The European Lawyer

Norway Corporate Counsel

4 Feb 2012

CSR World - Norway

Editors: Advokatfirmaet Selmer DA Thomas G Michelet, Per Harg andØyvind Schage Førde

CORPORATE SOCIAL RESPONSIBILITY IN GENERAL

1. CSR values and practices, including levels of support from government, business and the general public

In recent years there has been an increasing focus on ethical business standards in Norway, reflected in the state’s commitments under numerous international treaties on corruption, human rights, the environment and other issues. Norwegian legislation includes a range of CSR elements. There has also been a growing tendency among major companies and private and public investment funds to define their own CSR standards, and the stronger focus on CSR is also reflected in the business schools’ and universities’ educational programmes. Discussions on corporate governance led in December 2004 to the adoption of the National Codes for Corporate Governance by a working group of representatives from the Oslo Stock Exchange and various business and professional organisations. There are also examples of increased focus on CSR principles in the Limited Companies Acts. Furthermore, there is a growing focus on CSR among consumers, shown in the increased demand for ecological products in recent years. Concerns about the ‘product history’ also show a decreased tolerance for products made in countries in breach of human rights.

Traditionally, environmental protection has been central to discussions on CSR in Norway. An example of discussions on industrial strategy in which CSR has figured is the dispute over whether to allow, from a CSR standpoint, the establishment of gas energy plants in Norway that may be recommended from a purely commercial standpoint. Two other incidents that have hit the news involve Norway’s two largest companies, Norsk Hydro ASA and Statoil ASA. Norsk Hydro decided to stop a major mining project in India mainly due to local and domestic protests, while Statoil was fined for entering into a consultancy agreement related to petroleum activities in Iran that was considered to involve corruption.

2. Laws, statutes, government publications or other significant framework documents

Norway is not a member of the EU, but has obligations towards EU legislation, regulated by the European Economic Area (EEA) Agreement. Norway has undertaken a direct obligation to implement EU directives and regulations within the fields covered by the EEA Agreement into domestic legislation, and consequently, all such EU rules related to CSR also apply in Norway. There is no separate act on CSR per se in Norway. However, CSR principles are included in numerous acts and regulations, stipulating eg gender quotas on boards of directors, employees’ rights and various environmental standards. There are several industry standards including CSR elements. Well-known environmental criteria are set out in the Svane and Debio standards, which can be used by in-compliance products and are normally regarded as providing competitive advantage.

3. International treaties, conventions or standards

Traditionally, Norway has been among the first countries to commit to treaties or conventions that impact on CSR matters. Thus Norway has a strong obligation to follow the international principles set out by the OECD, the UN and other such bodies. Among the important international obligations are the Rio Declaration on Environment and Development and the OECD Convention on Combating Bribery of Foreign Public Officials in international business transactions. As mentioned above, Norway is also in general obliged to implement and follow all regulations and directives adopted by the EU.

4. Non-statutory sources of liability for companies

Norway has a civil law system, so there are no major non-statutory sources of liability, in contrast to common law countries. However, certain non-statutory rules and regulations exist that relate to CSR. As regards labour conditions, collective bargaining agreements between employers’ and employees’ organisations, that regulate basic conditions such as salary, work time etc, and are binding upon both sides, are of major importance. Companies in breach of such agreements may be held contractually liable, independently of any potential liability under labour legislation.

In addition, guidelines and decisions made by various public and private boards and authorities impact companies’ activities. Important authorities in this respect include the Financial Supervisory Authority of Norway, the Norwegian Petroleum Directorate and the National Board of Consumer Complaints. Although the guidelines are normally not legally binding, they define standards.

5. Principal institutions, government agencies and/or major non-governmental organisations (NGOs)

The Norwegian Ministry of Foreign Affairs is in charge of the general supervision of Norway’s international obligations and responsibilities. Investigation of allegations of Norwegian companies’ CSR-related breach of local rules in other countries will be handled by the Norwegian police. There is a large number of international and national NGOs monitoring the development of CSR in Norway, several of which actively supervise compliance with human rights, environmental standards and anti-corruption standards. The international NGOs include Amnesty International, Red Cross, Greenpeace, Save The Children, WWF and Transparency International. Important Norwegian NGOs are the environmental foundation Bellona, Norges Naturvernforbund (Norwegian Society for Conservation of Nature), Natur og Ungdom (Nature and Youth) and the human rights organisation the Norwegian Helsinki Committee.

SPECIFIC AREAS OF CORPORATE SOCIAL RESPONSIBILITY

6. Human rights

The Norwegian Constitution of 1814 contains provisions that have protected fundamental human rights since its adoption, in particular civil and political rights. Economic rights, such as the right to private property, have been soundly protected for many years. In 1994, the Norwegian Constitution was supplemented with section 110(c), committing the Norwegian authorities to respect and ensure human rights.

In recent decades, there has been strong focus on human rights legislation in Norway, developed in order to secure rights set out in the Constitution and to reflect values rooted in Norwegian society. Worth mentioning in this respect is the prohibition in the Penal Act against discrimination, and the Expropriation Act, which regulates the Norwegian authorities’ right to expropriate land and to pay compensation to the owner. Norway has also signed and ratified a majority of the treaties and conventions regarding human rights issued by the UN, the International Labour Organisation (ILO) and the European Council. In 1999, the European Convention on Human Rights was implemented into Norwegian law by incorporation, along with the United Nations Convention on Economic, Social and Cultural Rights and the United Nations Convention on Civil and Political Rights. In 2003, Norway also incorporated the United Nations Convention on the Rights of the Child. Today, the defence frequently pleads the European Convention on Human Rights in criminal cases, and the elements of human rights in national legislation are increasing. Although the many treaties and conventions on human rights ratified by Norway do not impose any direct obligation on Norwegian persons, the Norwegian government has a constitutional duty to ensure that human rights are respected. The most important elements concern freedom of speech, criminal procedure and private property.

The supervision of human rights in Norway lies within the authority of the Ministry of Justice. Several NGOs focus on protection of human rights, both in a national and international context, such as Amnesty International, the Norwegian Red Cross, Save The Children Norway, the Antiracist Centre and the Norwegian Helsinki Committee. The latter is a non-governmental, non-profit organisation that monitors compliance with the human rights provisions of the Organisation for Security and Co-operation in Europe (OSCE) within all OSCE signatory states and supports initiatives to strengthen democracy and civil society. In the last few years, the Norwegian Helsinki Committee’s international activities have concentrated on the emerging democracies in central and eastern Europe and the former Soviet Union. Today, many companies have, at their own initiative, established certain codes of conduct covering human rights. Some companies also co-operate with NGOs in their work on human rights and other CSR issues, eg Norsk Hydro’s co-operation agreement with Amnesty International.

7. Corruption

Norwegian legislation contains several provisions regarding corruption, many of which reflect Norway’s strong focus on this issue in recent years. Corruption is seen to constitute a threat towards the constitutional state, the democracy, human rights and the social justice, and may also obstruct financial development, and result in distortion of competition. According to the Norwegian Penal Act sections 276(a)-276(c), both active and passive corruption is regarded as a criminal offence, regardless of whether the corruption took place in the public or private sector. The maximum penalty for breach of the ordinary penal provision is imprisonment for up to three years, whereas serious corruption can lead to imprisonment for up to ten years. The Norwegian Ministry of Justice has engaged the French-Norwegian stipendiary magistrate, Ms Eva Joly, as a ‘special advisor’ in the fight against corruption and money laundering. Since 2002 she has led a special project organisation within the Ministry of Justice, aimed at strengthening Norway’s international work against corruption and money laundering, and funded jointly by the Ministry and the Ministry of Education and Research.

Norway has entered into several conventions on combating corruption. It has ratified the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Criminal Law Convention on Corruption. Norway has signed, but not yet ratified, the Civil Law Convention on Corruption. On 9 December 2003, Norway signed in Mexico the UN Convention against Corruption. During the spring session of 2005, the Norwegian government will recommend that parliament approve ratification of that convention. Moreover, the Norwegian Agency for Development Co-operation is a member of, and supports, Transparency International, the only international NGO devoted to combating corruption. One of Norway’s largest insurance companies, Storebrand ASA, is also a member of Transparency International. During recent years, we have experienced an increased focus on fighting corruption in Norway, resulting in the discovery of various incidents of corruption in Norwegian businesses, eg the Statoil case mentioned above.

Due to the increased focus on corruption, several Norwegian companies have thoroughly reviewed their guidelines and company policy in recent years. Norway’s two largest companies, Norsk Hydro ASA and Statoil ASA, have implemented highly developed ethical business standards that meet regulatory requirements but also go beyond what is imposed by law with regard to both national and international activities.

8. Corporate governance and business ethics

Corporate governance issues have been high on the agenda in Norway for many years. Through the Companies Act and the Limited Companies Acts of 1997, Norway has developed a modern company legislation that, in several areas, contains principles that are now only being discussed in other countries. As an example, the Norwegian Public Companies Act section 6-11(a) (not yet in force) requires a minimum representation of 40 per cent of each gender at the board of directors. Norwegian legislation also includes several regulations on good business practice, set out in various laws, including the Act on Real Estate Business, the Marketing Control Act, the Act on Securities Funds and the Public Procurement Act.

In many countries, governmental authorities and NGOs have established national guidelines and recommendation on good corporate governance (national codes for corporate governance). In Norway, the Financial Analysts Association (NFF) and the Oslo Stock Exchange initiated a process to develop such a national code, which, after two hearings, was approved in December 2004.

The quality of corporate governance varies. In Norway, as in many other countries, good management of enterprises is often disregarded, in matters ranging from failure to meet legal requirements for calling a general shareholders’ meeting all the way to clear abuse of lawful authority. In a recent judgment, the Norwegian Supreme Court found that a company’s general meeting resolution on dividend distributions strongly disfavoured the minority shareholders. Due to a defective notice, such shareholders were not represented at the meeting. The Supreme Court consequently overruled the resolution. An international survey prepared in late 2002 confirms that Norwegian companies would profit from increased focus on corporate governance. Among the Norwegian companies highly ranked in the survey are the commercial bank DnB NOR, the insurance company Storebrand ASA and the industry conglomerate Orkla ASA.

A political objective has been set out that the boards of directors of Norwegian public limited liability companies should include a minimum of 40 per cent women members by September 2005. A recent analysis shows that during 2004, women’s share of places on these boards increased only from 8.4 per cent to 11 per cent. As referred to above a new provision in the Norwegian Public Limited Companies Act requires a 40 per cent gender representation on the board of directors in public limited companies. Although the provision has not yet come into force, it will do if the requirement is not met by September 2005.

The authorities of the 30 OECD countries have accepted an amended version of OECD’s principles of corporate governance, and these have become the international benchmark for corporate governance. The OECD rules will not have a direct impact on Norwegian legislation which in all material respects is already in compliance with them. What will affect the Norwegian legislation, though, is the European Commission’s corporate governance initiatives. In October 2004, two Commission recommendations were issued on management remuneration and independent board members respectively.

9. Corporate responsibility to employees

The Norwegian legislation relating to corporate responsibility towards employees is extensive. The most important single law is the 1977 Act on Working Protection and Environmental Protection, the provisions of which cannot be waived by agreement unless otherwise specifically stated. Important regulations on equal opportunities between genders are also set out in the Norwegian Gender Equality Act. Other regulations on corporate responsibility towards employees include provisions in the Norwegian Penal Act. As mentioned above, most EU directives have been incorporated into Norwegian legislation; however, domestic laws on employees’ rights often secure employees a stronger position. A complete list of the EU directives incorporated into the Norwegian legislation is found on the Norwegian official website www.odin.dep.no.

In respect of equal opportunities, the 1977 Act, chapter 10A, contains provisions on equal treatment at work. This covers all aspects of employment, including advertising positions, recruitment, relocation, promotion and improvement of skills. Further, the Act provides for the right to equal wages and working conditions between men and women. The Norwegian Gender Equality Act prohibits the employer from discriminating against either gender. In order to ensure that these obligations are met, provisions have been implemented, for example, with respect to recruitment processes, under which the employer is obliged to disclose information to failed applicants regarding the ascertainable qualifications of the successful applicant. They also set out a reversed burden of proof in legal proceedings concerning wrongful differential treatment.

Chapter 8 of the 1977 Act contains provisions regarding the right to leave of absence from work in connection with pregnancy and birth. These provisions allow for maternity leave of 12 weeks during pregnancy and six weeks after giving birth; two weeks’ paternity leave; and each parent’s entitlement to up to one year’s leave of absence for each child. Moreover, the Act regulates the rights to partial leave of absence, leave of absence in connection with adoption, leave of absence for nursing mothers and leave of absence in the event of a child or childminder’s illness.

Chapter 10 of the 1977 Act regulates working hours, specifying the longest permitted working hours for different occupations, what is considered night work, specifications regarding work on Sundays and public holidays, and provisions regarding overtime work and additional work. Chapter 2 of the 1977 Act sets out requirements on workers’ health and security at work premises, as well as the company’s responsibility to ensure a safe working environment. This includes factors that both separately and collectively may influence the mental and physical health and welfare of the workers. Work premises must be designed so that the working environment is fully satisfactory as regards the employees’ safety, health and welfare. The chapter regulates the requirements for workplace adjustments and requirements for employees with reduced capacity for work.

At present, there is no Norwegian act safeguarding employees’ rights to join a trade union. Previously, in legal theory, it has been discussed whether this already follows from section 100 of the Norwegian Constitution regarding freedom of speech, but it is general opinion in legal theory that this is not the case. However, it is fair to presume that such a right exists, based on constitutional common law. The right to join a trade union follows, in any case, from the European Convention on Human Rights, which has been incorporated into Norwegian legislation through section 2 of the Human Rights Act.

Chapter 10A of the 1977 Act contains several provisions against discrimination at work; these prohibit direct and indirect discrimination on grounds of gender, religion, beliefs, colour, national or ethnic origin, political views, membership of a trade union, sexual orientation, disability or age. Section 135(a) of the Norwegian Penal Act prohibits discrimination through racial threats and insults. Correspondingly, it is a criminal offence, in any commercial or similar activity, to refuse any person goods or services on the same conditions as apply to others, under section 349(a) of the Norwegian Penal Act. The EU’s directive on equal treatment at work has been incorporated into Norwegian legislation through the 1977 Act. Council Directive 2000/78/EC, the Framework Directive against discrimination, is part of EU’s non-discrimination policy; there is also Council Directive 2000/43/EC concerning prohibition against discrimination on grounds of race or ethnic origin, as well as an action programme for 2001-2006 on defeating discrimination. The latter directive is implemented into the 1977 Act chapter 10A. Norway has among others ratified three conventions that directly affect the issue of ethnic discrimination at work. These are the ILO convention no 111 of 1958 on discrimination in employment and occupation, the UN Racial Discrimination Convention of 1965 and the UN Convention on Economic, Social and Cultural Right of 1966. Both the UN’s anti-discrimination convention and the ILO convention have been ratified by Norway, but not been directly incorporated.

Norway is a member of the ILO and has undertaken and ratified most ILO conventions. The ILO 1997 Tripartite Declaration of Principles, aiming to promote international standards in working life, has also been ratified by Norway. This is a statement Norway wishes to adhere to as far as possible, but lacks detailed routines for informing companies and governmental bodies concerning its content.

An agreement has been entered into between the Norwegian authorities and the employers’ and the employees’ organisations, with a view to helping companies reduce employees’ absence due to illness by at least 20 per cent, enabling more people with reduced work capacity to continue working, as well as increasing the age of retirement. The agreement was entered into in autumn 2001; it is optional, but those companies that enter into it obtain certain administrative and financial advantages.

10. Corporate responsibility towards the environment

Norwegian legislation contains a significant number of provisions dealing with environmental offences, both in respect of liability for damages and criminal liability. Basic principles on the protection of the environment are set out in the Norwegian Constitution, section 110(b). The Norwegian Pollution Control Act of 1981 sets out the major regulations concerning pollution of, and waste in, the external environment. The basic principle is that nobody may own, do or initiate anything that may create risk of pollution; the environmental authorities may, however, permit polluting activities based on prior applications. The Act also contains specific provisions regarding transportation and treatment of waste, regulates the liability for contamination and imposes a strict liability on the owner of any real estate, asset or business causing contamination, unless such property etc is operated, used or leased by others in which case the liability rests with that other person. Wilful or negligent breach of the Act may be punished by fines or imprisonment of up to three months. In aggravating circumstances a breach may be punished by imprisonment up to two years, but up to five years if the breach has caused risk to human life or health. These criminal sanctions are supplemented by the Norwegian Penal Act, under which wilful or grossly negligent contamination causing, or threatening, considerable harm to the environment may be punished by imprisonment for up to ten years.

The Norwegian Penal Act also contains provisions on corporate criminal liability; this applies if a penal provision is contravened by a person acting on behalf of an enterprise. In such case the penalty will be a fine. The enterprise may in such cases also be deprived of the right to carry on business or be prohibited from carrying on such business in certain ways. There are several examples of quite significant fines having been imposed on Norwegian companies. In 2001, Norzink AS and Norcem AS were fined NOK 4.5 million and NOK 3.5 million respectively, Norzink for the discharge of quicksilver and Norcem for the discharge of waste oil.

Other relevant legislation includes the Norwegian Nature Conservation Act, which is founded on the principle of natural resources being managed on the basis of close interdependence between mankind and nature, and the need to maintain the qualities of the natural environment for posterity. The Act contains criminal sanctions. An Act regulating the general public’s right to receive information on the environment was passed in 2003; this ensures the right to obtain general and specific environmental information from public authorities and environmental information regarding the business activities from private entities. The public may demand that companies provide information about the characteristics and contents of their products.

In the northern and polar areas, Norway administers some of world’s remaining vast areas of untouched nature. The Norwegian government strongly focuses on this issue. Extensive environmental conservation work is carried out, both on a national and international level. The Act of 2001 on the Spitsbergen environment was adopted for this purpose. Pursuant to section 99 of the Act, environmental offences may be punished by fines or imprisonment for up to three years. This is relevant not least for the Russian and Norwegian coal mining activities at Spitsbergen.

Norway has ratified several international conventions on environmental protection, including the 1997 Kyoto Protocol to the UN Framework Convention on Climate Change, the 1992 Convention on Biodiversity and the 2000 Cartagena Protocol on Bio safety, the 1993 Lugano Convention (new protocol of 21 May 2003) and the OECD Paris Convention on Third Party Liability in the Field of Nuclear Energy of 1960, as supplemented by the Brussels Supplementary Convention in 1963. The European Environmental Liability Directive (2004/35/EC) is incorporated into the EEA Agreement; it is not at present incorporated into Norwegian legislation, but is currently being addressed in the EEA Committee and complete incorporation is expected in the near future. Norwegian legislation, including the Pollution Control Act, in principle is regarded as complying with the directive, and only minor changes will have to be made.

The Norwegian Pollution Control Authority, established in 1974 as a subordinate agency of the Ministry of Environment, aims to prevent damage to health or welfare, or damage to the natural environment’s production and reproduction, by pollution, damaging products and waste. The Authority also monitors and analyses environmental developments, and notifies the authorities of new environmental threats or negative environmental developments. It also grants discharge permits and is responsible for ensuring that companies comply with Pollution Control Act and Product Liability Act regulations.

Several Norwegian NGOs focus on environmental issues. Some of the largest and most active organisations that work particularly on pollution and protecting the natural resources are Bellona, Natur og Ungdom, Norges Naturvernforbund, WWF Norge and Framtiden i våre hender. Several Norwegian companies operating in the international arena, including Statoil ASA, Norsk Hydro ASA, Orkla ASA and Storebrand ASA, are also concerned with the secure and sustainable allocation of the natural resources and have drawn up their own aims and guidelines in that respect. For example Storebrand participates in the UN environmental organisation UNEP, World Business Council for Sustainable Development and has signed Global Compact; and Statoil and Norsk Hydro are known to pay great attention to environmental issues when participating in oil and gas projects abroad.

11. Corporate responsibility to communities

Various agencies and bodies have initiated co-operation projects between business and various municipalities on CSR issues, eg by promoting businesses’ engagement in schools, or with institutions aiming at creating an improved environment. Governmental programmes have been started to encourage companies to invest in economically weaker parts of Norway; under these programmes, regional partnerships, consisting of representatives from different sectors including business, are working for sustainable development in different regions. Public grants are also available for the promotion of regional industrial developments.

12. Corporate responsibility for overseas activities

Companies breaching international conventions, local laws or their own codes of conduct, whether directly or indirectly, when conducting operations abroad are from time to time exposed in the media. Such exposure is likely to damage the company’s trademark/branding. Although Norwegian companies risk negative media attention when breaching human rights or environmental regulations in their overseas activities, they face little risk of being held legally responsible in Norway for their own or their subsidiaries’ overseas activities. One exemption is however the above-mentioned Statoil case.

13. Procurement

Norwegian public procurement legislation is based upon the EU Public Procurement Rules of 16 July 1999. A central consultative agency is responsible for monitoring the compliance of the Act on Public Procurement.

14. CSR reporting and socially responsible investing

Since 1998, the Norwegian Accounting Act has imposed an obligation on companies to provide information in their annual reports on the effect of their activities on the environment. Furthermore, according to the Accounting Act, companies are obliged to provide information in their annual reports on the working environment, such as employees’ absence from work due to illness, equal rights between genders and the remuneration, pension and other benefits to the company directors and the CEO. Pension funds, insurance companies, banks and individuals are paying increased attention to ethical, environmental and social considerations in their investment decisions. Certain investment funds do not invest in companies that deal with weapons, tobacco, alcohol, gambling, pornography, and companies that are in breach of fundamental labour law principles.

SOURCES

Møse, Erik, Menneskerettigheter (Human Rights).
Aall, Jørgen, Rettsstat og menneskerettigheter (Legal state and human rights).
NOU 2003:23. Evaluation of the Accounting Act to the question of EC NO 1606/2002.
NOU 2002:22. An ordinary penal provision concerning corruption.
NOU 2004:5. Arbeidslivslovutvalget, complete list of implemented EU directives on
working life.
St.Meld. no. 25, 2002–2003, Governmental environmental policy and the state of the
environment, including follow-up of the summit in Johannesburg.
NOU 2003:22. Proposal on ethic guidelines for the government petroleum fund.
NOU 2004:7. Governmental business ownership.
Eva Joly, Er det en slik verden vi ønsker oss? (Is this the kind of world we want?).