Compliance | What to report under the Norwegian Transparency Act? Part 3: Adverse impacts and risks

The first reporting deadline under the Norwegian Transparency Act (Nw. Åpenhetsloven) (“Transparency Act”) is approaching quickly. Our first newsletter addresses the questions “why”, “how”, “where” and “when”. But what to report? In addition to providing an overview of the business operations as discussed in our previous newsletter (Part 2), companies are required to provide information on adverse impacts on fundamental human rights and decent working conditions.

According to the Transparency Act (Section 5), the annual reporting must include information on actual adverse impacts and significant risks of adverse impacts on fundamental human rights and decent working conditions that the company has identified through its due diligence. This includes impacts that the company caused, contributed to or to which it is directly linked, either through its own operations, products or services or through its supply chain or business partners.

Thus, companies do not need to report all the impacts and risks that were identified during their due diligence process. But which risks are to be considered “significant”? Relevant factors are both the likelihood and the severity of the adverse impact for the people affected by it. This must be assessed on case-by-case basis.

Companies may choose not to limit their reporting to actual adverse impacts and significant risks, but report on less significant risks as well. In that case, it is according to the Consumer Authority important that the report distinguishes between the different types of risks. In addition, companies may include information on how they prioritise the various risks and based on what criteria.

The reporting on actual impacts and risks is key for more transparency and promoting society’s efforts on the protection of human rights.

Practical insights

Level of detail

We recommend that companies aim for a reporting format that supports the purpose of the Transparency Act and that allows other companies and the public to improve their own work with fundamental human rights and decent working conditions. Under certain circumstances, it might also make sense to refer to other companies’ reports in the same supply chain for specific risks. Make sure the identified actual impacts and significant risks are described adequately and put into context with the overall business operations.

Assess the boundaries of lawful public disclosure carefully

Companies need to carefully assess what information they are legally required and allowed to publish in their report. The Transparency Act itself states a few exemptions that may apply. However, there may be other legal restrictions to the disclosure of information in particular in connection with actual adverse impacts, such as, but limited to, orders by prosecution authorities or courts.

Questions? Do not hesitate to reach out to our Compliance & Risk Management team.