Statement on EITI Project-Level Reporting Requirement and Azerbaijan Suspension
News from NRGI
9 March 2017
Today the international board of the Extractive Industries Transparency Initiative (EITI) made critical commitments to the initiative’s core tenets – transparency and accountability.
BOGOTA—Today the international board of the Extractive Industries Transparency Initiative (EITI) made critical commitments to the initiative’s core tenets – transparency and accountability. By agreeing to implement project-level reporting from 2018 and suspending Azerbaijan due to its failure to protect civic space, EITI has taken important steps toward maintaining its leadership as a global standard in the extractives sector.
Transparency: Project-level reporting to be implemented from 2018
At its meeting in Bogotá, Colombia, the board agreed that the critical project-level reporting requirement would apply to EITI reports covering fiscal years ending on or after 31 December 2018, at the latest. The board also agreed that national EITI multi-stakeholder groups (MSGs) should devise and apply a definition of “project” that is consistent with relevant national laws and systems, as well as international norms.
This opens the door for MSGs in all 51 EITI countries to collect project data in a way that addresses key national policy objectives, while simultaneously joining the growing international community of practice on project-specific reporting in oil, gas and mining. These international norms include mandatory payment disclosure regimes in Europe and Canada, where companies have already reported on payments related to over 2,000 extractive projects around the world.
Project-level reporting has been a requirement in the EITI Standard since 2013, and governments and companies in at least a quarter of all EITI countries are already reporting at the project level to some degree. However, some companies had obstructed implementation of the EITI project-level reporting requirement, saying a U.S. transparency rule should be in force before the corresponding EITI requirement could proceed. Those same companies had worked to undermine the U.S. rule, which led to a deadlock. But today, the EITI board decisively moved past these unfortunate delays.
EITI countries which are not yet reporting information at the project level should begin preparing to do so as soon as possible, in line with today’s decision. And EITI should promptly offer guidance to help implementing countries pursue consistent and useful project-level reporting.
Implementation of EITI’s project requirement, which was long overdue, will provide critical and relevant information to local communities, governments and investors. This type of reporting also enables companies to demonstrate the economic contribution they are making in relation to specific projects and the communities they affect.
Accountability: Azerbaijan suspended due to poor civic space
The board also took the decision to suspend Azerbaijan because the country lacks an enabling environment for civil society, a violation of the initiative’s requirements on multi-stakeholder engagement and of its Civil Society Protocol. Ensuring protection for civil society in Azerbaijan, especially those working on EITI and natural resource governance, is now more critical than ever.
The board’s response highlights the central importance of civil society and public dialogue for accountability in this (and any) global multi-stakeholder initiative.
Azerbaijan should create an enabling legal and de facto environment for civil society, which includes enabling civil society organizations (CSOs) to freely access funding and opening space for public debate. Actions such as releasing prisoners who have been unjustly arrested, detained, tried, convicted and incarcerated on false charges charges—including NRGI advisory council member Ilgar Mammadov—would be important steps in the right direction.
In October 2014, concerns about the enabling environment for civil society led the EITI board to request that Azerbaijan undertake an “early validation” against the EITI Standard. Following that assessment, in April 2015, Azerbaijan became the first country to be downgraded from “compliant” back to “candidate” status in EITI and remedial actions to address civic space restrictions were issued. Following a second validation, in October 2016, the EITI board found that Azerbaijan had not made satisfactory progress on the EITI Standard’s civil society engagement requirements and concrete corrective actions were again prescribed. The government failed to fully undertake those actions, resulting in today’s suspension.
Azerbaijan’s progress on the outstanding corrective actions will again be assessed as part of a third validation, which will commence on 26 July 2017. The government now has an opportunity to improve civic space and enable its EITI process to function as a truly multi-stakeholder initiative, and to achieve the EITI’s aim of improving the management of natural resource wealth for the public good. Failing to make these improvements could lead EITI to delist the country.