Environmental reporting

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.

Why is environmental reporting important?

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.

Key benefits of environmental reporting

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.

Environmental reporting in action

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.

Civil society in the DRC builds on information in EITI reporting

The 2017 EITI Report by the DRC, published in December 2019, included information on the evaluation of environmental impact assessments for the purposes of granting licenses. It also included partial disclosures of environmental payments by companies. Following the report publication, a local NGO published recommendations encouraging the expansion of reporting to include additional environmental payments, the publication of environmental impact assessments and the audit of the revenues allocated to the rehabilitation fund.  

Colombia EITI produces guide to environmental payments

The EITI in Colombia has published a guide to environmental payments in the extractive sector. The guide identifies 14 different fiscal instruments, ranging from those applicable to all companies to fees and taxes specific to oil, gas and mining. In Colombia these include payments for water and forest use, insurance, mine closure, licenses and fines. The guide explains who is responsible for collecting these payments and how they are calculated and used.

Guide

Monitoring compliance with social and environmental regulation in Mexico

In Mexico, the EITI conducted a scoping study of social and environmental regulation affecting the extractive industry. The study identified opportunities to improve the disclosure of relevant data to allow citizens to monitor actual compliance with norms and regulations. It found that while the legal and regulatory framework is adequate to provide public information, there are cases in which information on practice will improve monitoring capacity. These include sanctions, insurance, remediation, social impact evaluations and environmental impact.

Scoping study (in Spanish)

EITI reporting in Zambia highlights challenges in environmental oversight

In Zambia, companies are required under the EITI to report payments to the Environmental Protection Fund (EPF). EITI reports have highlighted challenges in the oversight of the EPF and recommended improving its implementation by setting up a clear investment policy, appointing a fund manager and ensuring that all mining companies comply with the EPF requirements. These recommendations are being followed up by the Ministry of Mines and Mineral Development. 

Mongolia documents budgetary payments and refunds

In Mongolia, mining companies are required to deposit 50% of their annual budget for environmental protection to the environmental protection account in each region of operation. This amount is refunded to the companies on meeting their obligations as set out in environmental impact assessments. The 2018 EITI Report documents that no refunds were made in 2018. It further provides information on production areas rehabilitated during the year as well as an overview of water and waste fees paid by reporting companies.

Understanding water extraction in Germany

Germany’s EITI reporting covers environmental aspects and subsidies. Water extraction is a key feature of many mining projects. Most states levy fees for the use of ground and surface water, which act as incentives for a sustainable water management programme. Following an initiative by the EITI in Germany, an overview of fee rates in Germany’s natural resources sector is publicly accessible on the government website. This is the first time that such a comprehensive overview has been published, giving stakeholders greater insights into the management of water resources.

Requirements for EITI implementing countries

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.

Helpful resources for implementation 

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 Development Programme (UNDP) has developed guidance for the extractive industries, including on environmental governance.
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).

Key publications and resources

Transparency in Transition - Climate Change, Energy Transition and the EITI

Published Date:

April, 2020

Publisher:

Chatham House

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.

Coverage of environmental information in EITI reporting

Published Date:

November, 2017

Publisher:

EITI

A review of how some EITI countries are covering environmental information in EITI reporting.

Download paper Download paper in Spanish

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,