Implementing effective human rights and environmental due diligence legislation

The Norwegian Transparency Act which came into force last month requires certain companies to carry human rights due diligence to ensure they operate responsibly.

This legislation is demanding, as it applies to Norwegian or foreign companies with operations in Norway that meet at least two of the following three criteria:

• 50 or more full-time employees
• Annual turnover of at least NOK 70 million (EUR 6.9 million)
• A balance sheet of at least NOK 35 million (EUR 3.5 million).

They will also be required to report publicly on their activities throughout their supply chain “from raw material to finished product”. They will also have to report publicly on their activities. The law also creates a duty to inform, which means that companies will have to respond to requests for information from any stakeholder about the human rights risks and impacts identified in their operations.

Growth in duty of care legislation

The Norwegian Transparency Act joins a growing list of duty of care legislation since the adoption of the UN Guiding Principles on Business and Human Rights in 2011, starting with the California Transparency Act in 2012 and the UK Modern Slavery Act in 2015. The European Commission published its proposal for a directive on the subject in February 2022, while a draft binding international treaty has been under consideration by the United Nations for several years.

However, despite the push from both hard and soft law, more work is needed to guarantee the corporate respect for human rights and in particular, the effectiveness of human rights due diligence. The policy brief of the UN Special Rapporteur on Human Rights and the Environment, published on 4 July, stated that, “[h]ealth, quality of life and a wide range of human rights are being compromised, ostensibly for the sake of ‘growth’, ‘progress’ or ‘development’, but in reality to serve private interests”. Moreover, the most severe human rights and environmental abuses often take place in poorer areas, where people’s access to remedies, especially for the most vulnerable groups, is often restricted by legal, financial or language barriers.

UN guidance for human rights and environmental due diligence

The Special Rapporteur’s guidance note lists the following key elements to be included in human rights and environmental due diligence legislation:

• Require companies to implement a due diligence process that includes the right to a clean and sustainable environment throughout the life cycle of a project
• Take into account the environment, biodiversity and climate in the duty of care of companies
• Addressing all economic actors, especially small and medium-sized enterprises, focusing on the sectors most at risk
• Require dynamic and continuously improving due diligence
• Focus due diligence on rights holders, including vulnerable groups, by implementing effective and gender-responsive consultation and dialogue with these stakeholders
• Ensure access to remedy for all stakeholders, and protect them from retaliation
• Implement effective monitoring of risks, impacts and measures in place, and
• Encourage legislative harmonisation and international cooperation to facilitate the implementation of the duty of care.

What should companies do to implement effective human rights and environmental due diligence?

In this regard, companies and other business actors should ensure that they integrate the UN recommendations into their due diligence process. The identification, prevention, mitigation and remediation of their human rights risks and impacts must take into account the elements listed by the Special Rapporteur.

In particular, it is essential to adopt a people-centred, not a company-centred, approach. There is also an urgent need to evolve due diligence practices to incorporate climate, environmental and biodiversity issues.

Finally, the Business and Human Rights Resource Centre shows a sharp increase in the number of attacks on human rights and environmental defenders. It is therefore essential to implement accessible and reliable recourse solutions. Many companies are now developing innovative solutions to ensure access to remedy, for example through an SMS system or mobile application.

How GoodCorporation can support you

It is clear that beyond legal considerations, the most advanced companies are committed to meeting the expectations of their stakeholders, not only to protect their reputation but also because they care about doing the right thing. 

The GoodCorporation team is made up of experts and practitioners in the field of ethics, compliance and human rights in particular. We assist groups in a variety of sectors in identifying, preventing and assessing their human rights risks and impacts. For each project, we propose realistic recommendations adapted to the specificities of the company and the sector.