Responsible mining companies are committed to the concept and practice of transparency. This applies equally to dealings with governments, and to dealings with civil society in countries which remain heavily dependent on the extractives industry and on the revenues it produces.
What exactly is transparency?
According to Transparency International, a non-governmental organisation monitoring corporate and political corruption: ‘Transparency is about shedding light on rules, plans, processes and actions. It is knowing why, how, what, and how much. Transparency ensures that public officials, civil servants, managers, board members and businesspeople act visibly and understandably, and report on their activities. And it means that the general public can hold them to account. It is the surest way of guarding against corruption, and helps increase trust in the people and institutions on which our futures depend.’
ICMM has been active in encouraging a commitment to transparency among its members, and throughout the wider industry. At ICMM we believe that transparency and accountability are essential conditions for ethical business. They underpin good governance and have motivated our members to adopt a number of firm commitments to mineral revenue transparency in 2009.
A key challenge for all those involved has been the need to deliver transparency at a very practical level, with questions raised including:
- How do you improve reporting and provide a better breakdown of mining revenues?
- How do you make relevant data more accessible to interested parties?
- How do you show the link between transparency and wider social and economic reform?
The gold standard for progress in these and other areas is the Extractive Industries Transparency Initiative (EITI), which has been actively supported by ICMM since its launch in 2003.
A global standard
EITI works by promoting an open, honest partnership between governments, companies and civil society. This global standard now underpins good governance in the extractives sector. In its 2017 Progress Report, subtitled Ending Company Anonymity – The Key To Fighting Corruption, EITI noted that 51 countries are implementing the standard, and that a number of countries now report extractive revenues on a project-level basis. EITI also reported that an increasing number of countries are implementing contract transparency, and that most have made significant progress towards disclosing the beneficial owners of all extractive companies operating within their borders.
By disclosing payments, mining companies can garner trust and approval among a broad cross-section of stakeholders – including shareholders, employees and customers.
This commitment to the EITI standard by a growing number of countries is working hand in hand with the support of mining companies, including ICMM members, who can see the benefits of transparency. For example, by disclosing payments in EITI implementing countries, a company can garner trust and approval among a broad cross-section of stakeholders – including shareholders, employees and customers.
Since its launch, EITI has undoubtedly helped to reduce opportunities for corruption. In its requirement for revenue transparency, the standard reveals what money has been paid and where it has gone. The concept of contract transparency is designed to show what money should have been paid in relation to particular operations, so that citizens can hold their governments to account for the decisions made on their behalf.
In this way, ICMM believes EITI is important not only for reducing corruption, but also for improving development outcomes in mineral-dependent economies. Our members are seeing the benefits through an increase in trust and dialogue between interested parties – be they governments, civil society or business.
Perhaps most importantly, EITI encourages the implementing countries to report on how mining revenues are being distributed. The Government of Peru, for example, notes that nearly half of all revenues from the extractive industries are being dispersed from central government to local and regional levels.
In Ghana, where local communities had become increasingly concerned about the contribution of mining companies, the government’s EITI report has been a catalyst for changing the way that mining royalties and other revenues are used – as well as for ensuring that they actually reach the municipalities for which they are intended. One result of a recommendation in Ghana’s 2013 EITI report has been the establishment of designated bank accounts, so that royalty transfers to local communities can be more easily tracked and monitored.
Through examples such as these, ICMM believes that EITI can be used to drive reform in implementing countries and an equitable sharing of benefits. Since its inception, EITI reports have disclosed some US$2.3 trillion in revenues – a vast sum by any standards, and the means to secure significant social and economic development, providing that those funds are well managed.