Financial Transparency - EITI Standard (DE0005)

Description: To meet the standard of the international Extractive Industries Transparency Initiative (EITI) in Germany, we are working with a multi-stakeholder group (MSG) composed of the ministries concerned, the federal states, municipalities, civil society and businesses. The progress of national efforts (D-EITI) will be tracked in particular in an annual report which compares payments by extractive enterprises with the corresponding revenues of government agencies. Moreover, the DEITI report will include comprehensive and understandable explanations on Germany’s extractive industries (e.g. legal framework, extracted resources, system of taxes and duties, and data on production and export) and address several special issues (e.g. intervention regulation under nature conservation law, renewable energy resources, etc.). In addition, information about mining rights will also be made public. Aim: Increasing transparency and accountability in extractive industries and strengthening dialogue with extractive industries stakeholders. Increasing accessibility and usability of government and business data and information on German extractive industries by publishing it on a public online portal and as open data. Status quo: Since February 2016, Germany has been a member of EITI and is currently preparing for the first reporting period (first D-EITI report to be submitted in August 2017). The multi-stakeholder process to implement the EITI standard was initiated in March 2015. For the purpose of implementation, representatives from the private sector and civil society identified common goals at MSG level. For example, in addition to fulfilling the mandatory requirements of the EITI standard, they seek to jointly promote more transparency. Ambition: With D-EITI, the Federal Government sends an important signal for strengthening the initiative worldwide. The multi-stakeholder process which shapes implementation of the initiative in Germany is also an innovative network strengthening cooperation between government, businesses and civil society as well as dialogue and transparency in Germany’s extractive industries. New or ongoing: ongoing Implemented by: Federal Ministry for Economic Affairs and Energy (BMWi) Organizations involved in implementation: D-EITI secretariat; Federal Ministry of Finance; Federal Ministry for Economic Cooperation and Development; Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety; state ministries of finance and economic affairs; state mining authorities; local associations; stakeholders of the extractive industry in Germany, including from the private sector (e.g. Federation of German Industries (BDI), Association of German Chambers of Commerce and Industry (DIHK) and civil society (e.g. Transparency International, Open Knowledge Foundation), who are represented in the MSG. Organizational unit and contact: Division IVB2, buero-ivb2@bmwi.bund.de Open government values addressed: Participation, transparency, accountability Relevance: With EITI, Germany is implementing the most important international standard for transparency and accountability in the extractive sector and is helping to further develop the standard and expand the initiative. Participation of government, industry and civil society in the MSG is an innovative model for participatory and responsive industrial policy. By presenting government data and contextual information on a web portal, activities of the government and public administration in the extractive industries become more transparent and understandable for citizens. The D-EITI open data approach will also improve the re-use and distribution of data and facilitate new innovative forms of cooperation.

5. Financial Transparency—Implementing the EITI Standard

Language of the commitment as it appears in the action plan:

“To meet the standard of the international Extractive Industries Transparency Initiative (EITI) in Germany, we are working with a multi-stakeholder group (MSG) composed of the ministries concerned, the federal states, municipalities, civil society and businesses. The progress of national efforts (D-EITI) will be tracked in particular in an annual report which compares payments by extractive enterprises with the corresponding revenues of government agencies. Moreover, the D-EITI report will include comprehensive and understandable explanations on Germany’s extractive industries (e.g. legal framework, extracted resources, system of taxes and duties, and data on production and export) and address several special issues (e.g. intervention regulation under nature conservation law, renewable energy resources, etc.). In addition, information about mining rights will also be made public.”

Milestones:

5.1 Publishing government data on the German extractive industries in the first EITI report

5.2 Creating the legal basis for public access to certain information about mining rights by amending Section 76 of the Federal Mining Act (Bundesberggesetz, BBergG)

5.3 Providing government and business information and data on the German extractive industries on a public online portal and as open data

5.4 Discussing with stakeholders of the German extractive industries at MSG meetings on further promoting transparency in the sector and continuing EITI reporting

5.5 Publishing updated and possibly more government data on the German extractive industries in the second EITI report

Start Date: June 2017

End Date: June 2019

Context and Objectives

The Extractive Industries Transparency Initiative (EITI) is the first large multi-stakeholder initiative to promote transparency and accountability regarding extractive resource management. [18] Since its inception, it has been an important conduit for mainstreaming new modes of transparency, such as country-by-country reporting or beneficial ownership disclosure. It has also modeled new multi-stakeholder mechanisms to advance collective action in this area.

Having been a strong early supporter of the initiative, Germany decided in 2014 to adhere to the EITI standard for its own extractives sector (Deutschland-EITI, D-EITI). [19] The country has undertaken the necessary steps for full implementation of the EITI standard. It established a multi-stakeholder forum in 2015 [20] and compiled its first EITI report in 2017. [21] (Given that EITI inspired and served as a reference point for key ambitions and modes at OGP, EITI activities and setup are closely aligned with OGP values and mechanisms.) In addition, prior to Germany joining the EITI, information in the country on extractive industry operations and payments was highly fragmented in scale and scope across states and local communities. Related financial information held by companies was typically not publicly available. ^[22]

The commitment focuses on “[i]ncreasing transparency and accountability in extractive industries and strengthening dialogue with extractive industries stakeholders.” This also includes “[i]ncreasing accessibility and usability of government and business data and information on German extractive industries by publishing it on a public online portal and as open data.” [23]

The milestones are verifiable yet formulated in rather general terms. However, the milestones relate to activities that are well specified in the EITI framework. This applies, for example, to activities that focus on “[p]ublishing government data.” For such activities, the EITI prescribes a template, which this commitment implies that it follows. The listed milestones and activities are directly relevant to the OGP values of access to information (5.1 and 5.3) and civic participation (5.4). Given that reporting under the EITI also covers information on corporations’ tax payments, this commitment constitutes a significant expansion of transparency into areas of taxation and tax payments. In Germany, strong public norms and legal protections typically guard these areas for tax secrecy (Steuergeheimnis). [24]

Some of the related activities qualify as interesting institutional innovation. D-EITI has successfully navigated toward required changes in law (Milestone 5.2) and organized collective action on extractives transparency across all levels of government. D-EITI also continues its transition from producing expensive, time-lagged, stand-alone reports to systemically interlinking and curating real-time, dispersed data streams made available to public and private stakeholders. As a result, D-EITI has already made substantive inroads on key challenges to open government action. This makes D-EITI an interesting learning case for instituting incremental, yet highly important, institutional innovations as opposed to headline-grabbing technical integration efforts. These inroads warrant relevance to technology and innovation.

Implementation of this commitment could be important to incentivizing open government in other areas. Overall, the commitment could have a moderate potential impact on transparency in the extractives sector.

Next steps

The IRM researcher recommends that the Federal Ministry of Economic Affairs and Energy as the commitment holder encourages the D-EITI secretariat to make some information on institutional innovations and lessons learnt available to other OGP stakeholders. This information sharing would also benefit the broader action plan development and implementation process. Given the mature status of the transparency and disclosure architectures around extractives, the D-EITI could explore cutting-edge disclosure practices. For example, it could investigate practical mechanisms to move from periodic, stand-alone, consolidated reporting to distributed systems of continuous updates and interfaces with enterprise information systems.

[18] Extractive Industries Transparency Initiative, The Global Standard for the Good Governance of Oil, Gas and Mineral Resources,” March 2019, https://eiti.org/sites/default/files/documents/eiti_factsheet_en_oct2018_0.pdf.

[19] Deutschland Extractive Industries Transparency Initiative, EITI Candidature Application, 22 December 2015, https://www.d-eiti.de/wp-content/uploads/2015/12/Candidature-Application-Germany_22-12-2015.pdf.

[20] Deutschland Extractive Industries Transparency Initiative, Protokoll: Konstituierende Sitzung der Multi-Stakeholder-Gruppe (MSG) zur Implementierung der Extractive Industries Transparency Initiative (EITI) in Deutschland (D-EITI), 10 March 2015, https://www.d-eiti.de/wp-content/uploads/2017/09/1_Protokoll_MSG_Sitzung.pdf.

[21] Deutschland Extractive Industries Transparency Initiative, Report for 2016, August 2017, https://www.d-eiti.de/wp-content/uploads/2017/10/D_EITI_Report_2016.pdf.

[22] Interview with government representative.

[23] Federal Government of Germany, First National Action Plan 2017–2019, 15, https://www.opengovpartnership.org/documents/germany-action-plan-2019-2021/.

[24] The guiding principle of tax secrecy is enshrined in § 30 Deutsche Abgabenordnung [German Tax Law], https://www.gesetze-im-internet.de/ao_1977/index.html. The fundamental shift that the EITI reporting on tax payments constitutes in this regard has also been pointed out by an interviewee from the government.

5. Financial Transparency—Implementing the EITI Standard

Language of the commitment as it appears in the action plan:

“To meet the standard of the international Extractive Industries Transparency Initiative (EITI) in Germany, we are working with a multi-stakeholder group (MSG) composed of the ministries concerned, the federal states, municipalities, civil society and businesses. The progress of national efforts (D-EITI) will be tracked in particular in an annual report which compares payments by extractive enterprises with the corresponding revenues of government agencies. Moreover, the D-EITI report will include comprehensive and understandable explanations on Germany’s extractive industries (e.g. legal framework, extracted resources, system of taxes and duties, and data on production and export) and address several special issues (e.g. intervention regulation under nature conservation law, renewable energy resources, etc.). In addition, information about mining rights will also be made public.”

Milestones:

5.1 Publishing government data on the German extractive industries in the first EITI report

5.2 Creating the legal basis for public access to certain information about mining rights by amending Section 76 of the Federal Mining Act (Bundesberggesetz, BBergG)

5.3 Providing government and business information and data on the German extractive industries on a public online portal and as open data

5.4 Discussing with stakeholders of the German extractive industries at MSG meetings on further promoting transparency in the sector and continuing EITI reporting

5.5 Publishing updated and possibly more government data on the German extractive industries in the second EITI report

Start Date: June 2017

End Date: June 2019

The commitment focused on significantly improving the transparency of the German extractives sector. It covered efforts that Germany planned to undertake in the context of its participation in the Extractives Industry Transparency Initiative (EITI) and to become fully compliant with EITI’s disclosure standards.

All milestones have been implemented, including the publication of the second D-EITI report. [34] Although the milestones lacked detailed criteria for measuring success, there are indications that some were implemented at a high level of ambition. Not only does the multi-stakeholder group (MSG) (milestone 5.4) meet at the promised frequency (three times per year), but it also publishes all agenda and meeting protocols online. The MSG consists of 15 participants with five seats each for government, business, and civil society. Germany was assessed as fully compliant to the EITI standard in May 2019 (the first EU member state to receive this classification), an aim that milestone 5.5 worked towards. [35] By adding comprehensive reporting on environmental parameters, Germany also went beyond mandatory EITI reporting requirements. In the long term, this comprehensive reporting can help raise the bar for similar reporting in other countries, encouraging international peer exchanges around best practices. Efforts to showcase Germany’s advanced reporting practice on environmental parameters include presentations at a joint German-Ukrainian EITI civil society workshop in September 2019, [36] and related presentations at the 2019 EITI Global Summit in Paris. [37]

Although the extractives sector accounts for less than 0.2 percent of GDP [38] and therefore only a small portion of Germany’s economic activity and government income, the fulfillment of this commitment has contributed to a major change in disclosure in the extractives sector. It has helped create the legal basis, technical infrastructure, and practical institutional mechanism for publishing payments and operational information for the extractives sector that was previously highly fragmented, of variable quality, or simply unavailable to the public. [39] The MSG forms an integral part of Germany’s involvement in EITI and serves as a frequently referenced example for well-functioning multi-stakeholder collaboration envisaged across OGP thematic areas. [40] Germany plans to remain compliant with the evolving EITI standard, including requirements for beneficial ownership transparency (by 2020), open contracting (by 2021), and gender-disaggregated data (encouraged). [41] Thus, the EITI initiative in Germany has contributed to anchoring these norms more firmly in the German administration.

[34] 1st D-EITI Report, 2nd edition October 2018, https://www.d-eiti.de/wp-content/uploads/2018/11/D_EITI_Bericht_2016.pdf; 2nd D-EITI Report December 2019, https://d-eiti.de/wp-content/uploads/2019/12/2.-D-EITI-Bericht.pdf

[35] Press release on occasion of EITI compliance: https://www.bmwi.de/Redaktion/DE/Pressemitteilungen/2019/20190509-wittke-eiti-bericht-bescheinigt-deutschland-transparenz-im-rohstoffsektor.html

[36] Dixigroup, workshop programme, https://okfn.de/files/blog/2019/09/EITI-MAP-DE-UA-Agenda_Workshops_Final.pdf

[37] EITI Deutschland Twitter account, https://twitter.com/EITIDeutschland/status/1141346652344725505?s=20, https://twitter.com/foes_news/status/1141292802204196867?s=20)

[38] D-EITI Germany, https://eiti.org/germany

[39] Interview with EITI-DE Secretariat. 7 December 2018.

[40] Participant observation by IRM researcher during several open government meetings in Germany.

[41] EITI Progress Report 2019, https://eiti.org/files/documents/eiti_progress_report_2019_en.pdf