Disclosures that matter for citizens: Social, environmental and local impacts of extractives

EITI Global Conference: Executive Session 4

Session Summary

Too often, local populations bear a disproportionate share of the costs linked to the sector, while not being sufficiently represented in dialogue around its management and oversight. In response to demands from local stakeholders in implementing countries, the EITI has contributed to disclosures of information about the social and environmental impact of the extractive industries. Stakeholders have used this information to monitor social and environmental payments by companies, track company payments to communities that are transferred through the central government, and use the multi-stakeholder platform to discuss the economic, social and environmental implications of extractives projects. 

The session aimed to address demands in EITI countries for information on the social and environmental impact of the extractive industries. It looked at how local governments and communities have used information and multi-stakeholder dialogue to better understand the benefits and challenges related to extractives projects that affect them and how potentially negative impacts can be mitigated. 

The session can be viewed in full here.

Speakers

Moderator: Ms Penny Davies, International Program Director for Natural Resources and Climate Change, Ford Foundation

Speakers: 

  • Ms Delgermaa Boldbaatar, Program Coordinator, Disclosure to Development (D2D) Mongolia

  • Prof. Dr. Edda Müller, Germany EITI and Chair of Transparency International Germany

  • Mr Eduardo Guevara Dodds, Vice-minister of Hydrocarbons, Peru 

  • Mr Juan Cruz Vieyra, Senior Specialist at the Institutions for Development Sector, InterAmerican Development Bank (IDB)

  • Ms Lydia Boarlaza, Chairperson of the Board of Directors of Madagascar Consolidated Mining S.A.

Session Details

The moderator, Penny Davies, opened the discussions by noting that the extractive projects could affect local citizens in communities and citizens both positively and negatively. Panellists were asked to focus on how data could better capture the impact of the extractive sector at the local level, on what information related to social and environmental regulation and compliance, and on how multi-stakeholder dialogue at the subnational level and access to data could empower local communities to hold governments and companies accountable.

Drawing from the example of Mongolia, Delgermaa Boldbaatar highlighted the importance of encouraging tri-partite dialogue at the local level to help build trust between local herders and companies. She noted that the EITI’s added-value resided in the fact that it provided a multi-stakeholder platform at the local level and comprehensive revenue data. She stressed that the IFC’s D2D program recent data landscape research found that stakeholders were not using available natural resource related datasets for problem-solving. She highlighted the importance of a demand-driven process that addressed local concerns, through stronger communication with help from skilled infomediaries.

Prof. Dr. Edda Müller stated that, while local citizens were interested in the social and economic impact of the extractive sector, its environmental impact was also key. She explained that data about how companies complied with the applicable legislation in Germany in terms of minimizing environmental impact, as well as data about subsidies in industries such as coal mining, were of particular interest.

Hon. Eduardo Guevara shared the experience of subnational EITI implementation in five provinces in Peru. He highlighted that dialogue with local civil society organisations had emphasized concerns around corruption and the incapacity of local authorities to develop infrastructure despite revenues from the extractive sector – showing high demand for data around the allocation of such revenues at the subnational level and the need for authorities to adopt a holistic approach when addressing the impact of the industry.

Juan Cruz Vieyra mentioned examples from highly biodiverse areas in Latin America where there was a strong need to adopt best practices to mitigate the impact of the sector. He stressed the importance of using new technologies to disclose and disseminate geo-referenced data, coupled with strong mecanisms to ensure the participation of local actors, for example by providing information in indigenous languages.

Lydia Boarlaza presented the added value of EITI implementation in Madagascar, where reporting on subnational payments and transfers revealed bottlenecks in the disbursement process and challenges in the allocation of revenues, and led to relevant state agencies to publishing key data directly online. She argued that further work was needed to improve environmental reporting as well as the participation of women in the oversight of the sector, with companies working in partnership with CSOs.

Q&A

The moderator called on representatives from Papua New Guinea, Iraq, Cote d’Ivoire and the Responsible Mining Foundation respectively to provide initial comments on the panellists’ interventions. Paul Barker noted that many points made rang true in PNG too, and that it was important to engage with all stakeholders early to discuss key issues such as the environmental impact of extractives. Dr. Nidhal Abdul-Zahra highlighted that there were similar concerns around the use of oil revenues in investments at the provincial level in Iraq. Hélène de Villiers Piaget noted that dissemination of data should be simplified and tailored to different audiences, reflecting general open data principles, and highlighted data about the life-cycle of a mining project as an area of strengthening disclosures by companies. Michel Yoboué reflected on challenges to disclose data around the use of extractive revenues through mechanisms such as local development funds, comparing the experience of Peru with that of Cote d’Ivoire.

Other participants raised questions the management of local revenues, the role of a country such as Germany in transferring technological know-how to other countries that wished to develop their industry and the role of subsidies from the state in the industry. Some further discussed how companies could be held accountable in an environment where the rule of law was too weak, as well as how development partners and donors could be held accountable with regards to delivering results through projects they were supporting in mitigating the impact of the sector. Finally, it was noted that, while the EITI Standard was silent on the issue of free, prior and informed consent, countries such as the Philippines and the Peru addressed it through EITI implementation.   

Background

Information about the social and environmental impact of the extractive industries, ranging from monitoring social payments by companies to explaining regulations and monitoring compliance, has long been demanded by stakeholders in EITI implementing countries. In particular, regional and local stakeholders have recurrently complained that without information that allows them to understand the impact of resource extraction in their territories, it is impossible to ensure that extraction is done sustainably. Understanding and ensuring adequate mitigation of risks and costs borne by local communities is key for companies’ license to operate. 

The 2016 EITI Standard requires that implementing countries disclose data about mandatory social expenditures undertaken by companies (6.1), as well as information about revenues paid directly to communities (4.6) or transferred to local governments by the central authorities (5.2). Many countries have gone beyond, looking not only at voluntary social expenditures but also at how revenues are managed at the local level. EITI Reports in close to thirty countries have also started to address various aspects of environmental reporting. The EITI Board agreed changes to the EITI Standard at its 42nd Board meeting in Kyiv, which includes requiring the disclosure of environmental payments, and encouraging reporting on local revenue management and environmental regulation. 

Beyond disclosures, there are several examples of subnational implementation of the EITI’s multistakeholder model, such as in Peru, Mongolia or the Philippines. There are opportunities for the EITI to disclose information as relevant as possible for local stakeholders, helping the latter use data and participate actively in the management and oversight of the sector. The focus on systematic disclosures opens up for more timely and relevant information to be disclosed by the EITI in this prospect.

A large number of partners, government agencies, global NGOs and international agencies are already producing, collecting and disseminating such information. Environmental reporting as part of EITI process should ensure that efforts are not duplicated and synergies are created at the global and local levels.

Video Recording