Aid transparency should be the lowest hanging fruit on the aid reform tree.  Donors know how much money they are investing, and where; why not just disclose that info?

And yet, within the US government, disclosing this data has been a long, slow, un-anesthetized root canal.  US foreign assistance is balkanized across twenty-two US government agencies.  But until yesterday, only USAID and the Millennium Challenge Corporation (MCC) had published information on their expenditures to the Foreign Assistance “Dashboard” at foreignassistance.gov.  No wonder that US government agencies (MCC excepted) generally get poor scores on Publish What You Fund’s (PWYF) Aid Transparency Index.

For months we’ve been watching foreignassistance.gov, looking for new data.  Suddenly last night it arrived.  At some point yesterday, the US government finally pulled back the curtain on two more agencies.  Aid data from the US Treasury Department and Department of Defense finally was posted to the dashboard.

This is not a lot of new data.  In FY11, Treasury and Defense accounted (respectively) for about 6% and 3% of US government aid spending obligations.  But politically, this is an important signal of progress.  Prior to yesterday, the only US government agencies who had reported spending data to the dashboard were under the authority of the Secretary of State—USAID and MCC.  Both identify aid as their primary mission.  But Treasury and Defense have other jobs; foreign assistance is in fact a much smaller portion of their mission.  The fact that they are sharing their data gives new hope that the dashboard can deliver on its promise to be a truly comprehensive tool for knowing where the US government is investing all of its aid dollars.

Not time for transparency champagne yet. Jupiterimages/Photos.com/Getty Images

But don’t pop the cork on that champagne yet.  It’s great that Treasury and DoD have added their data alongside USAID and MCC, but that data overall is still pretty pathetic.  You can see nice pie charts of overall US spending to a particular country or sector, but the dashboard won’t let you drill down to the level of detail that people in developing countries actually need.  For example, if you are a DC-based advocate who wants to see how much the US government spent on agriculture in Tanzania in fiscal year 2011, the answer is relatively easy to find; $39.1m.  But if you are at the Agricultural Council of Tanzania, trying to help your members understand how local food markets might be impacted by aid investments, the dashboard can’t provide you anything beyond that top line number.

All this means that the dashboard remains what it has been since its launch in November 2010—all sizzle, no steak.  Without project-level data that helps people understand how aid is being invested and how we are measuring success, the dashboard fails to actually help US aid dollars work better.

So what’s the hold up?  No question there are significant technical hurdles to be overcome.  Those 22 agencies that deliver US foreign aid all have different computers and different methods of compiling data.  Never mind apples to apples; the intrepid but overworked dashboard team at the State Department’s F bureau faces enough of a challenge turning all this diverse stuff into something that vaguely looks like fruit.  And as frustrating as absent data can be, wrong data would be worse; once false data is out in public and replicated, they can become un-killable zombies, popping up again and again, fueling false conclusions.

But as difficult as these technical challenges are, they have solutions.  Other donors have figured it out; the UK’s Department for International Development (DfID) and the World Bank’s International Development Association (IDA) are leaders.  (It’s no surprise they rank first and second respectively on PWYF’s rankings.)  Even the US government has figured this out in other places.  Check out “recovery.gov”, where you can track every dollar of the 2009 Recovery Act.  You can drill down to the zip code, and see disbursements and results data.  This is exactly the kind of data that citizens and leaders in developing countries are asking for.

As usual, the real challenge seems to be lack of political will.  Getting the recovery.gov website up and running was not easy either, but that effort had a couple political advantages. It had the President’s prestige committed to getting it done, and it was required by the Recovery Act legislation itself.  The US government put in resources to get that effort done because the President’s reputation was on the line, and Congress was looking over his shoulder.

Soon we expect that Congress will reintroduce legislation to require US aid transparency.  Last year, the State Department spent months actively opposing the legislation before finally yielding to the inevitable.  Unfortunately, Congress adjourned before the Senate could take up the bill.  This year, the State Department has a chance for a do-over, whether or not the State Department supports the legislation introduced by Congressman Poe and Senator Rubio. Last year, Senator John Kerry supported the bill; here’s hoping he will do so again as Secretary of State.

We’re all waiting to see just how serious they are about aid transparency.

A few weeks ago, a few House Republicans introduced H.R. 1613, the innocuous sounding “Outer Continental Shelf Transboundary Hydrocarbons Agreement Act”. A little over four pages long, H.R. 1613 is primarily designed to provide Congressional approval to a US-Mexico Transboundary Hydrocarbons Agreement (TBA) signed by both governments over a year ago.

Oxfam has no problem with the approval of the US-Mexico TBA which simply lays out the rules for how hydrocarbons reserves in the Gulf of Mexico that straddle our maritime borders would be developed.

We do have a big problem with an irrelevant provision inserted into the bill designed to weaken the payment disclosure requirements in Section 1504 of the Dodd-Frank Act, also known as the Cardin-Lugar provision. That law provides for the annual disclosure of payments made by oil, gas and mining companies to host governments around the world – final rules were issued by the SEC in August last year. H.R. 1613 would exempt any covered company from reporting payments from in accordance with any transboundary hydrocarbons agreement anywhere in the world.

The American Petroleum Institute (API) – backed by companies such as Exxon, Shell, Chevron and BP – is suing the SEC in federal court and is now hoping that its Congressional allies can help weaken this landmark law. Oxfam is intervening to defend the rule. Meanwhile, the European Union has reached agreement to put in place similar reporting requirements.

I spoke this week with Neil Brown who was, until very recently, a top Senate Republican aide working on energy issues for Senator Lugar, who was the ranking member of the Senate Foreign Relations Committee. His response: “this exemption is unnecessary and inclusion would only forestall quick approval of this important agreement.”

He should know. As both the co-author of a Senate Foreign Relations Committee minority staff report for Senator Lugar on “Oil, Mexico and the Transboundary Agreement” as well as someone intimately familiar with the “Cardin-Lugar” provision in  Dodd-Frank, Mr. Brown would know if the reporting requirements in Dodd-Frank Section 1504 present any issue in approving the US-Mexico TBA. The short answer – they don’t. The minority staff report envisions reporting under Section 1504 and says that under Section 1504 covered companies “would already have to disclose payments” to the SEC if “they invest in Mexico”.

The US-Mexico TBA requires that certain information be kept confidential unless disclosure is required by law. The TBA text demonstrates that the US and Mexico have already made the correct policy judgment that the specific confidentiality provisions of the TBA should be subordinated to each country’s commitment to openness and subject to each country’s disclosure requirements. Nothing in the TBA would require the exemption provided by H.R. 1613.

Tellingly, the Senate Energy Committee has introduced a bi-partisan bill, S. 812, sponsored by Senators Ron Wyden (D-OR) and Lisa Murkowski (R-AK) to approve the US-Mexico TBA, and it contains no Section 1504 exemption provision. If Congress is truly interested in approving this agreement and providing the “rules of the road” for joint development of oil and gas reserves straddling the US-Mexico maritime boundary, then it should adopt the clean Senate bill without the reporting exemption.

Former Senator Jeff Bingaman, past Senate Energy Committee chairman, told Reuters that the exemption proposed by the House “complicates things significantly” for passage of the bill. Referring to the Section 1504 exemption language, he said, “They’ve added in some things that are going to make it difficult to pass in that form.”

The Mexican Congress ratified the TBA a year ago, and the Obama administration – and the oil industry – would like to see it approved. The Obama administration, though, has made clear that implementation of Section 1504 is a priority.

In a letter to Oxfam, Sec. of State Kerry said, “The Department of State and Administration strongly support transparency in the extractives sectors, as outlined in Section 1504 of Dodd-Frank, and the new rule issued by the SEC. The new SEC standard directly advances our foreign policy interest in increasing transparency and reducing corruption, particularly in the oil, gas and mineral sectors.”

My guess is that the oil industry lobby wants this TBA approved far more than it wants this unnecessary Section 1504 exemption. Surya Gunasekara, a tax and trade counsel with the American Petroleum Institute told me that there is “no doubt” that API cares more about Gulf of Mexico access than the proposed Section 1504 exemption.

Two key moments stand out for me last week. On Monday I saw former Senator Lugar (R-IN) receive Transparency International USA’s “Integrity Award” for his work to combat corruption, whether through his oversight hearings of World Bank projects or his leadership on the Dodd-Frank Act, specifically the Cardin-Lugar oil, gas and mining payment disclosure provision. . During a dinner co-sponsored by Exxon, Senator Lugar recounted his lobby visits from oil company representatives during the consideration of this legislation that now requires oil, gas and mining companies to disclose their payments to host governments. After hearing them out, Lugar and his staff simply weren’t persuaded by industry arguments about competitive harm or compliance costs. Looking forward, Lugar referenced the litigation that the American Petroleum Institute has launched against the provision bearing his name and said that no matter the outcome, “The trend is in our direction.”

The case will now go back down to the district court, where Oxfam believes the weaknesses of oil industry arguments will be demonstrated.

Indeed it is. On Friday morning I learned that the US Court of Appeals was not persuaded by the jurisdictional arguments of the oil industry’s lawyers, (Eugene Scalia and company from Gibson Dunn). The Appeals Court dismissed the case agreeing with Oxfam’s lawyers that the case should be heard in the district court first as Congress had instructed. Oxfam, as an intervener, was the only party to argue that this case does not belong in the Appeals Court and the court adopted Oxfam’s reasoning throughout the entire opinion.

This is a victory for transparency campaigners in the Publish What You Pay coalition. With the dismissal, the case will now go back down to the district court where there will be more opportunity for a comprehensive review of the administrative record. Such a review, we believe, will demonstrate the hollowness of industry arguments.

While the legal process continues, global momentum for increased transparency in the oil, gas and mining industry gains steam. In April, the European Union agreed on tough new rules that mirror Cardin-Lugar, with no exemptions for companies for alleged host government prohibitions. Once again, politicians and regulators were not persuaded by industry arguments and fear mongering. In Canada, Publish What You Pay is working with the Mining Association of Canada to develop mandatory disclosure proposals for the government. Later in May, Newmont Mining, the US and UK governments, and investors will highlight the importance of mandatory disclosure rules on the sidelines of the Extractive Industries Transparency Initiative global conference in Sydney, Australia. Finally, the UK government is championing transparency as part of its hosting of the G8 in June.

As the transparency tide reaches many corners of the globe, the war on transparency being waged by companies such as Shell, BP, Exxon and Chevron will seem increasingly doomed and misguided.

“You cannot link the extraction of minerals and community development—not at all,” says Augustine Niber.

Augustine Niber, Executive Director of the Centre for Public Interest Law in Accra, Ghana. Photo: Jennifer Lentfer / Oxfam America

Earlier this month, Oxfam America’s Extractive Industries campaign had the privilege of hosting Niber in Washington, DC to participate in a series of events, including an Oxfam-sponsored panel on land, natural resources, and food justice during Ecumenical Advocacy Days and the launch of an Oxfam report measuring the effectiveness of National Human Rights Institutions that features a case study in Ghana.  Here in the Oxfam offices in DC, amidst all his other activities, I had the opportunity to sit down with Augustine Niber and learn more about him, his work, and the issues communities affected by mining face in Ghana.

Founded in 1999, CEPIL is a non-profit public interest and human rights NGO and one of CEPIL’s key initiatives, the Mining Communities Human Rights and Legal Support Program, has provided free legal services, including court room representation, to communities negatively impacted by mining companies in Ghana. CEPIL also provides legal literacy training and human rights education to these communities to enable them to demand their rights.

“For state institutions in Ghana, the driving force has always been to promote mining activity,” says Niber, “but that type of development paradigm has not succeeded.”

So what does bring about development for communities affected by mining?

Below are three lessons I took away from hearing more about Augustine’s experience as a lawyer and an advocate, pertinent even beyond the mining sector:

1. Good governance and transparency are key.

Ghana is often referred to as the beacon of democracy in Africa. Niber shared that this has fostered a shift in the space for debate on extractive issues, and the role of civil society in this debate.

“The democratic environment we have enjoyed for twenty years now is a factor. Before, if you spoke about mining, you were seen as anti-development. Government has come to realize that civil society organizations working on extractive industries issues are not anti-development or mining, but development partners.”

Civil society participation and pressure have played an important role in pushing forward legislation promoting transparency of extractive resources revenues, particularly regarding oil extraction, which is relatively new to Ghana.

“As civil society organizations, we are working to ensure that the nature of violations for community rights in solid mineral extraction do not happen in oil extraction. Oil revenues should not be misused the way mining revenues have been used.”

Indeed, Ghanaian civil society was deeply involved in moving the passage of the Petroleum Revenue Bill in 2011, requiring petroleum revenue receipts and expenditures to be made public. The bill also called for the creation of a Public Interest and Accountability Committee to independently monitor and regulate the sector.

But Niber cautions that transparency is only the first step to accountability.

“Transparency is an important policy initiative, but it is not just about the policies in Ghana. It is about implementation of the policies.”

2. Community consultation and consent are key.

“Communities are not benefiting [from the industry]. [They] are not part of the decision making process. There have been human rights violations where community members have lost farmland.”

Artisinal miners working in the tailings impoundment of AngloGold Ashanti’s Obuasi Mine in Obuasi, Ghana. Many artisinal miners in Ghana are farmers that have been displaced by large scale mining. Photo: Keith Slack / Oxfam America

The extraction of natural resources can only contribute to development if a community’s fundamental rights are respected, Niber explained. The lack of consultation and consent often leads to the displacement of communities without just compensation. Niber also explained that some community members take part in “galamsey”, or artisanal mining, which can be a very dangerous undertaking.

“These community members are often harassed by state and private security employed by mining companies. Communities become disgruntled and protest. Some people have gotten shot.”

In addition, mining companies often fall short in their promise of jobs for the communities in which they operate. This can also create tension and unrest between the communities and the extractive companies. This is why Niber says companies and governments should be required to obtain the Free, Prior and Informed Consent (FPIC) of communities affected by oil and mining activity.

3. Taking the long view is key.

Achieving true, long-term social justice cannot be done overnight, something Niber knows all too well. Providing legal assistance and court representation for individuals and communities negatively affected by mining is a lengthy process, and a case can easily last a few years before a decision is reached.

“There are delays. Companies and their lawyers know how to frustrate the cases through the legal process and court system. It is possible to cause litigation fatigue with vulnerable communities.”

Though attaining results can take a long time, the payoff can be great and well worth the effort and wait. Such is the case with Niber’s most memorable case at CEPIL. “It was against the [Ghanaian] Environmental Protection Agency (EPA) and a defunct company that operated and left. The Minerals Commission, [responsible for the regulation and management of the mineral resources of Ghana], and the government were held jointly responsible for the destruction that took place.”

The effects of this case went well beyond mining. “CEPIL instituted the case in our name and the court ruled in our favor. The case has become a precedent that other civil society organizations are now using, and it has expanded the frontier of jurisprudence of Ghanaian courts.”

(Bonus lesson!) 4. Bringing global pressure is key.

Niber said that global pressure is important to his work, and encouraged us that here in the US, we can play a part. We can push our policy makers in DC to encourage African governments to agree to a common mining code in ECOWAS, push to protect the 1504 transparency provision, and pressure API to drop the lawsuit against it.

Oxfam has been supporting CEPIL since 2006. To learn more about their work, see: www.cepil.org.gh

Paul O’Brien is the Vice President for Policy and Campaigns at Oxfam America.

Will Raj Shah commit USAID to joining the top 10% most transparent donors by the time he leaves his USAID Administrator post?

USAID Administrator Rajiv Shah. Photo: Eric Bridiers / US Mission via Flickr http://bit.ly/10bPOkO

He might do so, but looking at his recent speeches, it’s no sure thing. More likely, “technological innovation” will continue to win out over “governance” issues like transparency in his priorities. If yesterday’s New York Times interview on child mortality is any indication, he mentions innovation seven times for every mention of transparency. His speech last year on agriculture is fairly typical. Even when he talks about tackling corruption, his proposed fix is to call on “the world’s brightest innovators, entrepreneurs, and engineers to design breakthrough technologies to make all voices count.”

Don’t get me wrong—I believe Mr. Shah gets it. His recent progress report on USAID Forward shows his bona fides on transparency. But if you believe that poverty is a function of power imbalances as much as innovation deficits, then you want USAID’s leadership talking about governance, incentives and democratizing “power” as much as helping people to get more and better “stuff”. Teach a man to fish with a high tech rod, and you will feed him for a lifetime. Unless of course, someone steals all the fish, the water gets polluted, or the government sells off the access rights!

So I hope that in the next four years, Mr. Shah and USAID will talk more about power and governance. I hope he will seek to strengthen institutions by holding his own and then others more accountable. What’s one concrete way to do this?  Don’t just talk about transparency as an end in itself. (It was hearing him deliver this speech on the International Aid Transparency Initiative last year that got me worried). I want Mr. Shah to explain why transparency is so important, and explicitly link transparency to making local institutions more politically accountable to their own citizens. I want him to talk more about how functioning, inclusive domestic institutions in developing countries are the indispensable foundation for innovations to take hold.

In 2004, the Minister of Finance in Afghanistan asked me to explain what the US government was spending on development in his country. Finding out turned into a massive undertaking. It wasn’t just that USAID had no one spreadsheet capturing their work. There were a dozen other US agencies working there and no-one had managed to put it all together. As a competent technocrat, the Minister and his President wanted to build up political legitimacy and to report to the Afghan people on what international aid was delivering. We had no answers. They wanted to hold other ministries accountable for how they managed funds in health care, education and rural rehabilitation. They couldn’t.

That’s why it frustrated me to no end when Publish What You Fund’s pilot ranked USAID in the bottom 36% of most transparent donors in 2011. It is why I took heart when USAID had climbed into the top 37% by the 2012 full assessment. That progress made me wonder whether Mr. Shah and USAID do get the importance of transparency after all.

Now, he should commit USAID to becoming a top 10% donor on transparency by the time he leaves, and explain once and for all, how transparency can help local institutions become more accountable to their own citizens in delivering lasting development results.

Suzanne Zweben is a Senior Advisor in the Private Sector Department of Oxfam America. 

Lake Izabal in Guatemala is an area of great biodiversity and natural resource wealth. Photo: Edgar Orellana / Oxfam America

Companies included in the Behind the Brands scorecard have for the most part made progress on managing water resources.  Largely they recognize that access to water will be one of the greatest challenges of our time.  It’s projected that by 2025, just 12 years away, that 1.8 billion people will be living in countries or regions with absolute water scarcity.  Two-thirds of the world’s population is expected to have limited access to clean water.

This is one sustainability issue food and beverage companies grasp as core to their business; it will impact their ability to make products and touch the lives of their employees, consumers and the communities where they operate and from which they source.  Approximately 70 percent of the world’s freshwater is used for irrigation compared to 22 percent for other industrial use and only 8 percent for domestic use.  In developing countries, 70 percent of industrial wastes are dumped untreated into waters where they pollute the usable water supply, with the food sector estimated as responsible for 54 percent of organic water pollutants.

Oxfam’s Scorecard assessed three main aspects related to water:

(1) Human Right to Water: Has the company recognized the human right to water as defined by the UN?  Has the company committed to consult communities on plans to develop water resources, i.e. before a project has started?  Have grievance mechanisms been established in cases where water rights have been violated?  (A recent report by The Special Rapporteur on the human right to safe drinking water and sanitation, On the Right Track, addresses good practices in implementing the human right to water.  See Chapter 3 especially.)

(2) Transparency: Does the company disclose information on water withdrawals, discharges (i.e. the quality of water released into lakes and rivers), water-stressed regions where the company has operations, regions where the company operates that are at risk for water stress, and raw materials that come from regions subject to water-related risk?  (Seven of the ten companies companies assessed through the Behind the Brands scorecard disclose information through the Water Program of the Carbon Disclosure Project.)

(3) Supply Chain Management:  Does the company require its suppliers to report on their water use, risks and management?  Are requirements on water rights and use specified in a company’s supplier code?  Has the company set a specific target to reduce its water use along its whole value chain?

Food and beverage companies have played a central role in the CEO Water Mandate, which was launched by the UN Secretary-General to assist companies in the development, implementation, and disclosure of water sustainability policies and practices.  Yet no one company has taken significant steps on both the human right to water and supply chain management.  PepsiCo and The Coca-Cola Company have developed policies that take into account the effect of their activities on local communities’ access to water.  Nestle and Unilever have supplier codes or guidelines with specific requirements on water management.

Yet there is still a long way to go.  Because some progress has been made, many companies consider themselves leaders in the realm of sustainable water management, even if they are only addressing one or two of the three aspects of this challenge. But I’m waiting to see who the real leader is going to be—this company will leverage their influence across their supply chain to take on all three of the key fundamental issues of the human right to water, transparency, AND supply chain management.

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This post by Suzanne Zweben is part of a Behind the Brands blog series on Politics of Poverty that examines the seven issues relating to poverty and big food companies’ supply chains. Read more on land, women, farmers, transparency, workers, and climate change!

Frank Mechielsen is the Private Sector Lobbyist at Oxfam Novib.

Do the Top 10 companies featured in the Behind the Brands Scorecard have transparent policies? Do they share their practices with the public?

It is not easy to look beyond the tip of food system’s iceberg, to see how the farmers and workers produce our favourite brands. Who has produced the NESCAFÉ which I drink? Where do the coffee workers live who harvested the coffee beans? Which trader sold them to Nestlé? To whom did the cocoa farmers produce and sell their cocoa beans? What price did they get?

But Oxfam found in the Behind the Brands scorecard process that some companies are more transparent about their sourcing than others.

I was positively surprised that Mars, a private company, is relatively open about its sourcing volumes and buying agents. As a family corporation, Mars does not have shareholders peeking over its shoulders. Only Unilever is more open about the volumes of tea, palm oil, tomatoes, and other commodities it buys. And Nestlé is more transparent about the sourcing countries.

I was also impressed by Danone, which gets its highest thematic score of 6 on transparency. It is number two of the Big 10. The policies of Danone related to women, farmers, and land are weak, but at least the company is becoming more transparent about their sourcing because of their recently published forest footprint policy.

On the other end, it gets murky. We find General Mills with a score of 2 and Associated British Foods with a score of 3 on transparency. General Mills provides information about the volumes of palm oil only and disclosure about buying agents is limited to one cane sugar supplier. Associated British Foods does inform the public about the volumes of palm oil and sugar it buys, but no further information about the sourcing volumes of other commodities.

Oxfam also looked for evidence of food companies’ transparency in their lobbying activities. The European Transparency Register is a voluntary initiative for companies to provide some information about their political activities.  Neither General Mills nor Associated British Food report in Europe on their lobby activities and, according to the Global Reporting Initiative, are less transparent about their corporate reporting than most of the Big 10.

It’s what can’t be seen under the water that is dangerous. Food companies, more clarity required.

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This post by Frank Mechielsen is part of a Behind the Brands blog series on Politics of Poverty that examines the seven issues relating to poverty and big food companies’ supply chains. Read more on land, women, farmers, water, workers, and climate change!

Monique van Zijl is the Policy Advisor for Economic Justice at Oxfam Novib.

Huh? It can’t be! I’m astounded. According to the Oxfam Behind the Brands Scorecard, none, not one of the Big 10 food companies has adequate policies to prevent or protect local communities from land grabs along their supply chains. As a land policy advisor for Oxfam, the scorecard gave me a chance to see just what ten of the world’s biggest food and beverage companies are doing to prevent land grabs along their supply chains.

All ten companies are driving in the dark.

Once upon a time, the food and beverage industry gained unrestricted access to cheap land, i.e. other people’s land, which allowed them to make huge profits at the expense of others. But that was before the problem of land grabs was all over the news. That was before companies and consumers knew better.

In the past decade, an area of land eight times the size of the United Kingdom has been sold off globally. This is enough land to feed nearly a billion people—the same number of people who go to bed hungry each night. The vast majority of large-scale land deals are taking place in countries with ‘alarming’ or ‘serious’ levels of hunger, and yet a majority of foreign land investors plan to export what they produce. Land sold as ‘unused’ or ‘undeveloped’ is often that of poor families. These families are forcibly kicked off the land, often violently, and if there are promises of jobs or compensation, these are often broken.

Companies can no longer claim to be unaware of these risks.  Yet no single company assessed in the scorecard has sufficient policies to prevent land grabs.

Oxfam’s Behind the Brands Scorecard measures whether companies have sufficient policies in place to ensure that their supply chains are free from ‘land grabs’. This includes policies that promote free, prior and informed consent throughout the entire supply chain and zero tolerance for those suppliers who obtain land through land rights violations. We are asking companies to turn their lights on: to adopt preventative policies; to seek the consent of local communities; to undertake transparent and comprehensive social and environmental impact assessments; and, if things do go wrong, to provide appropriate grievance mechanisms. In short, we are asking companies to be responsible investors, producers and, buyers.

Driving in the dark with no lights is reckless. Food companies, it’s time to switch the lights on.

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This post by Monique van Zijl is part of a Behind the Brands blog series on Politics of Poverty that examines the seven issues relating to poverty and big food companies’ supply chains. Read more on women, farmers, transparency, water, workers, and climate change!

A guest post by Keith Slack, Global Program Manager, Extractive Industries

Mining industry big-wigs will gather in South Africa next week for Mining Indaba, billed as the “world’s largest mining investment conference.”  As has become de rigeur in recent years at this kind of event, there will be some discussion of social and environmental “sustainability” issues.  The final day of the event is in fact devoted to this and boasts an impressive-sounding set of panels featuring mining company CEOs, World Bank executives, government officials, and a smattering of NGOs.  This is consistent with a recent spate of mining sector sustainability initiatives including, among several others, the International Council on Mining and Metals’ Resource Endowment series, which looked at how mining can contribute more to economic development.

While this attention to sustainability is in general positive, it hasn’t driven the fundamental change in industry practice that is urgently needed.  US-based Newmont Mining’s history in Peru is one example.  Following a series of problems in Peru and elsewhere in the mid-2000s, the company commissioned a report that produced recommendations on improving its relationships with local communities.  The company’s implementation of these recommendations has been spotty at best.  Last year it was forced to postpone its massive Mina Conga project in the face of community opposition.  In December the company released another damning external review that described a “state of fear” among communities living near the mine.  Clearly the learning from past reviews hasn’t sunk in with company management.

To address this situation and the critical sustainability challenges facing the mining sector, we offer a few recommendations for the mining execs gathered in in Cape Town to consider as they schmooze, golf, and down some of those delicious South African red wines.  (Goats do Roam is my personal favorite.)

Dominic Nyame, a member of the Concerned Citizens Association of Prestea, an organization in southwest Ghana negotiating with a mining company around issues related to air and water pollution, and the proposed expansion of mining operations. Photo: Jeff Deutsch / Oxfam America

First, mining companies need to start fully respecting community consent.  While industry rhetoric on this point has improved significantly in recent years (which Oxfam has highlighted in a recent report), good examples of implementation are still lacking. Industry types often make the practice out to be more difficult than it really is and worries about communities vetoing a project are overblown.  Newmont’s problems at Mina Conga in Peru exist not because communities there are inherently anti-mining.  Rather they stem from the company’s bungled handling of community relations (by its own admission) during the early days of its presence in the community.  Getting these relationships right from the beginning and actively addressing to community concerns are critical to avoiding these problems.

Ensuring respect for the rights of women in the communities where companies operate is also critical for ensuring sustainability.  Women are often the guardians of communities’ long-term interests.  They suffer most directly from the negative impacts of mining, via the domestic violence and alcoholism to which mining often contributes.  Mining companies must carry out more rigorous and independent gender impact assessments.

Transparency has become somewhat of a cliché in discussions of sustainability in the extractive industries, but it’s an area, like women’s rights, where much work still remains to be done.  Mining companies should fully disclose all payments they make to governments – down to the project level where their impacts are felt.  To its credit, the mining industry hasn’t joined the American Petroleum Institute’s odious lawsuit seeking to block a new US law requiring these disclosures.  This is positive and should be coupled with all companies publicly embracing the law and disclosing this information beginning this year.

The thirsty folks gathered in South Africa will know that there is no sustainability issue more critical to the mining industry than protecting water resources.  South Africa itself is awash in acid mine drainage, or sulfuric acid that leaches out of mine sites and destroys ground and surface water.  This problem is a ticking time bomb in developing countries and it is incredibly expensive to fix once it starts.  Once it does, the acid needs to be treated forever.  Mining companies have the technology now to know when mining in particular ore bodies is likely to cause this problem.  They also know they shouldn’t mine there.

Finally, if mining companies want to contribute more to sustainable development, they should accept the fact that that may mean reduced profits for themselves.  Mining companies are masters at negotiating deals that enable them to avoid paying significant amounts of taxes.  In contract negotiations, industry lawyers routinely take under-trained and under-resourced government officials to the cleaners.  Yes, companies should be able to make profits, but they shouldn’t do so by exploiting unfair advantages.

Ultimately, making progress on these issues will depend on the degree to which mining companies incorporate community consent, the rights of women, transparency, and protection of water resources into their business models.  Creating incentives for performance on these issues will be critical.  Investors can play a role by only buying shares of companies with independently-verified performance metrics on sustainability, including demonstrable progress on the issues listed above.  Companies themselves can link compensation and career advancement to performance on sustainability.

It’s time for sustainability to become a central part of mining industry standards in Africa and elsewhere, rather than a sideshow.

Ghanaians go to the polls for presidential and parliamentary elections this Friday and political observers and polls both indicate an extremely tight contest between the ruling National Democratic Congress (NDC) and the opposition New Patriotic Party (NPP).

These two main parties have profound differences when it comes to managing the oil sector and spending revenues. In an African nation that stands out by having five democratic elections in a row, including two peaceful transfers of power between parties, this election also stands out as the first where control of oil revenues is an important political “prize”.

Ghana’s “world class” Jubilee field started producing oil in late 2010 with great fanfare—so far, though, production results have been disappointing and revenues have been well under the $1 billion a year predicted. Ghana’s oil boom comes with big challenges to Ghana’s democratic development and in many countries oil has fueled increased conflict, corruption, and authoritarianism.

Ghana has made progress putting a transparent system for managing oil revenues in place.

The Western Corridor Gas Infrastructure Development Project.Atuabo, Ghana. Anna Fawcus / Oxfam America.

The passage of 2011’s Petroleum Revenue Management Act mandated the establishment of the Public Interest and Accountability Committee (PIAC) which is tasked with monitoring compliance with the revenue law. All payments are disclosed by the government on a quarterly basis and the current government has taken the notable and step of disclosing many of Ghana’s petroleum agreements—a rare step in the African oil context.

Much of this progress is directly attributable to a vibrant civil society sector—including the Civil Society Platform on Oil and Gas—that has demanded policies and taken government, parliament, companies and donors to task when they haven’t delivered. The legal framework is still incomplete. A Petroleum Exploration and Production Act, Ghana Extractive Industries Transparency Initiative Act, and implementing regulations for the newly created Petroleum Commission and PIAC are still in limbo. In addition, contract disclosure is currently at the whim of the present government and not required by law.

Creating a transparent system is one thing, holding government to account quite another. It is heartening to see that when the PIAC issued its first report earlier this year noting that some payments were misdirected or not reported the government and state oil company—the GNPC—were forced to respond.  Yet, the government has not provided the new accountability and regulatory institutions—the PIAC and Petroleum Commission—with the bare minimum of resources to be able to function.

How do the two main parties differ on the approach to managing Ghana’s oil boom?

First, the NDC has focused on investing oil revenues in infrastructure while the NPP believes that the country should go to the private capital markets for big ticket infrastructure items such as roads. Instead, it has campaigned on a platform of “free” secondary education for all Ghanaians with a focus on building human capital. (Both parties are likely overpromising based on the expected levels of oil revenues.)

Second, they differ on the role of the state in relation to oil production. The NDC believes that government revenues should be used to build up and capitalize the Ghana National Petroleum Corporation (GNPC) so it can eventually become an operator of oil fields and not just a passive partner. The NPP, meanwhile, would see GNPC as a joint venture partner, raising money on capital markets rather than relying on government subvention.

Third, before losing power, the NPP had favored working with Trinidad and Tobago to develop Ghana’s gas potential. The NDC has gone with a Chinese contractor, Sinopec, and is in the process of constructing gas processing infrastructure. It is unclear whether this strategy would change if the NPP gained power and whether they would re-evaluate the Sinopec contract, which has been the subject of controversy regarding whether the government was getting value for money. Yet, both parties are keen to use gas reserves to fuel a local petrochemical industry.

Ghana’s next government must focus on completing the job of constructing a transparent and accountable system for managing the oil and gas sector. Contract disclosure, competitive and transparent licensing, and disclosure of beneficial owners of oil and gas blocks should become mandatory. New institutions such as the PIAC and Petroleum Commission must have the resources, implementing regulations and political space to do their job. The Ghana Revenue Authority must have the expertise and staff to be able to properly monitor and collect oil revenues. Ghana’s budget preparation and execution system must be strengthened; including by bringing more transparency to the process (Ghana scores poorly on the Open Budget Survey). Finally, the government should respect the rights of local communities who are and will suffer the onshore and offshore impacts of Ghana’s oil boom.