More Good News in Extractive Industries
February 16th, 2011
February 16th, 2011
In July of last year President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act–also known as the “financial overhaul bill”—into law. The bill created a Financial Stability Oversight Counsel, which consolidates oversight of consumer products and alert regulators to emerging threats. It established a consumer financial protection bureau, which will be housed at the Fed, and will regulate mortgage lending, credit and debit cards and other consumer loans. And it had one amendment, buried amongst all the rest, called Energy Security Through Transparency (ESTT), which requires companies listed on the U.S. stock exchange to disclose payments to governments for oil, gas, and mining. They will provide this information in their SEC filings and it will be publicly available.
As Raymond Baker, director of Global Financial Integrity, put it: “This is…good for business. The more informed an investor is on the business practices of a company operating in high-risk areas, the more equipped they are to assess the risks and strengths of their investment choices. Given the fact that nearly all internationally competitive oil, gas, and mining companies are registered with the SEC this new legislation will have a global impact on investment decisions.”
The White House applauded the ESTT amendment for setting “a new standard for corporate transparency.” The Office of the Press Secretary went on to note “The challenge for us now is to make this a global standard. The United States is committed to working with other countries to ensure the implementation of similar disclosure requirements in other financial markets and will make this a priority in the year ahead.”
As Collin Swan described in a previous Task Force blog:
This new commitment shows that the White House recognizes the ESTT amendment as an extension of a global movement in favor of similar disclosure requirements within extractive industries worldwide. The Extractive Industries Transparency Initiative (EITI), an international coalition of governments, companies and civil society organizations, has been working since 2002 towards an international standard requiring extractive industry companies to disclose payments made to host-governments of resource-rich countries. Last month, the Hong Kong Stock Exchange implemented country-by-country disclosure requirements for new applicants operating in the oil, gas and mining sectors. The International Accounting Standards Board is also currently considering a rule change that would integrate country-by-country disclosure into its accounting standards.
It seems that Mr. Swan’s predictions may come to fruition much sooner than anyone had expected. Last week French President Nicolas Sarkozy pledged to spearhead efforts to pass similar legislation as the ESTT in the European Union. His proposal would require oil, gas, and mining companies registered in Europe to disclose their resource-related payments to governments. Sarkozy intends to organize a meeting on the issue at the March G8 and G20 meetings in Paris, and will ask the EU to “adopt as quickly as possible legislation forcing companies in the extractive sector to publish what they pay to host countries.”
These moves are positive steps forward toward global country-by-country reporting in the extractive industries. Through financial secrecy, extractive industries keep millions in poverty as they enable corruption and illicit financial flows on a massive scale. We will continue to watch these developments with a patient optimism as more countries join this new standard.
RT @latindadd: Alfonso Daniels da @FinTrCo: A EITI foi lançada em 2002 para exigir a divulgação dos beneficiários efetivos das indústrias e…
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