Catalysing transformative change in beneficial ownership transparency
With large volumes of revenue, the extractive industry is often associated with high risks for corruption. Indeed, there is a prevalence of extractive industry corruption cases along the value chain, from the award of contracts and licences to the delivery of services. Many governments as well as public and private organisations have sought to reduce the risk of corruption and ensure revenues are adequately used by improving governance and increasing transparency within the sector. Of a number of tools, beneficial ownership transparency (BOT) – knowing who ultimately controls and benefits from a company – has been internationally identified as key to fighting corruption and preventing illicit financial flows in all sectors of an economy. However, progress in this area has been constrained.
The Extractive Industries Transparency Initiative (EITI) and Open Ownership (OO) are partnering to design and deliver a new global programme to bring about transformative change in the availability and use of beneficial ownership (BO) information for effective governance of natural resources across the value chain. The overall goal is to improve transparency and accountability in resource-rich countries and, by building a solid evidence base that showcases the positive impact of effective publishing and use of data, contribute to reduced corruption and positively impact the lives of citizens.
The provisionally named Opening Extractives programme seeks to meet the following three goals:
- Enable governments and industry to disclose high quality open BO data for the extractives sector to improve transparency and accountability in resource-rich countries;
- Build the capacity of government and local stakeholders to use and analyse data in the public domain to improve accountability and governance in resource-rich countries;
- Mobilise global support for BOT in the extractive industry and beyond, and adapt to post-COVID-19 governance challenges.
As part of the programme design process, which the organisations were invited to submit as a proposal to the BHP Foundation, EITI and OO conducted design research to ensure that the assumptions upon which the programme was being designed were valid. Whilst the idea of the joint programme builds upon the knowledge and experience of both organisations, EITI and OO considered that it was an important to test the implicit assumptions that affect programme design and effectiveness by supplementing this existing knowledge with new primary and secondary evidence, outlined in this report.
The Extractive Industries Transparency Initiative (EITI) is the global standard to promote the open and accountable management of oil, gas, and mineral resources. The principles of the EITI, agreed in 2003, acknowledge that natural resource endowment can be an important contributor to sustainable economic growth. They underline the importance of transparency in informing public debate and realistic options for sustainable development. The EITI Standard therefore requires the disclosure of information along the extractive industry value chain. This includes a requirement for countries to ensure companies that apply for or hold a participating interest in an oil, gas, or mining licence or contract in their country disclose their beneficial owners. In each of the 53 countries that implement the Standard, the EITI is supported by a coalition of governments, companies and civil society.
Open Ownership (OO) is a global centre of expertise on beneficial ownership transparency (BOT). The organisation’s mission is to ensure that all jurisdictions publish high-quality data about the beneficial ownership (BO) of legal entities in their countries, and that this data can be well used by governments, the private sector, and civil society. OO provides specialist technical assistance and support to governments and national stakeholders throughout the implementation journey to BOT. OO also works with multilateral organisations to increase the number of jurisdictions publishing quality BO data, and builds the capacity of government and civil society to analyse and use BO data to drive impact. Founded in 2016, OO has designed the Beneficial Ownership Data Standards (BODS), a solid conceptual and practical framework for collecting and publishing high quality usable BO data, of which standardised implementation would permit easy interoperability of data, and therefore use across jurisdictions.
The programme design phase focused on the following objectives:
- Develop preliminary country selection process and criteria;
- Understand the priorities, needs and demands of implementers;
- Articulate approach to Monitoring, Evaluation and Learning (MEL);
- Develop communication strategy;
- Identify programme resource needs.
The design research specifically focused on objectives 1 and 2, whilst recognising its implications on 3, 4 and 5. The research gathered evidence from BO practitioners, data users and key partners to ensure a collaborative approach to inform the overall development of the programme. In doing so it pursued inquiry into the following key themes and questions.
Theme 1: Develop preliminary country selection process and criteria
- 1. What criteria should we use to select target countries for the project?
- 2. Who are the main secondary beneficiaries (CSOs, industry, and others), what role do they play in implementation, and how should we engage them in our programme design?
Theme 2: Understand the priorities, needs, and demands of implementers
- 3. Who are the main practitioners leading implementation of BO disclosure efforts that cover the extractives sector, and how should we adapt our support services to different implementers?
- 4. What are the main challenges faced by implementers, and do our support services match these?
- 5. What do practitioners need to overcome their challenges, and how can we design our support services to facilitate this?
- 6. What are the current enablers and blockers to delivering support and guidance, and how can these be incorporated into our programme design?
As the design phase took place when the COVID-19 crisis initially unfolded, EITI and OO also wanted to understand how this would potentially affect different BO implementers at the national level, and how this could be factored into programme design. Consequently, it was added as an additional line of inquiry, to see how COVID-19 was affecting both research themes in different implementing countries.
 Design research – a practice originally from the private sector – aims to help develop programmatic interventions. It is applied research, different from policy oriented or academic research, more practically applicable and less rigorous. By combining practices from ethnography, journalism, and systems thinking, it helps those designing programmes understand the causes, relationships, and human dimensions of complex contexts, and then aims to incorporate this knowledge into programme design. The work and guidance developed by Reboot (www.reboot.org) helped inform the development of this research.