The Securities and Exchange Commission’s (SEC) regulation giving effect to Section 1504 of the Dodd Frank Act has been published. The rules will require extractives companies in the US to disclose payments made to governments for the commercial development of oil, natural gas or minerals, disclosures that have already become routine in many EITI implementing countries.
It is hoped that the SEC’s rules will strengthen the efforts of the EITI community and others to improve natural resource governance globally and also spur more timely and detailed reporting in EITI countries. It will hopefully also be an encouragement to other major producing countries to join the process.
Bringing the data ‘home’ and informing governance
Whilst this is an important step, no single tool alone can assure better governance. Disclosing information on companies’ payments in New York, London and elsewhere is one form of transparency; making sure that such reporting leads to accountability in Kinshasa, Baku, and other resource-rich regions is a different, but related challenge. Hopefully, companies listed in the US will see the SEC's rules as an opportunity to use the EITI process to ensure a level playing field where they operate and to engage in the public debate to understand how best to manage the sector.
It is welcome that the SEC has recognised the importance of the US-EITI process. Further work is needed to recognise EITI Reporting in other countries so that there is no duplication of reporting and consistency in the data made available to the public.
In 2013 the EITI adopted a new reporting standard, extending the EITI’s reporting requirements well beyond revenue transparency. There are now 51 member countries, publishing EITI Reports that provide essential information on legal regimes, fiscal arrangements, licensing and contracts, state owned enterprises, production and export data, revenue collection and distribution. The EITI Standard was further strengthened in 2016, including ground-breaking requirements on the disclosure of beneficial ownership, and giving greater recognition to countries that make transparency a routine feature of extractive industry governance.
Crucially, this work is owned and implemented by resource rich countries, building capacity and promoting greater accountability in the countries where oil, gas and minerals are extracted. These implementing countries are extending and adapting the EITI reporting process to meet their needs and circumstances.
Publishing data is necessary, but not enough. EITI implementation is most effective when it promotes and informs dialogue between government, industry and civil society, and encourages informed debate about the reforms that are needed to ensure the extractive industries support national development priorities. In the DRC, Nigeria, the Philippines and PNG we are seeing the EITI have a real impact on the ground.
As commodity prices have fallen, the challenges facing resource rich countries have increased. The EITI will continue to be part of the solution.