What is new?
The recent international financial crisis stimulated the debate on the responsibility of business to contribute to sustainable economic growth.
Against this backdrop, the European Parliament adopted in 2013 a revised legislation, called the Accounting Directive. The Accounting Directive obliges large extractive and logging companies to report payments they make to governments. This is called the country-by-country reporting (CBCR). In order to ensure a level playing field between companies, the same country-by-country requirement has been incorporated in the revised Transparency Directive. The companies must report the amounts over 100’000 Euros paid out to the country in which they operate, namely the taxes, royalties and licence fees. Also, the companies have to report payments that were made for each project, specifying the profitable activities and production provided by oil, gas, mineral extraction and forestry.
What are the objectives?
The European Union legislation is similar to the US Dodd-Frank Act, although it goes further by including the forestry sector.
The objective of the law is not only increased accountability and transparency of international companies in the extractive industries, but also to encourage the adoption of the Extractive Industries Transparency Initiative (EITI) in resource-rich countries. The EU mandatory disclosure requirement (the Accounting Directive) will complement the EITI efforts by legally requiring companies registered or listed in the EU to disclose payments to governments along the same lines as EITI.
By requiring companies to disclose payments on a project and country basis, it allows citizens in resource-rich countries to know what mineral revenue is being received by their respective governments. In other words, the new legislation will assist citizens to hold their governments accountable, and contribute to a more equitable use of revenues.
For more information on the Accounting and Transparency Directives, see the documents below. Click on the pictures to access the documents.
Transparency Directive: Accounting Directive:
Directive 2013/50/EU of the European Parliament Directive 2013/34/EU of the European Parliament
and of the Council of 22 October 2013 and of the Council of 26 June 2013
(Official Journal of the European Union). (Official Journal of the European Union).
Memo and Frequently Asked Questions Fact Sheet on the new EU rules:
about the Transparency Directive. prepared by the global network
This is a publication of the European Commission. of civil society organisations Publish What You Pay.