For years, ExxonMobil has supported multi-stakeholder engagement in countries around the world for the purpose of increasing transparency of government revenues from the extractive industries. Our efforts to promote revenue transparency have helped reduce corruption, improve government accountability and promote greater economic stability worldwide. We believe the most successful transparency initiatives are those that ensure each relevant public, private and societal entity is fully engaged and properly represented. Successful initiatives must respect national sovereignty and local norms and apply to every company in all relevant sectors.
We continually monitor and participate in public policy and regulatory developments with respect to transparency initiatives. In 2012, the U.S. Securities and Exchange Commission (SEC) published a proposed rule for global government payment reporting as required by the Dodd-Frank Act. A U.S. District Court vacated the initial SEC rules in 2013, as they were deemed to cause potential commercial and competitive harm to U.S. companies. The American Petroleum Institute (API), of which ExxonMobil is a member, submitted recommendations to the SEC outlining a potential new approach to transparency reporting that focuses on government receipts by resource type and production method and that protects companies from disclosing commercially sensitive information. The recommendations would also give citizens the information they need to determine their government’s resource revenues.
In July 2013, the European Union (EU) approved a revised accounting directive that mandates government payment reporting. The United Kingdom implemented its reporting rule in 2015, and more EU member states are expected to do so this year. We remain concerned about the new EU rules, which impose a fragmented approach that will not give civil society a means to compile and analyze government revenue or give companies protection from disclosing commercially sensitive information. Nevertheless, we are preparing data gathering, verification and reporting systems and processes to comply with new requirements as the directive is transposed into local law in each EU member state.
The SEC published a revised draft payment disclosure rule on December 11, 2015, which largely adopts the EU model rather than the approach API is advocating. We opposed the SEC’s proposed rule on the same grounds of our opposition to its 2012 proposed rule and encouraged the adoption of a rule that generates data that host country citizens can access and use while simultaneously protecting companies from competitive harm. The SEC largely ignored our comments and published notice of a final rule on June 27, 2016 that remains based on the EU model and likely will adversely affect the global competitiveness of publicly-traded companies. ExxonMobil is working with other API member companies to decide whether or not to challenge the rule again.
A global program that encourages transparency and collaboration among governments, companies, civil society and financial institutions is the Extractive Industries Transparency Initiative (EITI). This initiative is dedicated to strengthening governance by improving transparency and accountability in the extractives sector. Companies and governments participating in EITI separately report payments and revenues, respectively, allowing EITI to reconcile any differences between the totals and publish validated total government revenues.
Since EITI’s inception more than a decade ago, ExxonMobil has had an active role at both the secretariat and country levels. An ExxonMobil representative has served on the EITI board as either a primary or alternate member since it began. In 2013, the program released an expanded EITI Standard outlining how countries can implement the EITI. The Standard requires commitment from all participants as stated in Principle 5: “We underline the importance of transparency by governments and companies in the extractive industries and the need to enhance public financial management and accountability.”
ExxonMobil supports the EITI application, validation and implementation processes in 20 countries, and we are working with governments in a number of other countries including Equatorial Guinea and Mexico, which are considering joining EITI. There are currently about 50 countries that are compliant members or have been accepted as candidates to begin reporting under the EITI Standard.