Rules on sustainability reporting have been among the most discussed changes in Norwegian accounting law in recent years. Many companies have spent time trying to understand CSRD, ESRS, double materiality, value chain information and assurance.
Now the Ministry of Finance is proposing a major narrowing.
If the proposal is adopted, far fewer Norwegian companies will have a statutory obligation to prepare sustainability reporting under the Accounting Act. That does not mean sustainability information becomes irrelevant. Smaller companies may still face requirements and expectations from banks, investors, customers, public contracting authorities and larger companies in the value chain.
This guide explains what the new sustainability reporting rules mean, who may be covered, what smaller companies should do, and what the board of a limited company should be aware of.
In brief
The Ministry of Finance has put forward a proposal to amend the Accounting Act to simplify the rules on sustainability reporting.
The main point is that the obligation is proposed to be narrowed sharply. Under the proposal, the reporting obligation would as a rule apply only to companies that meet both of these conditions:
- revenue over NOK 5 billion,
- more than 1,000 full-time equivalents.
The Ministry estimates that around 120–160 Norwegian companies will be covered by the reporting obligation under the new rules. By comparison, around 1,200 Norwegian companies could be covered under the current rules.
For most small and medium-sized limited companies, this means they will not have a direct statutory obligation to report on sustainability. But they may still be affected indirectly.
What is sustainability reporting?
Sustainability reporting is reporting on how a company affects people, the environment and society, and how sustainability matters affect the company itself.
The reporting may cover, among other things:
- climate and emissions,
- energy use,
- working conditions,
- equality and diversity,
- human rights,
- supply chains,
- corruption risk,
- governance and control,
- sustainability risk to the company's finances.
The point is not simply to produce a "green report". The purpose is to give investors, lenders, customers, employees, authorities and other stakeholders more comparable and reliable information.
In larger companies, sustainability reporting can be extensive. It may require analysis of the value chain, climate risk, data foundations, internal control, board handling and external assurance.
Why are new rules coming now?
The Norwegian rules on sustainability reporting build on EU legislation, in particular CSRD – the Corporate Sustainability Reporting Directive.
CSRD was introduced to provide more comparable and reliable sustainability information from European companies. The rules were implemented in Norwegian law through amendments to the Accounting Act.
After the rules were adopted, the EU has worked on simplifications. This is part of the so-called Omnibus I package, which is intended to reduce the reporting burden on European business.
The Ministry of Finance's proposal means that Norway will follow the new European changes. The result is that far fewer companies will be covered by the statutory reporting obligation.
Who will have a reporting obligation under the proposal?
Under the proposal, the obligation to report on sustainability will mainly apply to companies that have:
- revenue over NOK 5 billion, and
- more than 1,000 full-time equivalents.
Both conditions must be met.
That means a company with high turnover but fewer than 1,000 full-time equivalents will as a rule not be covered. The same applies to a company with many employees but revenue below the threshold.
It is nevertheless not enough to look at the figures alone. The company must also have a legal form that is covered by the Accounting Act rules on sustainability reporting.
The rules may typically be relevant for:
- private limited companies,
- public limited companies,
- banks,
- credit institutions,
- insurance companies,
- state enterprises,
- certain groups and parent companies,
- certain branches and company types that are specifically covered.
For most ordinary small limited companies, the thresholds will be so high that they will not be directly subject to reporting.
What happens to small and medium-sized companies?
For small and medium-sized companies, the overall picture is simple: most will not have a statutory obligation to report on sustainability under the new rules.
That does not mean smaller companies can ignore the topic entirely.
Smaller companies may still be asked for sustainability information by:
- larger customers,
- groups they supply to,
- banks,
- investors,
- public contracting authorities,
- accountants,
- auditors,
- business partners,
- supply chains in larger groups.
This is especially practical for companies that supply goods or services to large businesses. Even if the smaller company itself has no reporting obligation, the customer may have one. The customer may then need information from suppliers in order to report on its value chain.
Exemption from obligation is not the same as exemption from expectations
An important point is that a statutory reporting obligation and commercial information requirements are two different things.
A small limited company may be exempt from statutory sustainability reporting, but still face questions such as:
- Does the company have an overview of its own emissions?
- What measures is the company taking to reduce environmental impact?
- Does the company have routines for working conditions and HSE?
- Which suppliers does the company use?
- Does the company have policies on human rights and decent working conditions?
- Does the company have anti-corruption routines?
- Can the company document requirements from larger customers?
For some companies this will be of little relevance. For others it may become important in practice, especially in tenders, financing or supplier agreements.
What does this mean for companies in the value chain?
One of the most important parts of the proposal concerns companies in the value chain.
When large companies have a reporting obligation, they may need information from suppliers and business partners. This has raised concern that smaller companies could indirectly be required to do very extensive reporting work, even if they themselves are not subject to reporting.
The proposal therefore sets out clearer limits on what information reporting companies may require from smaller companies in the value chain.
Under the proposal, companies with fewer than 1,000 full-time equivalents in the value chain of reporting companies are to be shielded against requirements for more extensive sustainability information than follows from voluntary reporting standards, when the information is requested for sustainability reporting.
This may be important for small and medium-sized suppliers.
What is a shielded company?
In this context, a shielded company is a company in the value chain of a reporting company that does not have more than 1,000 full-time equivalents.
The point is that larger reporting companies should not be able to pass the entire reporting burden on to smaller suppliers without further justification.
Shielding does not mean that smaller companies never have to answer questions. Nor does it mean that large customers can never ask for relevant information.
But the framework for requests relating to sustainability reporting is to become clearer.
What is VSME and voluntary sustainability reporting?
VSME is a voluntary standard for sustainability reporting for small and medium-sized companies.
The idea is that smaller companies should be able to report in a simpler and more proportionate way than large groups. Such a standard can make it easier to respond to information requirements without each company having to invent its own reporting format.
For small companies, voluntary reporting under a simple standard may be useful if the business is often asked about sustainability by customers or banks.
It can reduce duplicate work. Instead of answering ten different questionnaires from ten different customers, the company can have one simple, up-to-date sustainability overview that can be shared where relevant.
Must smaller companies report voluntarily?
Not necessarily.
For many small limited companies it will be unnecessary to prepare a full sustainability report. A small holding company with no employees, operations or supply chain normally has very different needs from an industrial company, transport company or construction business.
The practical question is rather:
Who is going to ask the company for sustainability information?
Voluntary reporting may be useful if the company:
- supplies to large groups,
- participates in public tenders,
- operates in an industry with clear environmental impact,
- is seeking financing,
- has investors who request sustainability data,
- has employees and a supply chain,
- wants to appear more professional towards customers.
For very small companies, a simple internal overview of environmental matters, working conditions, suppliers and governance is often sufficient.
What happens to reporting for 2026?
The proposal provides for transitional rules.
The background is that some companies may already have started sustainability reporting, but will fall outside the new thresholds from 2027.
The Ministry therefore proposes a basis for adopting transitional rules. The purpose is among other things to be able to grant exemptions from the reporting obligation for the 2026 financial year for companies that do not meet the new conditions.
This is especially relevant for companies that were previously covered by the first implementation phases, but under the new thresholds will no longer have a reporting obligation.
For these companies, the board and accounting function should follow developments closely before closing down or changing reporting work.
What does this mean for the board?
The board is responsible for ensuring that the company meets its statutory obligations. That also applies to accounting and reporting obligations.
For companies close to the thresholds, the board should ensure that the following is assessed:
- whether the company or group is covered by the reporting obligation,
- which figures are to be used for revenue and full-time equivalents,
- whether the company is covered as a company or as a parent company in a group,
- whether subsidiaries may be covered by group reporting,
- whether transitional rules are relevant,
- whether there is still a need for voluntary reporting,
- what requirements customers, banks and investors impose.
In companies that clearly fall outside the rules, the board should nevertheless consider whether sustainability information has practical significance for the business.
This is especially relevant if the company has larger customers, loan financing or public contracting authorities.
What does this mean for newly established limited companies?
For newly established limited companies, the new rules will rarely lead to a direct reporting obligation.
A typical newly started AS will normally be far below the thresholds for revenue and full-time equivalents. That applies both to companies incorporated from scratch and companies taken over as shelf companies.
Nevertheless, sustainability may be relevant from the start if the company:
- is to supply to large businesses,
- is to participate in tenders,
- is to seek financing,
- is to build a brand around responsibility,
- is to have employees,
- is to import goods,
- is to use subcontractors in high-risk industries,
- is to enter a regulated or documentation-heavy industry.
For such companies it may be wise to establish simple routines early. It is much easier to collect basic information along the way than to reconstruct everything later.
What should small limited companies do now?
Most small limited companies do not need to start a major reporting project.
But they should be consciously aware of what may be requested.
A practical approach may be:
- Clarify whether the company is directly covered For most small companies the answer is no. But larger groups and growth companies should make a concrete assessment.
- Look at the customers Does the company supply to large reporting customers? Information requirements may then come through the value chain.
- Look at financing Banks and investors may request sustainability information even if the law does not require reporting.
- Prepare a simple overview Start with the most practical areas: employees, HSE, environmental impact, suppliers, privacy, anti-corruption and governance.
- Avoid over-reporting Do not spend time on extensive reporting if nobody actually needs it. For small companies, the work should be proportionate.
- Standardise the answers If the company is often asked questions by customers, one simple standardised overview can save time.
What should larger companies do now?
Larger companies should not simply assume that the reporting obligation disappears.
They should make a concrete assessment of:
- revenue,
- full-time equivalents,
- group structure,
- legal form,
- reporting obligation at company level,
- reporting obligation at group level,
- transitional rules,
- subsidiary exemptions,
- requirements from investors and lenders,
- existing reporting work,
- need for voluntary reporting.
For companies that remain covered, sustainability reporting work may still be extensive. For companies that fall outside, it may nevertheless be commercially right to continue with a simpler form of reporting.
What about groups?
The rules on sustainability reporting must also be assessed at group level.
A parent company in a large group may have an obligation to prepare consolidated sustainability reporting if the conditions are met. At the same time there are exemptions and special rules, including for subsidiaries included in the parent company's reporting.
The proposal also contains special rules for certain financial holding companies.
For groups, the assessment should therefore not be made only at single-company level. The whole structure must be considered:
- who is the parent company,
- which subsidiaries are included,
- which companies have activity,
- where employees and turnover are located,
- which entities are covered by the reporting,
- whether certain subsidiaries may be exempt,
- what reporting external stakeholders require.
This is especially important for groups with both holding companies and operating companies.
What significance does this have for banks and investors?
Even if the statutory reporting obligation is narrowed, the need for information does not disappear.
Banks and investors may still need to assess:
- climate risk,
- reputational risk,
- supply chains,
- regulatory risk,
- industry risk,
- governance and internal control,
- future costs and investments.
A company that has no reporting obligation may therefore still be asked about sustainability when taking out loans, refinancing, raising capital or selling the business.
This applies especially to companies in industries where sustainability risk is economically relevant.
Common misconceptions about the new rules
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"Nobody needs to report on sustainability any more"
That is not correct. The largest companies may still have a reporting obligation. The proposal is about narrowing the scope, not removing the rules entirely.
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"Small companies can ignore sustainability"
That is also not correct. Small companies will normally not have a direct statutory reporting obligation, but may still face requirements from customers, banks and investors.
-
"If the customer asks, we always have to answer everything"
Not necessarily. The proposal is intended to shield smaller companies in the value chain against excessively broad information requirements when the information is requested for sustainability reporting.
-
"Voluntary reporting must be as extensive as CSRD"
No. The point of voluntary standards for smaller companies is precisely that reporting should be simpler and more proportionate.
-
"This only applies to listed companies"
No. The rules may also apply to large unlisted companies and groups, depending on size and legal form.
Practical checklist: Must the company report on sustainability?
Start with these questions:
- Does the company or group have revenue over NOK 5 billion?
- Does the company or group have more than 1,000 full-time equivalents?
- Does the company have a legal form covered by the rules?
- Is the company a parent company in a group?
- Is the company a subsidiary that may be covered by the parent company's reporting?
- Is the company listed or subject to special rules?
- Could transitional rules be relevant for 2026?
- Does the company have customers or banks that require sustainability information in any case?
- Should the company report voluntarily to meet market expectations?
- Has the board documented its assessment?
For small limited companies, the answers will often show that statutory reporting is not necessary. But the assessment may still be useful, especially if the company is growing or is part of a larger value chain.
Sustainability and corporate governance
Sustainability reporting is not just an accounting question. It is also a question of corporate governance.
The board should have an overview of which requirements apply to the company, and which expectations the company faces from the market.
For small limited companies this can be kept simple. The important thing is to know:
- which requirements the company actually has,
- which requests the company may receive,
- who is to respond to them,
- what documentation the company has,
- which routines should be in place.
In some companies this should form part of the board's annual review. In others a simpler assessment will be enough.
How should new companies think?
When starting a limited company, it is easy to think that sustainability reporting only applies to large groups. For most newly established companies that is correct.
But that does not mean sustainability is irrelevant.
A new AS should at least know:
- which industry the company is to operate in,
- whether customers may require environmental or sustainability documentation,
- whether the company is to participate in tenders,
- whether the company is to import goods,
- whether the company is to have employees,
- whether the company is to use subcontractors,
- whether the bank or investors may impose requirements.
This is not necessarily extensive. Often it is simply a matter of having things in order from the start.
Just as the company should have tidy articles of association, share register, minutes and agreements, it should have a simple overview of matters that may become important later.
Voluntary reporting can be a competitive advantage
For some companies, voluntary sustainability reporting may be more than administration. It can be a way to appear more professional.
This applies especially where customers compare several suppliers.
A small company that can answer questions about the environment, working conditions and supply chain in an orderly way may appear more trustworthy than a company with no clear answer.
That does not mean all small companies should write long reports. But a short, factual and up-to-date overview can be valuable.
When should you get help?
Companies should consider getting help if:
- they are close to the thresholds,
- they are part of a group,
- they have foreign owners,
- they have many subsidiaries,
- they are listed or planning a listing,
- they receive extensive requests from large customers,
- they participate in public tenders,
- they are uncertain about the transitional rules,
- they have already started reporting for 2026,
- they are considering voluntary reporting under a standard.
For small companies that clearly fall outside the rules, a simple assessment and practical routines are often enough.
Summary
The Ministry of Finance proposes a major narrowing of the obligation to report on sustainability.
Under the proposal, the obligation will mainly apply to companies with revenue over NOK 5 billion and more than 1,000 full-time equivalents. This means that far fewer Norwegian companies will have a statutory reporting obligation.
For small and medium-sized limited companies, the overall picture is that they will normally not be directly subject to reporting. Nevertheless they may still be affected through the value chain, bank requirements, investor requirements, tenders and customer dialogue.
The most important thing for smaller companies is therefore not to over-report, but to have things in order: know which requirements actually apply, which questions may arise, and what documentation the company should have available.
Exemption from reporting obligation does not mean sustainability information becomes unimportant. It means the work should be adapted to the company's size, risk and actual needs.
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- General meetings in Norwegian limited companies – requirements, deadlines and procedures
- When can the chair and managing director become personally liable?
At Stift we help you with ready-registered Norwegian limited companies and orderly documented transfers. For most new limited companies, sustainability reporting will not be a statutory obligation from the start, but the right company structure, documentation and order from day one makes it easier to meet requirements from banks, customers and business partners later. See available shelf companies or contact us if you are considering establishing a new AS.
