Legislation: U.S. and EU Listing Requirements

A key part of RWI's campaign to "mainstream" revenue transparency in the extractive industries is the effort to secure stock exchange listing requirements that require listed companies to disclose their payments to host country governments. Once implemented, such requirements would lead to regular disclosures of payments to host country governments, agencies, or instrumentalities, on a country-by-country basis, by all companies that finance their EI investments through public markets.

Such disclosures should be broken down not only on a per country basis, but also according to categories of payment (royalties, taxes, bonuses, etc.). Given the high-risk environment in which many extractive companies operate—risks exacerbated by public unrest related to corruption or perceptions of corruption between company and government officials—the financial relationship between companies and governments is vital information for investors and creditors. Recognizing this, some companies already choose to disclose their host-country payments, but a universal listing requirement would ensure that this responsible behavior is the norm and not the exception.

A listing requirement on the major stock exchanges would complement the host-country focus of the EITI. EITI, as a voluntary effort by host countries, levels the playing field within a producing country, mitigating company concerns that unilateral disclosures would somehow put them at a competitive disadvantage. A widespread listing requirement would further level the playing field by subjecting most of the major extractive companies—including an increasing number of major state-owned companies—to the same disclosure rules on a large proportion of their activities worldwide. Moreover, listing requirements could supersede the host-country confidentiality clauses that are sometimes cited by companies as obstacles to meaningful transparency.

Coordinated action by the SEC and one or more key European exchanges would capture a significant and influential portion of the extractive industry. Further extension of such requirements to the Hong Kong exchange, for example, while not expected in the short term, would be a valuable next step.

RWI is promoting legislation in both the US and Europe to establish these listing requirements for extractive companies.

The PRT will heighten awareness in both governments and the private sector of the steps required to achieve and to mainstream revenue transparency. It also aims to mobilize governments and companies not yet participating in EITI and related transparency measures to join those efforts.