A Proposal for a Rating Scheme for the EITI Standard

Executive Summary

The question has been raised whether current implementation of the Extractive Industries Transparency Initiative (EITI) standard remains based on the EITI Criteria rather than the EITI Principles. In response, the EITI International Board has set up a Strategic Working Group, charged with making recommendations regarding the strategic direction of EITI, including a review of the EITI Principles, Criteria, and scope, as well as the system for assessing EITI implementation and considering a rating system for the EITI standard.

The purpose of this assignment has been to develop a proposal for such a rating scheme. The scheme should maintain the core EITI Requirements as the minimum standard, but reward high quality EITI processes and reports and complementary actions agreed by implementing countries to realize the EITI Principles. It is envisaged that the proposal will contribute towards the wider EITI Board discussion on the strategic direction for the EITI over the next three to five years.

The design of the proposed rating scheme is based on the pros and cons of several established rating schemes. Most of the reviewed schemes introduce some form of performance rating and include a narrative report to supplement the score. Often, a questionnaire is used for the assessment, taking the form of a self-assessment. Several schemes strive for transparent and objective rating mechanisms verifiable through publicly information. Some have introduced an element of peer review. In terms of weighting, none of the reviewed schemes have opted for variable indicator weights, but rather selected schemes that put equal weights on all indicators or, as an alternative, give a letter grade that cannot be aggregated.

The proposed scheme clearly distinguishes the roles between the various actors involved: the multi-stakeholder group fills out a self-assessment, prepares an EITI progress report, and ensures a broad participatory approach with stakeholders in-country; the International Secretariat performs the role of an independent international expert team, reviews the questionnaires to ensure quality and consistency, performs the rating, and prepares a narrative report following a standard format for all implementing countries; and the EITI Board approves the entire rating and validation process, publishes the report, and implicitly provides the final sign-off by peers.

The proposal aims to be as simple as possible, suggesting that a total of around 30 development- oriented indicators are designed under four separate categories, incorporating the core EITI Requirements and equipped with a catalogue of stylized practices ranging from poor practice to model behavior and be rated objectively on a scale from 1 to 5. To maintain primacy on the EITI Requirements and maintain a minimum standard, a score of no less than 3 for each of the EITI Requirement indicators should be expected to become Compliant.

There is broad-based support among the EITI stakeholders for encouraging implementing countries to go beyond compliance by undertaking additional work to improve transparency, accountability, and stakeholder collaboration. Hence, when designing the indicators, particular focus should be put on rewarding improved EITI reporting, effective communication and MSG governance, and expanding the scope of EITI. Some of the basic issues that define a robust and sustainable Extractive Industries Value Chain should be taken into consideration and indicators should draw on the IMF’s Guide on Resource Revenue Transparency, which lists a series of resource-specific good practices.