Comment on the EITI evaluation

I appreciate the opportunity to comment on the EITI assessment that has been sparked by the ScanTeam report. I see the ScanTeam report has a very constructive and useful element of the strategic review that the board had before it. There are some 50 observations and conclusions at the end of Chapters 3 – 6. All of which deserve careful consideration. The vast majority of these I would support.

However, I am moved at this stage to comment on the following four topics.

Topic 1. Broadening the Standard

The objective of the EITI (EITI Articles of Association, Art. 2.2): The objective of the EITI Association is to make the EITI Principles (Annex A) and the EITI Criteria (Annex B) the internationally accepted standard for transparency in the oil, gas and mining sectors, recognising that strengthened transparency of natural resource revenues can reduce corruption, and that the revenue from extractive industries can transform economies, reduce poverty, and raise the living standards of entire populations in resource-rich countries.

The ScanTeam report argues:

• Common denominator.  Today’s EITI Standard falls short of the EITI Principles and are limited. (p. 48)
• Current implementation of the EITI Standard remains based on the EITI Criteria rather than the EITI Principles. (p. 48)
• EITI risks falling into the latter category if it does not challenge itself to make its standard more in line with its principles, as a number of stakeholders have strongly suggested. (p. 48)
• The agreed EITI standard is too weak to guarantee sector-results; the current EITI standard is . . . not sufficient to guarantee sector impact since activities are limited to revenue verification. (p. 35)

Comments:

1. ScanTeam’s fundamental conclusion, that EITI’s lack of influence in society is because of EITI’s limited focus on revenue transparency, is not supported in the text by anything other than the opinions of “a number of stakeholders.” Beyond these opinions, the report offers no justification for this conclusion.
2. An equally strong argument can be made that EITI’s very effectiveness is a result of its limited focus on revenue transparency.
3. More importantly, the ScanTeam conclusion belies little understanding of change management theory and practice that espouses the need for a strategic approach to change that seeks to do the right thing at the right time for the right reasons with the right level/kind of resources. Simply broadening EITI’s mandate at this stage would, in my mind, have significantly negative consequences for EITI’s effectiveness.

Topic 2. Developing a “Results Framework” or “Theory of Change”

The ScanTeam report argues:

• EITI does not have a theory of change that can explain how it contributes to societal transformations (p. 35)
• It is not yet possible to track results of EITI at a global level but at the country level meaningful change can be documented and attributed to EITI as an international standard p. 35)
  • “Big Picture” indicators comparing EITI with non-EITI countries show no meaningful difference and do not constitute a good basis for tracking EITI performance over time (p. 35)

Comments:

1. It is only 6 years since the first meeting of the International Advisory Group at Lancaster House in London. To expect society-level indicators of change in the short, six-year period since is simply not reasonable. If anything, the progress made by EITI during this time is nothing short of spectacular.
2. Pursuing the development of a “results framework” would be a worthwhile and enlightening exercise. However, I believe we should be cautious in setting expectations too high. The EITI multi-interest mechanism is occupying new space in the public policy arena. This would not be a trivial exercise. Does the United Nations have such a theory of change? Does Revenue Watch have such a theory of change? At ICMM, while we serve (like EITI) as a kind of change agent, and have a results-based three-year action plan, I am not at all sure it would qualify as a “theory of change.” This is a topic area in which EITI may be able to play a powerful leadership role.

Topic 3. EITI as a “lowest common denominator” organization

The ScanTeam report argues:

• Current implementation of the EITI Standard remains based on the EITI Criteria rather than the EITI Principles. This is a function of EITI being a consensus-based body, so standards and agreements easily fall to the level of least)
• As a consensus-based body, EITI may easily fall to the level of least common denominator. (p. 48)

Comments:

1. ScanTeam’s sense that EITI is a least common denominator organization is of significant concern to me. It reflects a very old (out-dated) attitude that suggests that multi-interest activity inevitably results in a poor quality result. It is certainly not my personal experience.
2. In fact, the multi-interest make-up of EITI is one of its significant strengths. Multi-interest interaction, facilitated in a way that is respectful, creative and based on integrity, will lead to the best possible results. It is the only way forward when addressing issues in which benefits, costs, risks and responsibilities are shared across parties with values and interests that vary.

Topic 4. Strategic Options

The ScanTeam report identifies the following three strategic options:

• Option One: Status quo implementation based on the existing EITI Global Standard.
• Option Two: Broaden the existing consensus but maintaining the existing validation principle.
• Option Three: Provide a more broad-based standard in line with EITI Principles where the certification scheme is based on a scaling system that provides performance incentives. (recommended)

Comments:

1. I am not sure that these are the only options. These and any others that might arise from the conversation should all be considered.
2. The important issue of phasing has not been considered and needs to be an integral part of any action.
3. We may want to consider development of a long-term, organizational change strategy.

R. Anthony Hodge is President of International Council on Mining and Metals (ICMM), and a member of the EITI Board.