USA: Publish What You Pay calls on extractive companies to comment on latest SEC payment disclosure rules; including company responses

On 15 January 2020, the U.S. Securities & Exchange Commission (SEC) released the latest proposed rule to implement Section 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Section 1504 requires companies operating in the extractives sector and listed on US stock exchanges to disclose payments to governments. For more background on the SEC's drafting process, and criticism it received from anticorruption groups, see our previous story on the topic.

Publish What You Pay (PWYP) urged companies committed to the principles of the Extractive Industries Transparency Initiative (EITI) and listed on US stock exchanges to comment on the SEC's proposed rule. In an open letter, PWYP argued that this rule would deviate significantly from the EITI global transparency standard, particularly in its definition of project-level reporting, and "would be a marked step backwards in the global movement to ensure that stakeholders have access to relevant information about the extraction and sale of their country's natural resource wealth."

PWYP invited 25 oil, gas and mining companies to answer the following two questions:

  • Does your company support the EITI Standard's definition of project-level reporting?
  • Do you agree that this definition should be adopted by the SEC in its final rule?

We invited AngloGold Ashanti, ArcelorMittal, Barrick Gold, BHP, BP, Chevron, ConocoPhillips, Eni, Equinor, ExxonMobil, Freeport-McMoRan, Gold Fields, Hess Corporation, Hudbay, IAMGOLD, Kinross, Kosmos Energy, Marathon Oil, Newmont, Noble Energy, Petrobras, Rio Tinto, Shell, Total and Vale to respond. Their responses or non-responses are recorded below.

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Article
16 March 2020

EITI calls on SEC to align rules with international transparency efforts

Author: EITI

...The EITI’s comments focus on two aspects of the proposed rule: the importance of alignment with international transparency efforts, and the definition of project-level reporting.

Mark Robinson, the EITI’s Executive Director, commented on the need for alignment between the SEC rule and EITI and other international reporting requirements. “An SEC rule that is well aligned with the EITI and other international reporting requirements in the extractives sector would send a strong signal to the 53 countries implementing the EITI to accelerate their work,”...The provisions of the EITI Standard are well aligned with reporting requirements in the EU, the UK, Norway and Canada. To date, EITI implementing countries have disclosed USD 2.62 trillion in company payments and government revenues through EITI reporting...

The costs of transparency to industry are low and the benefits can be substantial. Transparency can foster greater trust in relations with stakeholders and local communities, better risk management, improved company reputation and the opportunity to demonstrate accountability and leadership. The investor community has been supportive of project-level reporting, noting how such reporting can contribute to a more stable investment climate and improve investors’ ability to manage risk.

The proposed SEC rules are, however, inconsistent with the EITI Standard, which requires implementing countries to introduce project-level disclosure in reporting covering fiscal years ending on, or after, 31 December 2018...

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NGO rejoinder
6 March 2020

Most companies endorse implementation of strong US transparency law

Author: Publish What You Pay

...several Extractive Industries Transparency Initiative (EITI)-supporting companies confirmed their support for the global transparency standard. This sends a strong message to the U.S. Securities & Exchange Commission (SEC)...

BP, BHP, Eni, Gold Fields, Kosmos, Newmont, Rio Tinto, and Total all submitted statements illustrating their companies’ willingness to uphold their obligations under the EITI-supporting company expectations to publicly declare support for the EITI Standard and a mandatory disclosure rule in the US that aligns with the Standard. “This is an important moment for the oil industry in particular,” said Kathleen Brophy, Director of Publish What You Pay-US. “This rule is a test for how oil and gas companies want the world to see them. Are they for secrecy, or are they for the public’s and investors’ right to know?...

EITI Board Member Chevron and EITI Supporting Company ConocoPhillips both mentioned competitive harm and undue compliance costs as their primary concerns...these hypothetical concerns have been disproven by the experience of 850 companies that have now disclosed...more than $800 billion in payments under payment disclosure laws in Canada, the EU, Norway and the UK. Barrick and Shell expressed their support for the EITI Standard but failed to promote the adoption of a strong rule in the US. A number of other companies including ArcelorMittal, Equinor, Exxon, Freeport McMoRan, Hudbay Minerals, and Kinross failed to use this opportunity to expressly support the EITI Standard or call on the SEC to align its final rule with the Standard.

A recent comment from French oil major Total to the SEC further debunks the burdensome compliance cost argument...Total shared that its costs for compliance with the EU payment disclosure regulations represented roughly .0007% of the company’s overall operating costs in 2019...

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Article
6 March 2020

Vale's Response

Author: Vale

Vale has publicly declared its support for the EITI in its sustainability reports and reiterates its commitment annually. Since 2014, Vale has directly endorsed this voluntary initiative that promotes transparency in financial flows between extractive organizations and the governments of countries in which they operate. The company participates in the multi-stakeholder group in Mozambique and Indonesia (through the membership to the Indonesian Mining Association)... Vale is not opposed to the SEC adopting this definition in its final rule. Nevertheless, Vale does not consider the adoption of this definition to be a condition to practice the transparency standards of the EITI. Regardless of the SEC decision, Vale is focused on being more transparent in its disclosure of tax transparency reports.

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Company response
4 March 2020

ArcelorMittal's response

Author: ArcelorMittal

ArcelorMittal has been supporting the Extractive Industries Transparency Initiative since 2009, after being an active participant of the EITI in Liberia and a corporate member since May 2007. In addition, we are a pro-active member of the Initiative for Responsible Mining (IRMA) which also has similar ambitions to the EITI. In the USA we have been following the existing Dodd-Frank Wall Street Reform and Consumer Protection Act and will be reviewing the impact on how these revisions will change the nature of what we disclose.

Company non-response
2 March 2020

AngloGold Ashanti did not respond

Business & Human Rights Resource Centre invited AngloGold Ashanti to respond. AngloGold Ashanti did not respond.

Company response
2 March 2020

Barrick Gold's response

Author: Barrick Gold

...Barrick was the first Canadian mining company to be a signatory to Extractive Industries Transparency Initiative (EITI)...In 2014, Barrick joined with our industry peers, NGOs, and the Canadian government to advocate for and develop comprehensive legislation in Canada on revenue transparency in the extractive industry. The resulting legislation – the Extractives Sector Transparency Measures Act (ESTMA) – has entered into force and we have reported on our taxes paid to government on both a project and payee basis since 2016. As a proud EITI member and long-time advocate for revenue transparency, we support the EITI Standard's definition of project-level reporting. Regarding the proposed SEC definition, we believe that a broadly consistent and workable approach to the disclosure of payments and revenues is required...Barrick has consistently pushed for near equivalency across revenue transparency regulations and encourages the SEC to allow the flexibility for companies to continue to report on a project by project basis if it is already doing so in other jurisdictions...

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Company non-response
2 March 2020

Hess Corporation did not respond

Business & Human Rights Resource Centre invited Hess Corporation to respond. Hess Corporation did not respond.

Company non-response
2 March 2020

IAMGOLD did not respond

Business & Human Rights Resource Centre invited IAMGOLD to respond. IAMGOLD did not respond.

Company non-response
2 March 2020

Marathon Oil did not respond

Business & Human Rights Resource Centre invited Marathon Oil to respond. Marathon Oil did not respond.

Company response
2 March 2020

Newmont's Response

Author: Newmont

...Newmont has been an active and vocal supporter of revenue transparency and an original signatory to the Extractive Industry Transparency Initiative (EITI). Newmont has built transparency and reporting into our global governance and social responsibility policy and performance, and we currently utilize regular independent auditing mechanisms to assure conformance....It is our view that responsible development of mineral resources can bring great benefir to a country and its people, but only when good governance is in place to monitor the distribution of those benefits... We believe that Dodd-Frank Section 1504 can complement the EITI and its requirements should be closely aligned with the EITI Standard. This will ensure companies can develop a consisitent approach to project-level reporting across multiple jurisdictions and broaden and deepen the transparency agenda globally... We encourage stakeholders to work constructively through the rule-making process to ensure an efficient and globally consisitent regulatory framework is established that broadly meets all stakeholder needs while ultimately ensuring the overall goal of increased transparency and reporting of revenues...

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