The United Kingdom has achieved a high overall score in implementing the 2019 EITI Standard

20.10.2021
Decision 2021-63/BM-51
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Board decision in full

The United Kingdom (UK) has achieved a high overall score in implementing the 2019 EITI Standard (90 points). The overall score reflects an average of the three component scores on Stakeholder engagement, Transparency and Outcomes and impact.

The EITI Board commends the UK for achieving a high score on “Outcomes and impact” (91 points). This reflects the MSG’s efforts to ensure that the EITI becomes a tool for increasing the accessibility of extractive data and centralising information on opportunities for multi-stakeholder input to extractive industry governance. The UK’s achievements in improving transparency in beneficial ownership disclosures have established best practice that have inspired other EITI implementing countries. The COVID-19 pandemic has curtailed MSG plans for in-person outreach across the country, affecting progress to build local stakeholder engagement. The UK was awarded one additional point for the effectiveness and sustainability of EITI implementation.

On “Transparency”, the UK reached a high score (90 points). The UK has made commendable efforts to strengthen data management systems of the 11 extractive licensing authorities. Most non-financial information required by the EITI Standard now appears to be systematically disclosed on government websites, with UKEITI disclosures of extractive payments and revenues leading EITI implementing countries in their timeliness. The UK is encouraged to lead international best practice in disclosures related to licensing and contracts by addressing gaps identified in this Validation. There is an opportunity for the UKEITI to expand public disclosures of environmental aspects of extractive industry governance, including in environmental taxes and in monitoring rules and practices, responding to growing public demand for this kind of information.

The UK achieved a high component score also on “Stakeholder engagement” (90 points). The MSG is exercising its oversight role effectively. The government and extractive companies have mostly sustained a high level of commitment. The civil society constituency’s efforts to engage stakeholders from communities hosting extractive activities are commendable, even if they have not yet been successful in ensuring direct participation of such groups on the MSG.

The Board has determined that the UK will have until a next Validation commencing on 1 October 2024 to carry out a corrective action regarding contracts (Requirement 2.4). 

Failure to demonstrate progress on “Transparency” in the next Validation may result in temporary suspension in accordance with Article 6 of the EITI Standard. In accordance with the EITI Standard, the UK’s MSG may request an extension of this timeframe or request that Validation commences earlier than scheduled.

Validation scorecard

Component & module

EITI Requirement

Progress

Score

Outcomes and impact

High

91/100

Extra points

Effectiveness and sustainability indicators

1

 

Outcomes and impact

Work plan (#1.5)

Fully met

90

=

Public debate (#7.1)

Fully met

90

Data accessibility and open data (#7.2)

Fully met

90

Recommendations from EITI (#7.3)

Fully met

90

=

Outcomes & impact (#7.4)

Fully met

90

Stakeholder engagement

High

90/100

Multi-stakeholder oversight

Government engagement (#1.1)

Fully met

90

=

Industry engagement (#1.2)

Fully met

90

=

Civil society engagement (#1.3)

Fully met

90

MSG governance (#1.4)

Fully met

90

Transparency

High

88/100

Overview of the extractive industries

Exploration data (#3.1)

Fully met

90

=

Economic contribution (#6.3)

Fully met

90

=

Legal and fiscal framework

Legal framework (#2.1)

Exceeded

100

=

Contracts (#2.4)

Mostly met

75

Environmental impact (#6.4)

Not assessed

-

=

Licenses

Contract and license allocations (#2.2)

Fully met

90

License register (#2.3)

Fully met

90

Ownership

Beneficial ownership (#2.5)

Fully met

90

State participation

State participation (#2.6)

Not applicable

-

=

In-kind revenues (#4.2)

Not applicable

-

=

SOE transactions (#4.5)

Not applicable

-

=

SOE quasi-fiscal expenditures (#6.2)

Not applicable

-

=

Production and exports

Production data (#3.2)

Fully met

90

=

Export data (#3.3)

Fully met

90

=

Revenue collection

Comprehensiveness (#4.1)

Fully met

90

=

Barter agreements (#4.3)

Not applicable

-

=

Transportation revenues (#4.4)

Not applicable

-

=

Disaggregation (#4.7)

Fully met

90

Data timeliness (#4.8)

Exceeded

100

Data quality (#4.9)

Fully met

90

=

Revenue management

Distribution of revenues (#5.1)

Fully met

90

=

Revenue management & expenditures (#5.3)

Not assessed

-

=

Subnational contributions

Direct subnational payments (#4.6)

Not applicable

-

=

Subnational transfers (#5.2)

Fully met

90

=

Social and environmental expenditures (#6.1)

Fully met

90

Overall score

High

90/100

 

Corrective actions and recommendations

The EITI Board agreed the following corrective action to be undertaken by the UK. Progress in addressing this corrective action will be assessed in the next Validation commencing on 1 October 2024:

  1. In accordance with Requirement 2.4.a, the UK should disclose any contracts and licenses that are granted, entered into or amended from 1 January 2021, including relevant annexes, addendum and riders where applicable. In accordance with Requirement 2.4.c.ii, the UK should publish a comprehensive overview of all active extractive contracts and licenses, indicating which are publicly available and which are not. For all published contracts and licenses, it should include a reference or link to the location where the contract or license is published. If a contract or license is not published, the legal or practical barriers should be clearly documented and explained and comprehensively resolved ahead of the second phase of Validation for Requirement 2.4 starting in January 2022.

The UK is encouraged to consider the following recommendations to strengthen EITI implementation:

Outcomes and impact

  1. To strengthen implementation and the alignment of EITI objectives with national priorities, the UK is encouraged to consider ways of strengthening the UKEITI’s engagement on the energy transition debate with a view to expanding the leadership by example for other EITI implementing countries, as is planned by the MSG for 2022. The MSG may wish to consider ways to strengthen its role as a platform for public debate on domestic and international policy issues relevant to EITI.

  2. To strengthen implementation, the UK may wish to consider additional capacity-building efforts, especially with civil society, to improve public understanding of UKEITI findings and encourage use of the information by citizens, the media, and others. The UK could consider opportunities to use the UKEITI to facilitate access and citizen input to existing channels of multi-stakeholder consultations on extractive governance, for example by building on their work to date in referencing ongoing public consultations on the UKEITI website.

  3. To strengthen the accessibility and usability of data, the UKEITI and government are encouraged to ensure that extractive sector data used in all charts and tables published by UKEITI is systematically published in machine readable and inter-operable format, and to code or tag EITI disclosures and other data files so that the information can be compared with other publicly available data in accordance with Requirement 7.2.d.

  4. To further strengthen the UKEITI’s accountability, the MSG is encouraged to consider innovative ways of engaging the broader constituencies in the MSG’s annual review of outcomes and impact of implementation in accordance with Requirement 7.4, building on the findings of its impact assessment in 2020.

  5. In order to increase its impact and the efficiency of its activities, the UKEITI may wish to consider mechanisms to more closely align the findings of impact studies with annual work planning and activity planning.

Stakeholder engagement

  1. To further strengthen civil society engagement, the civil society constituency is encouraged to continue outreach efforts toward civil society representatives from local communities hosting extractive industries and to sustain efforts to further broaden the constituency. The constituency is encouraged to consider what new areas of UKEITI focus, such as the energy transition and prospects for strategic minerals, could help engage a broader segment of civil society in EITI implementation.
     
  2. To strengthen implementation and the multi-stakeholder oversight of EITI implementation, all constituencies on the MSG are encouraged to continue efforts to ensure that all MSG seats are filled by members that are proactively engaged in all aspects of EITI implementation. As the MSG continues its strategic discussions about the future focus of UKEITI on emerging areas of implementation, such as oil and gas infrastructure decommissioning, prospects for strategic minerals and other areas such as the energy transition, it may wish to reconsider the structure of constituencies’ representation on the MSG to ensure that all appropriate stakeholders are represented on the MSG to make a meaningful contribution on these areas. All constituencies on the MSG, including government, are encouraged to consider proactive ways of fulfilling the national UKEITI objective of contributing to international efforts to further transparent and accessible disclosure systems, including in collaboration and peer exchanges on emerging issues of focus for UKEITI including environmental aspects of the extractive industries, the energy transition and beneficial ownership transparency.

Transparency

  1. To strengthen environmental aspects of EITI implementation, the UK may wish to consider using its EITI disclosures to cover the rules and practices of environmental management and monitoring of extractive investments in accordance with Requirement 6.4.a. The UK could also consider disclosures on regular environmental monitoring procedures, administrative and sanctioning processes, as well as environmental liabilities, environmental rehabilitation and remediation programmes in accordance with Requirement 6.4.b.

  2. To strengthen implementation, the UK is encouraged to ensure public disclosure of information on awards and transfers of licenses on an annual basis, for all types of extractive licenses awarded by each of the 11 licensing authorities. This information should include the technical and financial criteria assessed, as well as clarity on license transfer rules and practices.

  3. To strengthen implementation, the UK is encouraged to ensure that information on active licenses in the mining, oil and gas sectors is comprehensively disclosed, at the least for licenses held by material companies include in the scope of UKEITI reporting. This information should include license coordinates, dates of application, award and expiry, and commodity(ies) covered.

  4. To strengthen implementation, the UK is encouraged to ensure that the MSG publishes an assessment of the comprehensiveness and reliability of beneficial ownership disclosures of all companies holding or applying for a mining or oil and gas license on a regular basis as a means of providing a diagnostic of disclosures in practice. The UK is urged to ensure that any politically exposed persons be identified in public disclosures of the beneficial ownership of extractive companies in accordance with Requirement 2.5.d.

  5. To strengthen implementation, the UK may wish to publish clarifications of whether there are any instances of multiple extractive agreements that are substantially interconnected and considered to form a single project for the purposes of levying any revenue streams imposed at a project-level in the UK.

  6. To strengthen implementation, the UK may wish to consider strengthening disclosures in the framework of Requirement 5.3 to address issues of public concern highlighted in the UKEITI’s 2020 impact study, such as the energy transition and intergenerational equity.

  7. To strengthen implementation, the UK may wish to reconsider its approach to materiality and expand the scope of UKEITI disclosures of financial data to include indirect taxes related to the environment such as the Aggregates Levy, disclosing the requisite information listed under Requirement 6.1.b. In order for Requirement 6.1 to be considered exceeded, the UK would have to ensure comprehensive and reliable disclosures of voluntary social expenditures and environmental payments to government, while ensuring that disclosures of information mandated under Requirement 6.1 was systematically disclosed through government and company systems.

The government and the MSG are encouraged to consider these recommendations, and to document the MSG’s responses to these recommendations in the next annual review of outcomes and impact of EITI implementation.

Background

Overview of the extractive industries

An overview of the extractive industries is accessible on the country page of the EITI website for the UK.

History of EITI implementation

The history of implementation is accessible on the country page of the EITI website for the UK.

Explanation of the Validation process

An overview of the Validation process is available on the EITI website. The Validation Guide provides detailed guidance on assessing EITI Requirements, while the more detailed Validation procedure include a standardised procedure for undertaking Validation by the EITI International Secretariat.

The International Secretariat’s country implementation support team include Sam Bartlett, while the Validation team was comprised of Alex Gordy, Christopher Wilson, Mark Burnett and Matt Mossman.

Confidentiality

The practice in attribution of stakeholder comments in EITI Validation reports is by constituency, without naming the stakeholder or its organisation. Where requested, the confidentiality of stakeholders’ identities is respected, and comments are not attributed by constituency.

Timeline of Validation

The Validation of the UK commenced on 1 July 2021. A public call for stakeholder views was issued on 1 June 2021. Stakeholder consultations were held virtually on 7-22 July 2021. The draft Validation report was finalised on 16 August 2021. Following comments from the MSG on 13 September 2021, the Validation report was finalised for consideration by the EITI Board.

Resources

 

Keywords: Validation
Country: United Kingdom