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Key Points and Differences between the Norwegian Transparency Act and proposed EU Directive on Corporate Sustainability Due Diligence

The draft directive on corporate sustainability due diligence (“CSDD-directive”) is still in the making, but with a draft from the European Commission and the Council of the European Union negotiating position established, we have compared the obligations in the draft directive with the obligations following from the Norwegian Transparency Act.

Both legal instruments are based on the OECD guidelines for multinational enterprises and the Human Rights Due Dilligence (HRDD)-procedure established in the OECD guidelines.

The Scope of the Companies Covered by Due Diligence Obligation


The draft Directive only covers the largest companies in the EU. The draft Directive will apply to EU companies that are formed in accordance with the legislation of a Member State and have

(a) more than 500 employees on average and a net worldwide turnover of more than EUR 150 million; or

(b) more than 250 employees on average and a net worldwide turnover of more than EUR 40 million, provided that at least EUR 20 million was generated in “high-risk” sectors, such as textiles and agriculture.

The draft Directive will also apply to non-EU companies that have:

(a) a net turnover of more than EUR 150 million in the Union; or

(b) a net turnover of more than EUR 40 million but not more than EUR 150 million in the Union, provided that at least EUR 20 million was generated in one or more of the “high-risk” sectors.

The draft Directive will apply to companies that have met the above-mentioned criteria for two consecutive financial years.

The draft Directive suggests a two-year transition period, allowing the companies an adaptation period. Furthermore, the draft Directive introduces a phased-in approach to implementation of the rules based on the size of the companies.

The Council has suggested in its general approach that the applicability of the Draft Directive to financial services be optional. If this approach is adopted in the final CSDD-directive, each EU Member State will be able to decide for itself whether to include financial services within scope when implementing the Directive into national law.

The Norwegian Transparency Act

The Norwegian Transparency Act applies to a much wider set of companies, as the threshold for falling under the Transparency Act is much lower. A company falls under the scope of the Transparency Act if it exceeds two of the three following conditions:

    1. Sales revenues: NOK 70 million (ca. EUR 6,37 million)
    2. Balance sheet total: NOK 35 million (ca. EUR 3,19 million)
    3. Average number of employees in the financial year: 50 full-time equivalent

The Scope of Obligations

The draft Directive sets out companies’ obligations to carry out human rights and environmental due diligence. The environmental due diligence is connected to the Paris agreement.

The Transparency Act requires due diligence of fundamental human rights and decent working conditions.  Adverse impacts on the environment may, however, indirectly fall within the scope of the Transparency Act if they lead to adverse impacts on human rights.

The Due Diligence Process

Both instruments are based on the OECD guidelines

The Transparency Act and the draft Directive both refer to the OECD guidelines’ due diligence process. While the Transparency Act refers to the OECD Guidelines for Multinational Enterprises and states that the due diligence process should be carried out in accordance with them, the draft Directive incorporates the due diligence process step by step.

Supply chain vs. chain of activity

While the EU Commission initially suggested the term “value chain”, the Council changed it to “the chain of activities”. Chain of activities has a more specified meaning focusing on a company’s suppliers and leaving out the uses of the company’s products or provision of its services.

The Transparency Act refers to “supply chain” and “business partners” when defining the scope of the due diligence. Supply chain means any party in the chain of suppliers and sub-contractors that supplies or produces goods, services or other input factors included in an enterprise’s delivery of services or production of goods from the raw material stage to a finished product.

At this stage it is thus unclear whether there will be a difference in how far the obligation to perform due diligence throughout the value chain will go in the CSDD-directive, and thus if it will correspond to the obligation found in the Transparency Act.


The draft Directive states that companies must report by publishing an annual statement on their website in a language customary in the sphere of international business.

The draft Directive provides the possibility for persons and organizations to submit complaints to the companies where there are legitimate concerns regarding actual or potential adverse impacts with respect to their own operations, the operations of their subsidiaries and the operations of their business partners in the companies’ chains of activities.

The Transparency Act correspondingly demands that the enterprises publish an account of due diligence that fulfills criteria specified in the Act. Unlike the draft Directive, the Transparency Act gives the general public the right to demand information from an enterprise regarding how the enterprise addresses actual and potential adverse impacts, upon a written request. This includes both general information and information relating to a specific product or service offered by the enterprise.

Civil liability and the right to compensation

The civil liability provisions in the draft Directive states that companies can be liable for intentional or negligent failures to comply with the obligations to prevent or bring adverse impacts to an end, where such failures lead to damage to a natural or legal person. The liability is not limited in cases where contractual assurance from business partners has been sought. The draft Directive states, however, that companies cannot be held liable of the damage was caused only by its business partner in it chain of activities.

In cases where the company is held liable for failures as mentioned above, a natural or legal person will have a right to full compensation for the damage occurred in accordance with national law.

The Transparency Act, unlike the draft Directive, does not have a corresponding provision stating the right to full compensating for damages to natural or legal persons. However, as part of the due diligence process the companies must provide remediation and compensation where this is required. Financial compensation may be one possible remediation.

Hjort has extensive experience in assisting both Norwegian and international companies in designing and implementing effective and risk-based internal control systems.