Entered into force on 1 July 2022, the Norwegian Transparency Act focuses on requirements for ‘larger’ businesses to adopt measures aimed at safeguarding human rights, both in their own operations and across value/supply chains, Vincent Gustavi, Skuld’s Chief Compliance Officer explains.
In an article published on Skuld’s website, Vincent Gustavi highlights the three main pillars of the legislation. These are as follows:
- a duty to carry out due diligence to assess actual and potential areas of concern;
- an obligation to provide an annual account of this process (in a report published before 30 June each year); and
- a ‘right to information’, whereby companies must respond to questions from the public concerning relevant human rights and working condition issues.
Using Skuld as an example, Vincent explains that not only must the company assess and document any actual and potential issues and risks within its own global network of offices, but it also needs to repeat the process for its suppliers. In Skuld’s case that amounts to several hundred companies, ranging from IT service suppliers and lawyers, through to surveyors and salvage firms.
Skuld’s methodology involves “a risk-based approach”, whereby businesses are categorised based on factors such as the type of service they provide, their location, their size, and so on, with the highest risk businesses – and these ‘risks’ can range from health and safety factors, to forced labour, freedom of association, discrimination, potential child labour, etc. – singled out for further action.
A mapping process follows, including assessments, and questionnaires to understand individual company approaches to human rights and the provision of decent working conditions.
Next steps are then considered on a case-by-case basis, with any incidences of non-compliance followed up, often with timescales given to address potential issues.
With so much understandable emphasis on the E of ESG, it’s great to see an Act that really puts the S centre stage.
Getting back to the relevance of the law for companies outside Norway, and the shipping industry in general, Vincent points to an evolving regulatory landscape increasingly defined by those three aforementioned letters.
Norway, Vincent points out, is an early mover rather than an outlier in this regard. The EU is currently working on the Corporate Sustainable Due Diligence Directive, which will expand requirements for transparency and reporting, while in January this year Germany introduced the new Supply Chain Act, with a similar scope to the Norwegian legislation. All these laws share a foundation in OECD guidelines for responsible business and the UN Guiding Principles on Business and Human Rights.
A standard is being set here. There’s a clear trend that is moving from a local to a global basis, and our members should be aware of that.
