance with the Transparency Act. The Consumer Authority will be relying in some part on filed complaints from the public, as well as performing controls on their own initiative. To ensure compliance, the Consumer Authorities may issue prohibitions, orders and penalties based on their assessments.
The penalties issued by the Consumer Authority is based on the severity of the violation of the Act and can be up to 4% of the annual turnover of the company, or 25 million NOK, where the larger of the two amounts can be used.
When considering the penalty, the Consumer Authority will assess the severity of the violation, such as failure to report or not providing required information, if the violation was preventable, if the violation was made in bad faith or for the enterprise to benefit from, and the preventive effect a fine would have on other actors in the business.
Need help with your Due Dilligence report?
Our legal team is more than happy to assist. Contact us today!
Learning from past experience
With the first deadline for publishing the Due Diligence Report behind us, it is time to look ahead to the next steps that any business directly or indirectly covered by the Act should consider.
It is important to note that compliance with the Transparency Act is a matter of continuous work, and not something that should be postponed to the last month before the regular deadline.
Also read: The Norwegian Transparency Act
Conduct a Due Diligence
A natural starting point for businesses looking to improve upon their responsibilities related to the Transparency Act, is to assess the process that went into performing the previous Due Diligence. From our own experience with working with the Transparency Act, the first report provided valuable lessons in terms of optimizing future assessments.
Most larger enterprises in Norway are dependent on smaller businesses to perform their business, who are not themselves directly obligated by the Transparency Act to publish a Due Diligence Report. In our experience, these smaller businesses can be reluctant in spending time and effort to provide the information the larger enterprises need to execute a thorough risk assessment of their supply chain, especially for their suppliers’ sub-suppliers.
As such, it is our recommendation that the suppliers of larger enterprises are made aware of the obligations the larger enterprise has to perform the Due Diligence, and that clear expectations in terms of what information will be requested, and when, is communicated to all suppliers.
Do you need help with the Act and conducting a Due Diligence?
Magnus Legal are available assist, by analyzing where improvements in routines and existing procedures of corporate government can be made, as well as suggesting new implementations.
Need help with your Due Dilligence report?
Our legal team is more than happy to assist. Contact us today!
