The Canadian federal government has tabled a new law that would require oil, gas and mining companies to publicly disclose payments they make to governments around the world. The rules, which are part of a broader omnibus budget implementation bill, would apply to companies listed on Canadian stock exchanges as well as large private companies. The government has taken a positive step in introducing legislation, although questions remain over what information will ultimately be made public. If the law is to be effective, improvements are needed.
Passage of the new law, introduced on October 23 to fulfil a G8 pledge made in 2013 by Prime Minister Stephen Harper, would see Canada join a growing number of countries which have mandated transparency of extractive payments by companies to governments in a sector which has been long characterized by opacity.
When oil, gas and mining companies reveal these payments in a detailed manner, citizens in developing, resource-rich countries are better able to demand that their governments use those public funds to fight poverty and contribute to sustainable economic growth, rather than lose them to corruption or mismanagement.
As part of the Resource Revenue Transparency Working Group, we at the Natural Resource Governance Institute (NRGI) worked with Canada's largest mining associations and the civil society coalition Publish What You Pay Canada to create recommendations to lawmakers on the key features needed to ensure that the new law is fit for purpose.
While the tabled legislation includes a number of the recommendations made by the Resource Revenue Transparency Working Group which we welcome, our initial analysis suggests that many open questions remain. Chief among these is the lack of any explicit requirement for project-level reporting, which is essential to promoting local accountability and for investors aiming to manage risk. Similar laws in the United States, the European Union and Norway all explicitly contain a project-level reporting requirement, and Canada ought to match this in order to support a consistent global standard for the benefit of citizens in developing countries, as well as a level playing field for companies.
Other key issues that remain unresolved include the public availability of information, the possibility that some critical data could be exempt from reporting, and the accessibility of information in an open data format. These should be resolved by lawmakers either within the legislation itself, or through regulations and administrative guidance that will accompany the law once passed.
Canadian oil and mining companies operate in more than 100 countries around the world. Strong final legislation will be needed to shed crucial light on the financial flows from these companies to governments, and contribute to the fight against corruption and the improvement of natural resource governance.
Joseph Williams is the Natural Resource Governance Institute's senior advocacy officer.