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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Company non-response
2 March 2020

Noble Energy did not respond

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

Company non-response
2 March 2020

Petrobras did not respond

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

Company response
28 February 2020

BP's response

Author: BP

...Our position is clear: convergence on a standard approach to reporting meaningful, material data across the different reporting jurisdictions - in a manner that avoids commercial harm to companies - would improve the quality and comparability of the information provided...we would welcome convergence on the definition of a ‘project’ for the purposes of disclosing project-level payments: defining extractive projects in a consistent manner across all countries would foster improved transparency and support accountability in practice...

BP believes that the adoption of an implementing Rule 13q under the Dodd Frank Act should aim to maintain a level playing field among oil and gas companies and encourage convergence on a standard approach by seeking alignment with EU rules and consistency with the new EITI Standard to the greatest extent possible...BP will continue to engage contructively with public debate in this area, to support the EITI Principles and to promote transparency of payments to governments. Accordingly, we will respond directly to the SEC during the current public comment period, to give BP’s view of the proposed Rule 13q.

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Company response
28 February 2020

Freeport-McMoRan's response

Author: Freeport-McMoRan

...We believe that increased transparency of natural resource revenues and payments promotes better governance and accountability regarding the distribution of natural resource revenues...Freeport-McMoRan has endorsed and committed to support the EITI since 2008. This support includes direct financial contributions from the company as well as contributions through the International Council on Mining and Metals (ICMM) of which we are a founding member. Freeport-McMoRan maintains significant mining operations in Indonesia and Peru, both of which are EITI-implementing countries, and we actively support and participate in associated in- country processes.

...as a U.S. listed company, we will continue to comply with Securities Exchange Commission disclosure regulations. In addition to our country-level EITI commitments and regulatory reporting obligations, our practice is to voluntarily report cash payments to governments in all jurisdictions where we conduct business. Please refer to our annual Working Toward Sustainable Development Reporting for additional information.

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Company response
28 February 2020

Hubday's response

Author: Hudbay Minerals

I appreciate that your organization is working to support the EITI and overall progress in ensuring the open and accountable management of government revenues from extractive industries, and that Publish What You Pay also does much good work to further this cause. The only two countries in which we generate resource revenues and make related payments to government are Canada and Peru. We actively support EITI activities in Peru, and we supported the development of transparency regulation in Canada.
However, we have not carried out sufficient analysis of the proposed SEC rules versus EITI and other global standards to take a position regarding the PWYP letter.

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Company response
28 February 2020

Kinross's response

Author: Kinross

Kinross is a supporting member of EITI and as such participates in project level reporting of payments to Governments. Kinross has disclosed such information since 2010 through its benefit footprint, published in its regular CR reports available at www.kinross.com, and more recently through Canada’s ESTMA law.  The company will continue this reporting, regardless of possible changes to US SEC rules.   Kinross is not currently engaged in lobbying the US Federal Government on policy matters and is not in a position to comment on the matter you have requested. However, as a point of efficiency, Kinross supports international alignment of reporting requirements. 

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Company response
28 February 2020

Kosmos Energy's response

Author: Kosmos Energy

...[W]e refer all parties to Kosmos Energy’s long-held position on transparency around payments to governments in the extractive industries... We believe resource revenues are more likely to be managed in the best interests of a country if payments and receipts are made transparently, and if accountability measures are in place for the use of these revenues... Kosmos is committed to advocating for transparency... with host governments. Kosmos is also a Supporting Company of the Extractive Industries Transparency Initiative (EITI)... We are committed to meeting or exceeding EITI requirements and have resolved to report and publish annually material payments to governments... [We] disclose payments to governments at the project level as defined in the European Union Accounting Directive. We believe that this type of disclosure is beneficial to investors, civil society, and local communities, and reflects evolving international expectations. We therefore support the EITI Standard’s definition of project-level reporting... [I]t would be helpful and more cost-efficient if there was substantial international alignment on this definition and on payments-to-government reporting requirements more broadly... [O]ur approach to transparency helps us to manage social and political issues... We are also encouraged that civil society is committed to using payments to governments data constructively – an essential element in ensuring that transparency policies achieve the aim of strong resource governance.

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Company response
28 February 2020

Rio Tinto's response

Author: Rio Tinto

... Rio Tinto is a founding member of the EITI, a supporter of the EITI Principles and has played an active role in this global standard since 2003. Rio Tinto supports the EITI’s position on project-by-project reporting. Our annual taxes paid report discloses country-by-country data on taxes and payments to government, as well as project-by-project disclosures. We also file additional reports to disclose payments to governments connected with extractive activity to meet requirements in the UK and Canada (Chapter 10 of EU Accounting Directive 2013/34 and the Extractive Sector Transparency Measures Act respectively). These reports include the project-by-project information disclosed in our annual taxes paid reports. Further, Rio Tinto encourages the harmonisation of reporting obligations aligned with global best practice. We believe that the creation of a consistent standard by which companies can report their contributions with integrity and responsibility is essential to promoting confidence in business. Accordingly, we support the harmonisation of the section 1504 proposal with the requirements under the UK and Canadian mandatory disclosure regimes.

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Company response
28 February 2020

Shell's response

Author: Shell

Shell has been a long standing member of EITI. We have worked within the EITI framework to help develop the standards, and we support these standards, including the EITI standard’s definition of project-level reporting. The implementation of EITI standards is a government-led process, with multi-stakeholder support, and we encourage countries to join EITI.

Shell is subject to the UK requirements regarding the detailing of payments to governments in relation to our extractive activities. These include references to project-reporting which are similar to the EITI standard.

We believe that close alignment in reporting standards is beneficial to all stakeholders, and we support countries in implementing their transparency ambitions. To the extent that such alignment is not possible, we believe an equivalence clause is helpful.

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Company response
28 February 2020

Total's response

Author: Total

As part of the public consultation opened by the SEC regarding the proposed rule on Disclosure of Payment by Resource extraction issuers, Total has already submitted its comments to the SEC. Total considers that the re-introduction of Rule 13q1 under the Dodd Frank Act should enhance transparency for the benefit of the whole industry and its stakeholders and, to this end, restore a level playing field among major publicly listed oil and gas companies. As a result, the Group strongly supports that the SEC align the Proposed Rule with the European Directive 2013/34/EU, more stringent mainly on two key points : (i) the threshold above which payment to foreign governments must be presented in the report and (ii) the definition of the term “project”.  Our detailed position is available on the SEC website : https://www.sec.gov/comments/s7-24-19/s72419-6791650-208331.pdf 

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