Memos to the SEC on the Proposed Rule on Disclosure of Payments by Resource Extraction Issuers
CCSI strongly supports the transparency of contracts and tax flows. CCSI shares the belief of many stakeholders that transparency is essential to leverage extractive industries for sustainable development and is in the mutual interest of all stakeholders. However, some industry players continue to voice the concern that increased transparency would be harmful for their business. Therefore, CCSI is working to also establish the business case for transparency.
In one such case, some industry players have been lobbying against the regulations developed by the Security and Exchange Commission to implement the mandatory disclosure provisions of the Dodd Frank Wall Street Reform and Consumer Protection Act; section 1504 of that act requires all US listed companies to report detailed payments to governments on a project-by-project basis in all countries of operation. To support the SEC’s mandate in implementing the regulations, and to respond to some of the concerns of industry, CCSI identified the publicly listed extractive industry companies that disclose tax payments on a country-by-country basis and showed the correlation of this reporting practice with both higher financial performance and fewer reported incidences of human and environmental rights violations in the communities where they operate. In December 2011, these results were submitted to the US Securities & Exchange Commission to inform the regulatory deliberations of the Dodd Frank Wall Street Reform and Consumer Protection Act.
As implementation regulations of Section 1504 were still pending as of October 2015, CCSI consulted with the Publish What You Pay Network and a number of investors and submitted a second letter to the US Securities Exchange Commission. Recognizing the SEC’s mandate to protect investors, this letter provides 7 reasons why it is of utmost importance to maintain company-specific, project-level payment disclosure when issuing the new rules of Section 1504 in order to create improved efficiency in the capital markets. In November 2017, CCSI submitted the same argument to the UK government as they reviewed the UK extractive sector transparency law.