Beyond Transparency: Enhanced EITI standard set to raise the bar

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2013 marks ten years of the Extractive Industry Transparency Initiative (EITI).  At the sixth conference in Sydney from 23th to 24th May a revised standard was agreed and launched. The key questions are will the revisions to the Standard keep it sufficiently fresh and relevant and how to make the jump from transparency of payment data to accountability?

CAFOD has been involved from the early development of the EITI multi-stakeholder initiative.  The newly revised standard does show significant improvements, drawing on the experience of EITI implementing countries over the last decade.  The requirement for EITI reports to include disaggregated data broken down by each company for instance is welcome and long overdue. This will end the situation which Timor-Leste experienced where some companies already reporting on a disaggregated basis under EITI Nigeria wasted a long time arguing against a similar level of disclosure for Timor-Leste’s reports. 

Additional elements which enhance the standard include:

  • Reports have to provide a clearer context for the data so that they are easier to understand. For example, they should set out the contribution of extractive industries to the overall economy, production volumes and values, employment etc.
  • State-owned enterprises are also covered as are payments to sub-national governments
  • As well as reporting payment information, EITI countries will have to report on the process for granting mineral and oil/gas licences and who holds them.
  • Reporting on beneficial ownership – i.e. who actually owns and controls an extractive company is recommended and will become a requirement from 2016
  • Although not yet a requirement, countries are encouraged to publish contracts as well as payment information.

All these measures will help with the next step of EITI’s development – moving beyond transparency to accountability so the technical data in the reports actually influences public debate about how natural resources are being used and who is benefiting.

Enhanced EITI does look more useful in that respect. CAFOD partners in Colombia and the Democratic Republic of Congo have stressed the importance of being able to access mining contracts in order to get a fuller understanding of projects with a direct impact on their lives and communities.

The theme of the Sydney conference is Beyond Transparency. Perhaps another equally important theme for this year is Beyond EITI.  The helpful revisions to the EITI Standard need to be placed in the context of significant developments in the introduction of mandatory reporting requirements for oil, gas and mining companies. 

In the early days EITI hindered rather than helped when it came to Publish What You Pay’s campaign to change the law.  But after a few years, when there was more evidence of both the possibilities and limitations of this multi-stakeholder approach, law-makers realised that EITI on its own would not be enough to deliver transparency. The US Dodd-Frank law and the revised EU Accounting Directive requiring extractive companies to report on their payments for each country and project will reach beyond the EITI’s 39 implementing countries and provide more timely and reliable data on payments.

A strong message in Sydney from governments, civil society and companies was that transparency is not an end in itself but needs to support accountability and wise management of natural resources.  EITI alone will not be able to deliver that goal.  But now the initiative is in better shape to play its part. 

Looking ahead we can expect more readable reports and EITI discussions at country level getting into contracts and ownership questions. Add in legal reporting requirements for the majority of oil, gas and mining companies and it is clear that there has been a significant change in what we expect from the industry. 

Now it’s time to link access to data to a broader range of governance issues and rights such as free, prior and informed consent, freedom of speech and freedom of association.  The next ten years will be all about impacts and whether the citizens in resource-rich countries around the world are able to turn transparency into accountability.

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