The most successful transparency initiatives are those that ensure all relevant players in the public and private sectors and in civil society are fully engaged and properly represented.
The initiatives also must respect national sovereignty and local norms and apply to all companies operating in a country. This is why ExxonMobil has supported multi-stakeholder engagement to achieve revenue transparency for the past decade.
Extractive Industries Transparency Initiative
One important global program that encourages transparency and collaboration among governments, companies, civil society and financial institutions is the Extractive Industries Transparency Initiative (EITI), which is dedicated to strengthening governance by improving transparency and accountability in the extractives sector. Companies and country 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.
ExxonMobil has actively participated in EITI since its inception in 2002, at both the secretariat and country levels, including continuous participation on the EITI board as either a primary or alternate member. Our efforts in this area during the past year have focused on intensive work together with the extractive industry, investor groups and civil society representatives to make sound progress in the EITI process. Nearly 20 countries where we have operations are working on becoming, or have become, EITI members. The Corporation is supporting the EITI application, validation and membership processes of countries such as Azerbaijan, Cameroon, Chad, Indonesia, Iraq, Kazakhstan, Madagascar, Nigeria and Norway, and of potential new applicant EITI countries including Australia, Colombia, Papua New Guinea, Ukraine and the United States.
In August 2012, the U.S. Securities and Exchange Commission (SEC) published new rules for global government payment reporting. These rules require an unprecedented degree of cost and complexity that will generate a significant volume of data from publicly traded extractive companies. The rules do not apply to state-owned and privately held companies not registered with the SEC, and do not reconcile government revenues with company payments. As a result, the new rules will not enable total government extractive industry revenues to be gathered or reported, which will limit the extent to which this reporting will help improve country governance and government accountability. Compliance will require companies to design and build costly new accounting processes to gather, validate and report many different payment streams. Many key elements in the rules are undefined or unclear. The SEC estimates the cost of compliance for the industry may reach $14 billion.
It is ExxonMobil’s policy to comply with all governmental laws, rules and regulations applicable to its business. However, because of the unprecedented cost and complexity of these rules, as well as the potential for conflict with other laws, ExxonMobil is also supporting efforts by the National Foreign Trade Council, U.S. Chamber of Commerce, Independent Petroleum Association of America and American Petroleum Institute to overturn these rules so that they can be replaced with a more reasonable approach.
The European Union is also in the process of revising government revenue reporting rules through new accounting and transparency directives. ExxonMobil supports efforts of the International Association of Oil and Gas Producers to seek directives that strike a reasonable balance between disclosure and economic harm.
We will continue to work constructively with all proponents of increased revenue transparency toward policies and programs that reduce corruption and improve governance. Initiatives that pursue those goals provide for a more stable business climate which, in turn, supports stronger and more sustainable economic development in the countries where we operate.
ExxonMobil is also developing procedures, consistent with new SEC rules under the Dodd-Frank Act, to confirm that any “conflict minerals” (currently including gold, tin, tungsten and tantalum) that may be necessary to the production or functionality of our products do not originate from the Democratic Republic of the Congo or adjoining countries.