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Republicans in Congress and members of the oil industry may want to make an anti-corruption disclosure requirement for the extractive industry disappear, but some investors want it to stay.
The Securities and Exchange Commission rule requires reporting on taxes, royalties and other payments that publicly listed companies make to governments for the development of oil, natural gas or minerals starting in fiscal 2018.
The Senate is set to vote on a resolution to scuttle it after the House passed a similar measure Feb. 1.
The rule was mandated by the Dodd-Frank Act and championed as a way to help make sure payments end up in public coffers rather than in the pockets of corrupt officials. Support for it has come from institutional investors with $10 trillion in assets under management, who say the project-by-project disclosures would provide material information on risk profiles and company performance.
“We need more, not less, disclosure for investors to make prudent judgments consistent with their fiduciary responsibility,” said Bennett Freeman, who led the investor push for introducing the disclosures when he was a senior vice president at Calvert Investments.
Calvert, one of the largest and most diversified families of responsibly invested mutual funds, was on Capitol Hill this week telling senators why the disclosures are important to them. “We are hoping that the Senate can understand,” Erica Lasdon, vice president of research and advocacy at Calvert, told Bloomberg BNA.
Other backers include Allianz Global Investors, Aviva Investors and pension funds in California, New York and Sweden.
Researchers at the Columbia Center on Sustainable Investment say the payment disclosures could help institutional investors see which projects are more susceptible to commodity price downturns or better understand risks of tax policy changes, for example.
Oil and gas producers such as Exxon Mobil Corp. and Chevron Corp. have pushed back against the SEC’s reporting rule over concerns about competition. But peers BP Plc and Royal Dutch Shell have already reported more than $150 billion in payments to governments of more than 100 countries under similar disclosure regimes in Canada and Europe, according to the Natural Resource Governance Institute.
“Investors are just starting to get this information,” Freeman, a former State Department official, told Bloomberg BNA. Without the U.S. rule, investors may be left with incomplete and inconsistent payment reports.
“Having comparable information is the only way to make governance progress,” Perrine Toledano, who leads the Columbia Center’s extractive industry work, told Bloomberg BNA.
The U.S. Forum for Sustainable and Responsible Investment (US SIF), a D.C.-based association for professionals, firms and organizations in the field, has urged lawmakers to oppose any additional efforts to get rid of the underlying Dodd-Frank Act mandate for the disclosures. A piece of legislation floated in the last Congress and expected to be reintroduced in a similar form this Congress would do just that.
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