EITI: The Case for Company-by-Company Reporting
By Sefton Darby, Revenue Watch Institute, June 2009.
Download the report here
Since the inception of the Extractive Industries Transparency Initiative (EITI), the reporting method for company payments to governments has been one of the most contentious issues, specifically, whether disclosures should be made on a disaggregated, company-by-company basis or in aggregated form, without company-specific breakdowns.
In this Revenue Watch report, author Sefton Darby lays out the most common arguments for an aggregated reporting standard, details the weaknesses of each argument, and presents several arguments that civil society groups can use when presenting company-by-company reporting as the preferable alternative to both government and extractive industry officials.
Supporters of aggregated reporting have argued variously that the EITI is more focused on government revenue than company payments; that disaggregated reporting is not best for citizen comprehension or satisfaction; that disclosure of company payments does not help combat corruption; and that disaggregation undermines companies' confidentiality and their competitive edge, among other claims.
Darby addresses each of these assertions and provides background and expert knowledge for transparency advocates as they promote the disaggregated reporting option. The report finds that not only is there little substance to many of these arguments, but that a disaggregated approach shows clear benefits to EITI stakeholders.
Almost half of the countries currently producing EITI reports already do so in a disaggregated manner. Companies operating in those countries tend to be neutral on the issue. Only a small number of companies are actively engaged in arguing for aggregated disclosure, and even those companies have accepted disaggregated disclosure in countries where the government has decided to adopt such an approach.
Sefton Darby is a veteran EITI advocate who has worked in numerous implementing countries as they determine how best to meet EITI requirements and adapt those requirements to specific national needs.