Politics of Poverty

Ideas and analysis from Oxfam America's policy experts

At Annual General Meeting, Kosmos Shareholders Demand Transparency

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In the company’s first-ever shareholder proposal vote, 23% of Kosmos Energy investors vote for tax transparency.

On Thursday, June 6, at Kosmos Energy’s Annual General Meeting, 23.2 percent of shareholders voted in favor of the company publishing its country-by-country financial information, a critical form of tax transparency. The vote was the first of its kind at the company and sent a clear signal to the board that a significant percentage of investors want this important tax information to evaluate their risk properly.

It is encouraging to see close to a quarter of Kosmos’ shareholders voting in favor of transparency in an environment that strongly disfavors shareholder resolutions– in 2023, only 3 percent of 257 environmental, social, and governance shareholder resolutions passed.

Kosmos is a company that has long prided itself on its transparency. It voluntarily publishes its project-level payments to governments, discloses its contracts, and sits on the board of the Extractive Industries Transparency Initiative. So, when will Kosmos publicly share the tax information so many of its investors are asking for?

Peer companies already publish country-by-country tax data

Many other oil, gas, and mining companies publicly disclose this data. BP, AngloAmerican, Equinor, Rio Tinto, Eni, South 32, Shell, Repsol, BHP, and TotalEnergies all make this data available to the general public. And, the International Council of Mining and Metals (ICMM) requires that its members– which constitute one-third of the world’s mining industry– share this data publicly. The ubiquity of these disclosures makes any argument about the competitive harm that may befall a company that discloses senseless. Still, American companies– other than Hess and Newmont, who disclose this data voluntarily– are lagging woefully behind their peers.

Oxfam introduced this shareholder resolution because lack of transparency can lead to aggressive tax avoidance practices that undermine governments’ ability to fund infrastructure, essential services, and action to combat the climate crisis. Not knowing whether a company engages in such practices can also leave shareholders guessing whether profits stem from genuine commercial success or risky strategies that expose companies to the risk of government lawsuits (or other risks), which pose long-term financial risks.

Disclosing this data helps investors evaluate risk

Public country-by-country tax reporting under GRI-207, the industry-leading standard, can let investors and the public know the details of whether a company has paid taxes owed for the level of activity it has in a country. For each country of operation, the data includes how many employees work for the company, how much revenue and profit the company makes, and the amount of taxes it pays. If this data isn’t disaggregated by country, it reveals very little about the tax, geopolitical, and ultimately financial risks a company may be taking.

Oxfam also filed resolutions asking for country-by-country tax reporting at ExxonMobil, Chevron, and ConocoPhillips. Fifteen percent of Chevron shareholders voted in favor of the resolution. Exxon successfully appealed to the U.S. Securities Exchange Commission (SEC) to have the resolution thrown out on substantive grounds (over Oxfam’s opposition), and ConocoPhillips successfully petitioned to have our resolution thrown out on a technicality. Why are these companies fighting so hard to keep their tax payments a secret? What are they hiding?

Public country-by-country reporting is gaining global momentum

While American companies continue to drag their feet on disclosing this important data, progress toward greater transparency is being made elsewhere. In 2021, 136 OECD countries signed a global tax reform framework and in 2023, the European Union implemented public country-by-country reporting for large multinational companies operating there. And, on June 5 of this year, the Australian Parliament proposed legislation to implement public country-by-country reporting for multinational enterprises operating there.

Will Kosmos answer the call of many of its shareholders and voluntarily disclose this data, joining its European and American peer companies that are already doing so? Or will it join the ranks of big oil in continuing to keep this information from its shareholders?