Each year mining companies give millions of dollars to the governments of countries whose resources they extract. Money often flows to corrupt leaders who derive a significant portion of their wealth from these payments.
In an attempt to make these transactions more transparent the European Union and the US have adopted legislation forcing their companies to reveal which states they gave money to and how much. Canada has so far been lagging, having only recently made moves to require the same level of transparency with Prime Minister Stephen Harper promising in June to push forward with legislation.
Now a coalition of US investors has chimed in. Investors representing $5.8 trillion in assets are lobbying the Canadian government to push forward with this issue. In a letter Natural Resources Canada the group has called upon the agency to develop standards forcing companies to reveal how much they're giving to governments.
Citing transparency legislation in the US and the EU, the group – which includes SNS Asset Management, Aviva Investors and F&C Management, among others – wants the Canadian government to align its reporting standards with these jurisdictions.
Primarily, the group wants Canadian transparency legislation to have the same definition of a project as the US and EU and to adopt a disclosure threshold of $100,000.
Earlier this year a coalition of Canadian mining industry representatives and civil society organizations, the Resources Revenue Transparency Working Group (RRTWG), issued a set proposals requiring miners to disclose payments. According to RRTWG, the measures would make foreign governments more accountable and allow investors to make more informed decisions on where to put their money.
Transparency legislation, according to the letter sent to Canadian lawmakers, would deter "forum-shopping by issuers that might otherwise be tempted to seek out less rigorous disclosure regimes" – behaviors which "harm well-governed companies through unfair competition as well as investors through higher risk."
Flickr Creative Commons image by: Wazari Wazir