The transition to a sustainable, decarbonised economy is now reshaping the extractive industries. It will have profound implications for the kinds of data, disclosures and dialogues that will be required to support accountability and good governance. Transparency is also central to international efforts to support the energy transition, including the reporting of emissions and the disclosure of climate risks.
Environmental reporting is the disclosure of information on the management and monitoring of the environmental impact of the extractives industries. This includes information on legal provisions and regulation. It also includes information on environmental management practices within the regulatory framework.
Environmental reporting provisions in the 2019 EITI Standard cover both the publication of data on mandatory and discretionary payments related to the environment regulatory framework in each country and information on environmental impact.
Mining, oil and gas operations have substantial environmental impacts. These impacts are largely regulated by environmental protection agencies, who enforce national legislation and regulations.
Environmental payments can be substantial. Reporting from 14 EITI countries resulted in the estimated disclosure of over USD 0.5bn in mandatory environmental payments for 2018. Environmental taxes may be higher, depending on each country’s taxation regime. For example, EITI disclosures since 1999 have covered an estimated US10.5 bn in environmental taxes, with US9 bn of these tax payments relating to two implementing countries – Kazakhstan and Norway.
The environmental impact of the extractive industries is often a focal point of public debate. Environmental disclosures can raise awareness among affected communities, stimulate debate and promote responsible natural resource management.
In addition to knowing that there is regulatory compliance, stakeholders and the public may wish to access information on the environmental impact of operations and on any payments made by companies to comply with laws, regulations or contracts.
Benefits for citizens
Disclosing environmental payments helps citizens understand whether mining, oil and gas operations are complying with national legislation and regulation.
Information on the environmental impact of operations is relevant for communities affected by operations. It is particularly relevant for communities that depend on the availability of land, water or natural reserves for their livelihoods or for recreation.
Data on extractive sector revenues can help citizens understand the extent to which they are dependent on mining, oil and gas revenue and how these revenues might change as the energy transition progresses.
Benefits for companies
Transparency over payments and environmental impacts can help build trust with affected communities.
Disclosing environmental payments and information on environmental impacts can strengthen a company’s social license to operate.
Data on the contribution of the extractive sector to national revenue can help inform discussion on the future of the sector in partnership with governments, state-owned enterprises and civil society.
Benefits for governments
Environmental payments by companies can be substantial. Visibility over these payments can strengthen public scrutiny and help ensure that revenue is maximised.
Governments can use information on environmental impact to ensure that they have the right legal and regulatory controls in place for mining, oil and gas companies.
Governments can use information on the extractives sector, including payments, revenues, contracts and licenses to model the impact of the energy transition and understand how to reduce their own contribution to carbon emissions.
A wide range of information on environmental impact has been published through EITI reporting, including data on contributions to environmental funds and special accounts, environmental impact assessments, water management, emissions and residuals, certification schemes, environmental liabilities and sanctions and rehabilitation and remediation programmes.
Over 30 countries have used EITI reporting to publish information on environmental impact and management.
Environmental information is relevant through the value chain. For example, information on environmental impact assessments may be included under information on licenses and license registers in EITI reporting. Legal provisions covering environmental management are often contained in extractive contracts concluded between companies and governments, disclosed in accordance with the EITI’s contract transparency requirements.
EITI environmental reporting requirements covers two areas of disclosure. Firstly, Requirement 6.1 in the EITI Standard requires the disclosure of material environmental payments to governments. Secondly, Requirement 6.4 encourages the disclosure of information related to environmental impact and monitoring. Data reported under this requirement has included:
Legal and administrative rules for environmental management
Databases of environmental impact assessments, certification schemes or similar documentation relating to environmental management
Information on environmental monitoring procedures and their administration.
Environmental and energy transition data reported through the EITI complements data on environmental impact published by extractive companies through voluntary reporting mechanisms such as the Global Reporting Initiative and the CDP.
The Global Reporting Initiative has developed standards for corporate reporting on environmental issues including compliance, supplier environmental assessment, water and effluents, waste and emissions.
In 2018, the World Bank published the environmental and social framework for guiding projects and its contribution to development.
The World Bank has also issued guidance on environmental assessments and commitments for borrowers, aiming at informing the mitigation of environmental risks and impact.
Other aspects of environmental management, such as pollution, biodiversity and stakeholders engagement and disclosure are covered in their guidance.
The United Nations Environment Programme, the Principles for Responsible Investment (PRI) UNEP and the International Council on Mining and Metals (ICMM) convened stakeholders to develop and publish a global standard for tailings’ management including public disclosure and access to information.
In June 2020, UNEP published a discussion paper on mineral resource governance including a mapping of governance instruments and initiatives related to mining (many of such related to environmental aspects).
A review of how some EITI countries are covering environmental information in EITI reporting.
SummaryThe EITI Principles emphasise that natural resource wealth should be an engine for sustainable economic growth. Although the EITI Standard does not require or encourage disclosures regarding environmental management, several EITI implementing countries have included some information related to environment as part of their EITI reporting. This paper reviews the coverage environmental taxes,