The Norwegian Transparency Act: solving five major supply chain challenges

Many businesses operate through a supply chain that is crucial for their existence. However, as countries still require growth and prosperity, stricter demands for transparency and responsibility are set to ensure sustainable development. New sustainability legislation, such as Norway's Transparency Act, highlights this challenge.

The Transparency Act requires all businesses operating in Norway to conduct thorough due diligence assessments if they meet two of three conditions in sales revenue, balance sheet total, or average number of employees. This assessment aims to map, prevent, account for, and address how the business's actual and potential negative impacts are managed. Information regarding the supply chain is part of this.

In February 2022, the EU Commission adopted its proposal for the "due diligence" directive for sustainable business. The Corporate Sustainability Due Diligence Directive (CSDDD or CS3D) directive will come into force in the EU in spring 2024. It has similarities with the Transparency Act, so businesses that adapt to the Transparency Act's requirements will have a significant advantage when the CSDDD is introduced.

Supplier monitoring is closely linked to the Transparency Act, but what do our customers find most challenging about it? We have boiled it down to five key challenges that businesses face when managing their supply chains:

1. It is challenging to get an overview

Gaining a good understanding of the impact suppliers have on society is not an easy task. To do so, one needs information on what the supply chain actually looks like and the guidelines and routines followed. However, obtaining this information can be a challenge. Traditionally, following up the supply chain has involved using heavy Excel sheets, sending emails, making phone calls, and having physical meetings. These manual and person-dependent processes are very time-consuming and prone to human error, which makes it challenging to ensure progress, improve processes, and reduce time usage.

‍If you have any questions or want to learn more about how Factlines can help you with the EU Taxonomy, please click the button at the bottom of this interview.

2. It is challenging to locate data - and know which is important and correct....

Discovering the right data can be a daunting task, raising questions about what to look for, what to ask for, and how to interpret it. Naturally, having knowledge and competence in the field is crucial to ensuring a good data basis. However, many businesses struggle to hire or build the necessary competence internally to effectively handle these challenges.

‍If you have any questions or want to learn more about how Factlines can help you with the EU Taxonomy, please click the button at the bottom of this interview.

3. It is challenging to measure development in the supply chain

Once the data is located, the task of keeping it updated arises, especially given the constant changes in the supply chain. Continuous follow-up of the data basis is demanding and is amplified when the recipients at different suppliers do not share necessary data, do not understand which data is relevant to share, fail to prioritize essential initiatives, or neglect to maintain documentation according to standards such as the OECD framework.

‍If you have any questions or want to learn more about how Factlines can help you with the EU Taxonomy, please click the button at the bottom of this interview.

4. It is challenging to know if you are following the requirements according to current laws and regulations

It is necessary to know and understand which laws and regulations one must follow and what requirements these pose. This understanding is vital to ensure that one operates within the legal framework and complies with all necessary regulations and standards. It must be built internally or purchased if one does not possess this competence.

5. It is challenging to know which tools or services should be used

There are several options to follow up the supply chain and report on relevant sustainability activities. One can engage traditional consultancy agencies and take the costs that come with it, or connect internal resources with more straightforward tools like Excel and email for overview and communication. Another solution is to use survey tools to collect and manage data. Each alternative has advantages and limitations, and the choice should be based on the specific needs and resources of the business.

No matter which solution one ends up with, we recommend automating the processes so that time is freed up for what matters most. This also applies to businesses with their own sustainability department. With Factlines, a supplier can conduct a due diligence assessment once, and then share with all existing and potential customers as often as they want.

Factlines: a cloud-based software developed for efficient follow-up of the supply chain

Factlines Sustainable Supplier Network is adapted to the framework for the OECD and UN Global Compact's ten principles and has been used to map supply chains since 2012.

With Factlines, businesses can:

- Ensure overview

Factlines' cloud-based sustainability software provides a clear and efficient overview of the supply chain, reducing complexity and time-consuming processes.

- Improve data management

Factlines Sustainable Supplier Network enables businesses to easily find and interpret relevant data, supported by a platform aligned with OECD and UN Global Compact's principles. With our Transparency Act guide and user-friendly questionnaires, obtaining better data is simpler than ever. It also becomes easier to identify and prioritize suppliers for closer collaboration.

- Measure development

Factlines Sustainable Supplier Network simplifies continuous supply chain monitoring, keeping information up-to-date with minimal effort. The survey automatically saves responses, giving suppliers greater control over their data and enabling easy and frequent updates.

- Comply with legislation

Factlines Sustainable Supplier Network ensures compliance with relevant laws and regulations, simplifying the complexity of legal requirements, including our continuously updated Transparency Act guide and templates.

- Reduce time spent (!!)

Factlines Sustainable Supplier Network was developed for monitoring and reporting and is a smart choice for supply chain management. Being part of the network, suppliers might also conduct due diligence assessments just once and share them as desired, as often as wanted.

December 2023
Sustainable supply chains