CSR News Update - February 2012

This News Update does not normally dedicate attention to events taking place in the United States. In the case of the ongoing debate surrounding the implementation of Section 1504 of the Dodd-Frank Wall Street Reform Act approved in 2010 it is however worthwhile making an exception. Section 1504 of Dodd-Frank requires companies operating in the extractive industries sector and quoted on Wall Street to disclose their payments made to foreign government. The Securities and Exchange Commission (SEC) of the United States is tasked with writing the implementing rules and has taken far more time than originally foreseen and has not yet been able to publish them. December 2011 is the latest deadline missed by the SEC, which now plans to publish them by June 2012. The delays of the SEC give multinational corporations the opportunity to lobby against the provisions and to try to weaken them as far as possible.

 

The European Commission has recently presented its own version of section 1504 of Dodd-Frank[1], which has yet to be approved by the Council and by the European Parliament. The American debate is therefore very instructive on what we can expect to hear in Europe in the coming months.

 

The oil and mining industries love to trumpet their support of international transparency initiatives. Many oil and gas companies are “supporters” of the Extractive Industries Transparency Initiative (EITI). Chevron for example states “Chevron believes that the disclosure of revenues received by governments and payments made by extractive industries to governments could lead to improved governance in resource-rich countries. The transparent and accurate accounting of these funds contributes to stable, long-term investment climates, economic growth and the well-being of communities. Our commitment to promoting revenue transparency in reflected in our participation in the multistakeholder Extractive Industries Transparency Initiative (EITI)".[2] EITI is a voluntary initiative, where companies disclose their payments to governments.[3] However, unless the host country decides to implement EITI, companies do not have to disclose anything.

 

However, when there is a shift from voluntary to mandatory measures the enthusiasm of the corporations immediately declines and they start bringing out their lobbyists and lawyers. Many of the same companies praising transparency have been actively lobbying since the law was passed to water down the SEC implementation. Senate lobbying disclosure forms show that Chevron, Exxon, Shell, Conoco Phillips, Marathon, Occidental, the American Petroleum Institute (API), and others have been very active in Washington on this provision, targeting not only the SEC, but also the House of Representatives, Senate, Department of State, Department of the Interior, and the National Security Council. Shell even went so far as to claim that the disclosure of payments may encourage terrorist acts[4]. It is not known how much the oil and gas industry is spending specifically to undo the Dodd-Frank provision, but overall the oil and gas industry is one of the biggest lobbyists in the US, spending an astonishing $145 million on lobbying activities in 2011 alone[5].

 

The data and the information coming from the US are an important warning sign of the challenge ahead for civil society in the EU. We are dealing with corporations equipped with immense financial resources, bigger by far than those of civil society organisations, and which are determined to do what they can to have disclosure provisions watered down.

 

 

Thomas Lazzeri



[1] See also CSR News Update - November 2011 at http://www.aefjn.org/index.php/369/articles/csr-news-update-november-2011.html

[2] http://eiti.org/supporters/companies/chevron-corporation

[3] See also Voluntary Initiatives to enhance Transparency in the Extractive Industries at http://www.aefjn.org/index.php/370/articles/voluntary-initiatives-to-enhance-transparency-in-the-extractive-industries.html

[4] http://www.sec.gov/comments/s7-42-10/s74210-18.pdf

[5] http://www.opensecrets.org/lobby/indusclient.php?id=E01&year=2011

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