The Norwegian Consumer Authority publishes findings after having reviewed the Transparency Act annual reports of 500 companies

As reported in our previous newsletter regarding the Transparency Act (link here) the Norwegian Consumer Authority announced this summer that they will increase their monitoring activities to ensure that companies are complying with the requirements of the Act. The Consumer Authority have followed-up on this, and recently issued a press release (link here) summarizing their findings after having reviewed the annual reports of 500 companies. The findings suggest that a considerable number of companies have not published reports in line with the requirements of the Transparency Act.

The 500 examined companies are all assumed by the Consumer Authority to be encompassed by the Transparency Act based on publicly available accounting information. They were chosen randomly, regardless of size and business sector.

Of the 500 companies examined, around 100 have reportedly violated the requirement that the annual report is to be published on the company's website. The Consumer Authority have issued letters to each of these companies, where they also remind the recipients that non-compliance may be met with financial sanctions.

As to the 400 remaining companies, the Consumer Authority notes that the reports vary in quality, and highlight the following:

• Companies do only to a small extent report on adverse impacts uncovered. Over a third of the examined companies have either not reported anything on adverse impacts or simply stated that they have not uncovered adverse impacts;
• Companies do only to small extent report on initiated or planned measures, i.e. measures to prevent, mitigate or remedy adverse impacts. Around a third of the examined companies do not mention such measures at all;
• Some companies have published a text regarding the Transparency Act, but it is not clear whether the text is meant as an annual report as it is undated, unsigned and does not state what period it refers to;
• Many of the examined companies are part of a group. It is often unclear which of the companies the reports are meant to cover, and the reports are also not very specific when it comes to risk associated with the different business areas within the group;
• Many enterprises appear to have solved the due diligence work by distributing forms, code of conducts or similar, without following-up on the work with specific risk assessments and measures to address the risk.

The findings are generally in line with what we in Schjødt's Corporate Compliance team have noted from our experience when working with matters involving the Transparency Act. We have also noted several cases where companies limit their risk assessments to tier 1 suppliers, despite of the Act requiring companies to consider the supply chain as a whole (including sub-suppliers of any tier).

The Consumer Authority states that they intend to continue their monitoring activities to ensure that the requirements of the Transparency Act are being met, and their recent press release clearly demonstrates that they are committed to follow-up on this. Companies should therefore carefully review the latest signals from the Consumer Authority, including the findings above, and consider whether their due diligence work are in line with the Consumer Authority's expectations. Companies should in particular bear in mind that the due diligence work is an ongoing exercise, where companies are expected to continuously assess the risk of violating human rights and decent working conditions in their own operations, in the supply chain and with respect to business partners, and to work in a systematic way to prioritize and address these risks. 

We specifically recommend companies to revisit and update their risk assessments and planned measures, and to plan for measures going into 2024 already now, to ensure their due diligence work are aligned with the Consumer Authorities' expectations as expressed above. Schjødt's Corporate Compliance team have extensive experience in dealing with all matters related to the Transparency Act, and remains ready to assist in this regard.