Natural Resource Transparency (UK0064)

Objective: In addition to commitments on timely implementation of EITI and EU Directives, the UK will work with others to enhance company disclosure regarding payments to government for the sale of oil, gas and minerals. The UK will explore the scope for a common global reporting standard and work with others to build a common understanding and strengthen the evidence for transparency in this area.

Status quo: Over the last decade, the UK has led the way in encouraging the extractive sector to be more transparent, notably through a combination of voluntary reporting under the EITI and mandatory disclosure rules now present in the EU, Canada, the US and other countries. But despite this progress, a significant gap still exists. Payments from physical commodity trading companies to governments and state-owned enterprises for the sale of oil, gas and minerals – which account for the majority of total government revenues in countries such as Iraq, Libya, Angola and Nigeria – remain largely opaque. Whereas taxes, royalties and other payments are included within existing home disclosure rules, payments from oil traders to governments (often $US billions/year) are not.

Ambition: To enhance company disclosure regarding payments to government for the sale of oil, gas and minerals.

2. Natural Resource Transparency

Commitment Text: We will work with others to enhance company disclosure regarding payments to government for the sale of oil, gas and minerals, complementing our commitment to the Extractive Industries Transparency Initiative (EITI) and implementation of EU Directives, and explore the scope for a common global reporting standard.

Objective: In addition to commitments on timely implementation of EITI and EU Directives, the UK will work with others to enhance company disclosure regarding payments to government for the sale of oil, gas and minerals. The UK will explore the scope for a common global reporting standard and work with others to build a common understanding and strengthen the evidence for transparency in this area.

Status quo: Over the last decade, the UK has led the way in encouraging the extractive sector to be more transparent, notably through a combination of voluntary reporting under the EITI and mandatory disclosure rules now present in the EU, Canada, the US and other countries. But despite this progress, a significant gap still exists. Payments from physical commodity trading companies to governments and state-owned enterprises for the sale of oil, gas and minerals –which account for the majority of total government revenues in countries such as Iraq, Libya, Angola and Nigeria – remain largely opaque. Whereas taxes, royalties and other payments are included within existing home disclosure rules, payments from oil traders to governments (often $US billions/year) are not.

Ambition: To enhance company disclosure regarding payments to government for the sale of oil, gas and minerals.

Milestones:

1.  UK to publish second EITI report by 15 April 2017 and commence validation to become EITI compliant

2. UK listed extractive companies will be required to publish data under the EU transparency amending directive in an open and accessible format

3. Agree terms of reference for the dialogue on increased transparency around sales of oil, gas and minerals

Responsible institution: Department for Business, Innovation and Skills, Department of Energy and Climate Change, HM Treasury, Financial Conduct Authority (FCA) and Department for International Development

Supporting institution(s): Department for Business, Innovation and Skills, Department of Energy and Climate Change, HM Treasury, Financial Conduct Authority and Department for International Development

Start date: May 2016

End date: March 2018

Commitment Aim:

This commitment continued the extractives transparency initiatives from the second action plan. Two parts of the commitment are a continuation of the reporting requirements of the Extractives Industries Transparency Initiative (EITI), and an extension of openness to a set of companies not fully covered by earlier legislation.

Status

Midterm: Substantial

The government reported in its July 2017 update the good progress on this commitment.^{[Note 11: Cabinet Office Open Government National Action Plan 2016-18,}

July 2017 Commitment Progress Updates (commitment update for July 2017) pre-publication passed to author.] UK published the second EITI report in March 2017, and all relevant background data in line with its EITI requirements. Validation was still needed but as a result of EITI moving the deadline, not the UK government.^{[Note 12: Department for Business, Energy & Industrial Strategy, Research and analysis, Extractive Industries Transparency Initiative: payments report, 2015, https://www.gov.uk/government/publications/extractive-industries-transparency-initiative-payments-report-2015 ]} Companies covered by the EU Transparency Directive started to publish data in open and machine-readable formats.^{[Note 13: Interview with Miles Litvinoff, Publish What You Pay, 25 August 2017.]} As of December 2016, terms of reference on transparency of oil, gas and minerals physical commodity trading payments to governments had not yet been agreed.

However, the EITI process in the UK was thrown into doubt on 29 September 2017, when 20 members of civil society withdrew from the process over concerns about the possible disruption of the selection of civil society representatives by one group, Extractive Industries Civil Society (EICS). The withdrawing CSOs argued that their independence had been breached. Those withdrawing included major CSOs such as Global Witness, Natural Resource Governance Institute, Transparency International UK and Publish What You Pay UK.^{[Note 14: Publish What You Pay UK ‘News: Civil Society Organisations withdraw from UK EITI', http://www.publishwhatyoupay.org/pwyp-news/civil-society-organisations-withdraw-from-uk-eiti/ ]}

End of term: Complete

The UK published its third EITI report in April 2018 and commenced validation according to the current (revised) schedule on 1 July 2018. UK-listed extractive companies have begun to publish data under the EU Transparency Amending Directive in an open and machine-readable format and are required to continue doing so (this is an open process with no end date).^{[Note 15: Email correspondence with Miles Litvinoff, PWYP, August 2018: UK government (2018) 2016-18 Open Government Action Plan: April 2018 Commitment Progress Updates, https://www.opengovernment.org.uk/resource/2016-18-open-government-action-plan-april-2018-commitment-progress-updates/ ]}

The final UK government update of April 2018 outlined how the UK government had continued work to stimulate international dialogue, with a successful event hosted by OECD on commodity trading transparency in January 2018. The OECD reported that the event included 22 government delegations from Africa, Asia, Europe, and Latin America, as well as representatives from eight partner international organisations and institutions, and 48 major firms, industry associations, civil society organisations, academia, law firms and think tanks.^{[Note 16: OECD 9th meeting January 2018, and a 10th in June 2018, OECD (2018) Tenth Plenary Meeting of the PD-NR, 25-26 June 2018, http://www.oecd.org/dev/ninth-meeting-pd-nr-jan-2018.htm; summary report of the event, http://www.oecd.org/dev/Summary%20Report%20-%20Ninth%20Meeting%20of%20the%20Policy%20Dialogue%20on%20Natural%20Resources%20(FOR%20UPLOAD).pdf ]} According to the OECD, the event allowed sharing of best practice examples and discussed ways and means of developing policy and sharing data.

The 10^th EITI plenary, in June 2018, with 31 countries represented, discussed climate change, durable contracts and problems faced by tax base erosion.

The UK EITI Civil Society Network has not, to date, re-joined the UK initiative since withdrawing from it in September 2017, and is waiting for the government to identify a third-party independent body to handle the selection of civil society representatives for the Multi-Stakeholder Group.^{[Note 17: Email correspondence with Miles Litvinoff, PWYP, August 2018.]}

Did It Open Government?

Access to Information: Marginal

The policy aimed to further open up a new area of private sector activity of global importance. It is listed as a marginal change, as the first two parts of the commitment were a contribution to ongoing work from the third action plan, reinforcing and broadening work already done. In terms of access to information, this was a very small number of companies, estimated at 60-65, not fully covered before, compared with around 1,200 companies registered in the UK. While this closed a loophole, it had a small impact on provision overall. The third part of the commitment was building the ground work for important changes through international agreement, but the process was ongoing and not complete at the end of the implementation period.

Carried Forward?

The UK government's consultation on the next action plan for OGP suggested a possible continuation, though this is a suggestion and not government policy. The suggested commitment aims to enhance company disclosure regarding payments to governments for the sale of publicly owned oil, gas and minerals and help to establish/implement a common global reporting standard. The suggested commitment contained a four-point set of aims: to continue dialogue, assess how to ‘further enhance' disclosure, work with stakeholders to enhance openness, and provide clearer guidance in making sure data is machine readable. If the commitment was carried forward, clarity on how this would be put into practice would be helpful.