VSME vs. the Transparency Act (Åpenhetsloven): What’s the Difference?
VSME and the Transparency Act (Åpenhetsloven) serve different purposes, but work best together: VSME structures ESG and supplier data, making it easier for companies to carry out the human rights due diligence required by law.
The Transparency Act (Åpenhetsloven) sets clear expectations: companies must carry out due diligence, identify human rights risks, and take action across their supply chains.
The challenge? Getting the right data from suppliers.
This is where VSME becomes useful. VSME is not a legal requirement, but a structured reporting framework that helps suppliers share consistent and relevant information. It gives companies a clearer picture of who their suppliers are, how they operate, and where potential risks may lie.
In simple terms:
VSME helps you get the data you need, so you can actually do the work the Transparency Act requires.
VSME can support compliance by providing useful data on suppliers, such as company structure, policies, workforce conditions, and potential human rights risks. However, it does not replace the legal requirements to assess, act, and document measures under the Transparency Act.
Below is a simplified comparison:
|
Area
|
VSME data point | What information the VSME data point provides | Relevance for the Transparency Act / supplier DD |
|---|---|---|---|
| Company structure | B1 – General information | Legal entities, activities, location, balance sheet, revenue | Provides an overview of who the supplier is, size and where the business operates; necessary to assess risk across the entire value chain |
| Geographical exposure | B1 – General information | Location of business and operational sites | Identify high-risk areas for human rights |
| Value chain | C1 – Business model and value chain | Description of activities and supplier structure | Provides basis for mapping the value chain |
| Policies and practices | B2 & C2 – Practices, policies and future initiatives | Whether the company has measures, policies and future initiatives for sustainability, including working conditions and responsible operations | Documents whether the supplier has embedded responsible business practices in its policies — §4a |
| Workforce structure | B8 – Workforce characteristics | Number of employees, workforce, contracts | Indication of the structure of working conditions at the supplier; relevant for the Transparency Act §4 and §5 |
| Labor rights (Wages, Equality, Training) | B10 – Remuneration, collective bargaining and training | Wages above minimum, gender pay differences, union coverage, training and competence development | Directly relevant to the Transparency Act requirements on wages and decent working conditions (§3c). Indication of discrimination risk — relevant for human rights assessment under §4b |
| Health and safety (HSE) | B9 – Health and safety | Workplace accidents and safety systems | Shows whether the supplier has control over the working environment |
| Worker rights & whistleblowing system | C6 – Human rights policies and processes | Policies, codes and processes to ensure worker rights and complaint mechanisms for employees | Important indicator for responsible operations and follow-up of human rights in the business |
| Severe human rights violations (Child labor, Forced labor, Human trafficking) | C7 – Severe negative human rights incidents | Confirmed incidents related to child labor, forced labor, discrimination etc. in own business and value chain | Directly relevant for §5b (actual negative impacts) and §4c (measures to stop violations) |
| Corruption and ethical trade | B11 – Governance, anti-corruption | Number of convictions and fines for corruption, ethical guidelines | Important for supplier compliance and responsible business conduct |
| Right to information / documentation | – | – | The Transparency Act §6–7 gives the right to information upon request. VSME is a reporting framework and does not provide access to underlying documentation such as employment contracts or payslips |
Bottom line: by using VSME, companies can:
- Standardize supplier data collection
- Gain insight into risk areas such as geography, workforce, and labor conditions
- Identify red flags early, including lack of policies or reported incidents
- Build a stronger foundation for due diligence assessments