Our requirements for sustainability and responsible business

Responsible business is about how companies and organisations take responsibility for their impact on people, society and the environment – beyond what is required by laws and regulations. Responsible business is often referred to as good business practice, corporate responsibility or Corporate Social Responsibility (CSR).

We expect our customers, suppliers and business partners to follow the recommendations set out in

• OECD Guidelines for Responsible Business Conduct
• UN Guiding Principles on Business and Human Rights

We are also committed to following and promoting the principles of 

• UN Global Compact

These aim to regulate conduct in areas such as human rights, labour rights, the environment, anti-corruption, taxation, transparency, competition law and consumer interests.

To receive services from us, companies must recognise and comply with the principles of responsible business conduct:

• Businesses must avoid contributing to corruption, human rights violations, poor working conditions or harm to consumers, local communities and the environment, both in their own operations and through business relationships.
• Companies must take a responsible approach to the principles of responsible business conduct by carrying out due diligence and implementing internal controls, guidelines or procedures tailored to the size and nature of their business, its activities and risk profile.
• Companies must follow the international guidelines referred to above and best practices for their sector, and implement measures for continuous improvement.

Companies that receive funding from us commit to

• take appropriate action if the company becomes aware that key individuals in the company are suspected, charged or convicted of financial crime or other criminal offences; and 
• notify us of any suspected financial crime, other criminal offences or breaches of the principles for responsible business conduct referred to above. We may at any time require the company to provide the necessary documentation to demonstrate that it is taking appropriate action.

It is not easy for a business to guarantee that no principles will ever be breached. However, businesses we provide services to must demonstrate a commitment to continuous improvement and take the necessary steps to ensure responsible business conduct. We require our customers and business partners to provide written documentation of their risk assessment and management of responsible business conduct, as well as their compliance with applicable law.

Sustainability risk (ESG) concerns whether your company's activities have a negative impact on people, society or the environment.

• Climate and the environment (environment) concerns the risk that your own operations may have an environmental impact (greenhouse gas emissions, pollution, and impacts on oceans, water and biodiversity). It also covers risks associated with the consequences of climate change and resource scarcity (climate- and nature-related risks).
• Social factors concern risks related to human rights violations and unacceptable working conditions.
• Governance concerns risks related to financial irregularities, corruption, opaque ownership structures and weak corporate governance.

Sustainability risk assessment

We aim to be a transformation partner for businesses in Norway. We challenge our customers and ask the difficult questions, and we expect them to be mindful of their impact on the climate and nature.

We expect companies applying to us for funding to have analysed where they have the greatest impact on the climate and nature, and to have a plan for managing these risks. Where climate- and nature-related risks could adversely affect a company's long-term profitability, the company must present specific transition plans endorsed by its board and management.

Read our guidance on climate and nature-related risks

The UN Global Compact has developed guidance on transition plans in collaboration with the Confederation of Norwegian Enterprise (NHO), the Norwegian Confederation of Trade Unions (LO) and key business stakeholders.

We follow the same guidelines for conduct- or product-based exclusions established by the Ministry of Finance for the Government Pension Fund Global. This means that we will not support companies where there is an unacceptable risk that the company contributes to or is itself responsible for:

• Serious or systematic human rights violations.
• Serious violations of individual rights in situations of war or conflict.
• The sale of weapons to states involved in armed conflicts that use the weapons in ways that constitute serious and systematic violations of the rules of international law governing hostilities.
• Sale of weapons or military equipment to states covered by the government bond exemption scheme referred to in Section 2-1, second paragraph, point (c) of the mandate for the management of the Government Pension Fund Global.
• Severe environmental damage
• Actions or omissions that, at an aggregate company level, result in an unacceptable level of greenhouse gas emissions.
• Gross corruption or other serious financial crime.
• Other particularly serious breaches of fundamental ethical standards.

When interpreting the points above, we draw on assessments made by the Council on Ethics for the Government Pension Fund Global. For example, we will exclude all projects linked to tobacco, cannabis, gambling, pornography or controversial weapons, as well as projects with a significant negative climate impact, such as coal and oil sands extraction and coal-fired power generation.

When you apply for funding, we will consider your project's impact on environmental and societal challenges as part of our overall assessment. Some schemes require your project to have measurable environmental impacts.

Read more about: What is the project's environmental or societal impact?

A key prerequisite for long-term profitability is earning the trust of business partners, public authorities, employees and customers, and maintaining a strong reputation among them. Companies that take an active role in addressing the major challenges facing the world will strengthen their position. At a minimum, your company must take steps to minimise its negative impact on society and the environment. A sustainability strategy will help you achieve this.

Sustainability requirements and expectations

A good sustainability strategy starts by analysing which areas of your business are affected by sustainability requirements and expectations. Next, assess which areas are most affected. Where is the risk greatest if sustainability requirements are not met, and what could the consequences be?

Next, you should set clear strategic goals for the medium to long term. Quantifiable goals are preferable where possible, but you can also use qualitative goals if they are easy to communicate and assess. The strategy should also explain how it and the related actions will be measured and reported. Your commitment should be reflected in your deliverables, communications and employees’ behaviour.

Strategic priorities

To achieve your goals, your company must make some strategic choices. Identifying these can be challenging and requires broad involvement, as they affect the entire organisation.

The strategy should not explain how you will achieve the goal, but it should include a section outlining which areas will be affected and what needs to be done to put it into practice.

Clarify your company's requirements for its operations and employees.

In difficult situations, written standards and rules are a useful tool. The guidelines should be clear and easy to understand, so that employees and management can follow them easily.

For example, you should have clear guidance on how to deal with:

• gifts from business associates
• reporting incidents and conduct
• conflicts of loyalty and suppliers’ financial interests
• corruption, for example in connection with tenders

Ethical procurement requirements

By setting clear contract terms and following up with suppliers, you can avoid costly mistakes and unscrupulous suppliers that offer low prices at the expense of environmental standards and working conditions.

Ethical procurement requirements ensure equal treatment and non-discrimination. Norwegian companies that purchase goods and services in developing countries, where working conditions and environmental standards are lower than in Norway, have the power to drive positive change.

If you do business abroad, you must be prepared to encounter corruption. In many countries, for example, it is common for people to demand bribes, gifts or services in exchange for a contract or business agreement.

Corruption committed abroad by Norwegian companies and citizens is a criminal offence both in Norway and in most other countries.

We have offices and advisors in many countries and markets. We understand local cultures and business practices and can offer valuable guidance if you are unsure about the business environment in a new country. We can also help you find trusted legal advisors.

Detailed advice and more information about corruption:

• Økokrim on corruption
• Corruption levels in different countries
• Transparency International's anti-corruption handbook
• The Fight Against Corruption: e-learning with dilemma-based training

Good sustainability reporting has two main characteristics: it covers topics that are material to the company, and sets clear targets and actions for achieving them. To identify which topics are material to the company, you should conduct a materiality assessment. This involves prioritising sustainability topics, preferably in dialogue with the company’s key stakeholders.

Relevance is determined by where your company has the greatest negative impact and exposure to risk, as well as where it has the greatest potential to make a positive difference. For the topics ranked highest in this assessment, you should set clear targets and develop action plans to achieve them, either as part of a sustainability strategy or integrated into your overall business strategy.

Sustainability reporting standards

In Norway, there is no requirement to follow a specific sustainability reporting standard, but in its sustainability reporting guide, Oslo Børs (Euronext) refers to the Global Reporting Initiative (GRI) Standards. These are the most widely used reporting standards in Norway and Europe. The materiality assessment explained above is an important part of these standards. Other relevant reporting frameworks include:

• Task Force on Climate-related Financial Disclosures (TCFD): recommendations for analysing and reporting on climate risk.
• UN Global Compact: companies that have signed the UN Global Compact are required to publish an annual progress report on their work towards the UN Global Compact's Ten Principles.

Under Section 3-3c of the Norwegian Accounting Act, large companies must report on how they address environmental and social matters, working conditions, equality and non-discrimination, respect for human rights, and the prevention of corruption and bribery.

Section 3-3c of the Norwegian Accounting Act was updated on 1 July 2021 to ensure compliance with the EU's Non-Financial Reporting Directive (NFRD). However, in April 2021, the EU published a proposal for a new directive, the Corporate Sustainability Reporting Directive (CSRD), which will replace the NFRD. The CSRD imposes even stricter requirements on companies' sustainability reporting. Among other things, the new proposal requires reporting on

• sustainability risk
• the targets the company has set for its sustainability work, and its progress towards achieving them
• stakeholder engagement
• how responsibility for sustainability is embedded in management and the board
  due diligence assessments and actual or potential adverse impacts in the supply chain
• the company's climate strategy (which must be aligned with the Paris Agreement's goal of limiting global warming to 1.5°C)

In addition, this information must be independently reviewed (limited assurance).

Read more about the Guide Against Greenwashing

Small and medium-sized enterprises

Companies with a strong sustainability profile or ambitions for significant growth and/or a stock market listing should start sustainability reporting early. For small and medium-sized companies, following a formal reporting standard or publishing a separate sustainability report may not necessarily be appropriate. However, you should still be able to demonstrate your company’s future prospects from a sustainability perspective, as environmental and social risks and opportunities are also material from a financial perspective. Having a reporting process in place will also make it easier to comply with future reporting requirements.

Businesses that do not actively address climate and environmental issues in their business model risk being outcompeted by others in the same sector that do. The green transition in the EU is moving faster than many Norwegian businesses realise. Read more about the European Green Deal.

The EU has launched a system for assessing what is ‘green enough’. The EU taxonomy sets thresholds for what qualifies as a substantial contribution to six defined environmental objectives and specifies the criteria that economic activities must meet to be considered green. The six environmental objectives are:

• reduced greenhouse gas emissions
• climate adaptation
• water and marine resources
• transition to a circular economy
• pollution control
• biodiversity and ecosystems

For now, only selected funding schemes from Innovation Norway will be directly affected by the EU taxonomy. However, for companies looking to prepare their business model for a low-emission society, it provides a clear indication of the EU's direction of travel.