The Transparency Act; what is the impact of the due diligence assessments?
Many companies feel that the Transparency Act is an innovation in all areas. This is incorrect. In this connection, reference is made to statements from Frode Elgesem, who is a judge in Borgarting Court of Appeal and head of Norway’s contact point for responsible business, to Rett24.no on 22 March 2022.
“The OECD’s guidelines on responsible business are currently endorsed by 50 countries and are the governments’ common expectations for the industry to act responsible and thereby contribute to sustainable development. Over the years, various Norwegian governments have clearly expressed the expectation that Norwegian businesses know of and comply with the OECD’s guidelines. This applies not least to the duty to respect human rights and to ensure trade union rights and decent work. The duty to carry out due diligence assessments in line with the OECD’s guidelines, cf. Section 4 of the Transparency Act, is therefore nothing new, on the contrary, it is something that has been expected by the industry for a long time”.
Pursuant to Section 3-3 c of the Accounting Act, guidelines are also given for large companies; including:
“Large companies shall prepare a report on social responsibility which at least deals with environment, social conditions, working environment, equality and non-discrimination, compliance with human rights and preventing corruption and bribery. The information shall be provided to the extent necessary to understand the company’s development, results, position and consequences of the company’s business.”
When it is now hopefully clear that the due diligence assessments are not an innovation, the question is whether the assessments should only apply upstream or whether downstream should also be included. Frode Elgesem has once again contributed with wise inputs to this assessment. In an editorial in Lov og Rett 23 May 2023, Elgesem inter alia points out the following:
“…the companies – in addition to due diligence assessments relating to activities with suppliers and business partners – have a duty to carry out due diligence assessments in order to map and manage any negative impact on human rights and decent working conditions that the business itself causes or contributes to.”
Further, Elgesem writes:
“An investor, lender, consultant or lawyer must also map and manage risks of negative consequences for basic human rights and decent working conditions that they contribute to. This applies even if they are directly caused by companies they have invested in, by borrowers, customers or clients. Thus, risks related to downstream activities are included. If you contribute or risk contributing to human rights violations, you must stop the contribution or introduce measures to prevent the risks. If you have contributed to violations, you have a duty to ensure, or cooperate on, restoration and compensation.”
The above circumstances mean that many companies may have to expand the work that has been done in the business.
The Transparency Act stipulates that the businesses must have ownership of their work with the Transparency Act. Over many years, SANDS’ experts have worked up considerable expertise in assisting clients in their compliance work, for example when carrying out due diligence assessments and implementing compliance work in the business and towards third parties. Through close dialogue and follow-up with the clients, SANDS’ experts have taught, guided and quality assured the businesses’ work. Naturally, our assistance is adapted to the needs and resource situation of each individual business.
How can we assist?
The Transparency Act stipulates that the businesses must have ownership of their work with due diligence assessments. At the same time, the Transparency Act requires that expertise is worked up and that the businesses must do a thorough job of updating routines, guidelines and templates. Therefore, we believe in a model where the business has an active participation in the project. Through close dialogue and follow-up, SANDS can teach, guide and quality assure the work of the business. We can also take part in the project group or assume responsibility for the process if desired. Naturally, our assistance is adapted to the needs and resource situation of each individual business.