Why the Transparency Act Is Important for a Sustainable Future

The Transparency Act: A Key to a Sustainable Future

The Transparency Act, which came into force in Norway on July 1, 2022, is a key instrument for promoting responsible business practices, ensuring decent working conditions, and safeguarding fundamental human rights in global value chains. The law requires large Norwegian companies, as well as foreign companies with significant activity in Norway, to conduct thorough due diligence assessments of their suppliers and publish statements outlining how they work to ensure ethically sound operations. By adhering to the principles of the Act, companies can not only reduce the risk of unethical practices but also contribute to a more sustainable development of our planet.

Protecting Human Rights and Working Conditions
The Transparency Act sets a clear requirement for businesses to identify and address the risk of human rights violations throughout their value chains. This means not only preventing child labor, forced labor, or discrimination, but also promoting working conditions that support safe, inclusive, and dignified workplaces. By complying with these obligations, companies help improve the living conditions and quality of life for millions of workers worldwide, while also reducing exploitation. This direct positive impact on people can in turn contribute to more stable societies, which lays the foundation for sustainable economic and social development.

Reducing Environmental Impact
Although the Transparency Act primarily focuses on human rights and working conditions, increased transparency and accountability often lead to more environmentally conscious decisions. Companies that actively work to prevent unethical practices tend to have a broader sustainability perspective. This may include choosing suppliers with more eco-friendly production methods, reducing long-distance transportation, or ensuring that raw materials are sourced responsibly. A company that places ethical trade at the center often embraces a holistic view of sustainability—where waste reduction, efficient use of resources, and a lower carbon footprint are essential. The result is a value chain that is not only fair but also more gentle on the planet’s ecosystems.

Risk Management and Reputation Building
For companies, legally mandated transparency and thorough documentation serve as a form of risk management. By closely monitoring their suppliers and subcontractors, businesses can identify and prevent potential violations of labor and human rights before they escalate and harm both people and nature. This reduces legal risk and minimizes the chances of negative media attention or consumer boycotts. Thus, the Transparency Act also helps safeguard corporate reputation and makes companies more attractive to customers, investors, and talented employees who want to be part of a business that takes social responsibility seriously.

Consumer Awareness and Market-Driven Change
An important side effect of the Transparency Act is that consumers gain better insight into how the products they buy are made. When companies disclose information about conditions in their value chains, consumers can make informed choices based on ethical and sustainable criteria. This demand creates incentives for the entire value chain to improve. As a result, the market becomes a driver for more responsible production, ultimately creating a positive cycle of continuous sustainable improvement.

Contributing to Global Sustainability Goals
The Transparency Act aligns well with the work toward the UN Sustainable Development Goals, particularly those focused on decent work, reduced inequalities, and responsible consumption and production. By complying with the Act, companies contribute to achieving these goals in practice. This is important because global challenges—such as climate change and the unjust distribution of resources—can only be addressed if governments, businesses, and civil society work together. The Transparency Act helps establish the framework for such coordinated efforts.

Conclusion
The Transparency Act plays a crucial role in creating a more just and sustainable world. By setting clear requirements for openness and accountability, it compels businesses to make ethically responsible choices throughout their value chains. This leads to stronger protection of human rights, safer working conditions, environmental benefits, and enhanced global cooperation on sustainable development. Complying with the Transparency Act is therefore not just a legal obligation—it is an investment in our shared future on this planet.