I was encouraged by a recent email exchange with CGD visiting fellow Ted Moran, who is off this week to participate in the 5th Extractive Industries Transparency Initiative (EITI) Global Conference in Paris. Ted has been working with Isabel Munilla, Director of Publish What You Pay (PWYP) United States, to increase revenue transparency in extractive industries.
(For those new to this issue: PWYP received the 2010 Commitment to Development Award for their role promoting the Cardin-Lugar Transparency Provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The legislation requires oil, gas, and mining companies registered with the U.S. Securities and Exchange Commission (SEC) to publish how much they each pay to foreign countries and the U.S. government.)
Ted wrote to share some exciting news: some key industry players have begun to recognize the value of a universally-applied disclosure standard.
Launched in 2002, the EITI establishes a global standard for revenue transparency and accountability in the oil, gas, and mining sectors. Over 30 resource-rich countries have implemented or are working to implement the EITI, agreeing to publish what they receive from extractive industries. While this might seem like a good fit with the Cardin-Lugar provision, there’s an important discrepancy: EITI compliant countries can choose to disclose at an aggregate level (i.e. “this is how much we received from all extractive industries in 2010”) or on a company level. This choice creates an uneven playing field that could place U.S. listed firms at a competitive disadvantage, as many of the world’s largest mining, oil, and gas companies are based in China, India, and Russia and are not registered with the SEC.
In a new CGD Note, Ted argues that the remedy is to require all players in extractive industries to provide transparent data on an equivalent basis—that is, company-by-company. It appears that his arguments are gaining traction and that firms subject to the new U.S. law are beginning to push for similar standards internationally in a sort of race-to-the-top. (Eventually, Ted would like to see project-by-project disclosures, believing that the more granular the reporting, the fewer opportunities for corruption, but views a global company-by-company standard as a big step in the right direction.)
I look forward to Ted’s reports from Paris and hope to share more exciting news on this forum soon.