PWYP-Canada Welcomes Canadian Effort to Increase Transparency in the Extractive Sector
PWYP-Canada welcomes recently tabled legislation aimed at promoting increased transparency by Canadian companies operating in the oil, gas and mining sectors overseas.
"Canada is in a unique position to make a substantial impact on promoting accountability and responsible natural resource management," says Kady Seguin, Director of Publish What You Pay Canada, a coalition of civil society organizations around the world seeking to ensure that natural resource wealth forms the basis of sustainable development and poverty alleviation.
Bill C-474, An Act Respecting the Promotion of Financial Transparency, Improved Accountability and Long-term Economic Sustainability Through the Public Reporting of Payments Made by Mining, Oil and Gas Corporations to Foreign Governments, was tabled in Parliament on February 26, 2013 by Toronto MP John McKay. It would require Canadian extractive companies to disclose all taxes, royalties and other types of payments they make to foreign governments on an annual basis.
"This is a welcomed initiative. Canada is home to more mining companies than any other country in the world, and it has significant investments in some of the poorest countries in Africa, Latin America and Asia," added Seguin. "By requiring Canadian extractive companies to disclose the payments they make to governments, Canada would join the UK in sending a strong message to fellow G8 leaders that they must take concrete steps for improving transparency."
The move comes on the heels of a global effort to bring greater transparency to the extractive sector. PWYP-Canada has been working to develop a framework to increase the transparency of Canadian extractive companies at home and abroad through the Resource Revenue Transparency Working Group. Other jurisdictions, such as the United States and the European Union, have already taken steps to require greater transparency for oil, gas and mining companies. The United States was the first to pass legislation in July 2010 with section 1504 of the Dodd-Frank Act, a monumental piece of legislation that requires all publicly-listed extractive companies to disclose their payments to governments. The European Union is negotiating similar regulations, which are expected to be finalized this spring. "Legislation like this empowers citizens to demand accountability and responsible management of natural resources," said Seguin, who notes that the majority of people in resource-rich countries in the developing world continue to live on less than $2 a day. "If citizens know how much money is being paid by extractive companies to their governments, they are better positioned to hold officials accountable for how this money is used."
Canadian companies and investors also benefit from increased transparency. The disclosure of payments made to governments by extractive companies provides a tool for assessing and managing a variety of economic, social and political risks associated with their investments. It creates a more stable investment climate and reduces possible economic grievances that can lead to armed conflict. Many companies are already recognizing the value of transparency by voluntarily disclosing such payments. Recently, 24 Canadian investment institutions with assets of $362 billion voiced their support for increased transparency by Canadian extractive companies operating abroad, stating that it is an important contributor to good governance and sustainable development in resource-rich countries, which in turn benefits companies and their investors.