Research Symposium Synthesis Report: Evidence and impact of beneficial ownership transparency
Data use and impact measurement
Impact measurement is essential for understanding and demonstrating the value of BOT reforms. As more countries implement BOT, the opportunities to measure its impact are growing. The Symposium showed that there are an increasing number of studies documenting the ways in which BOT is creating positive outcomes. Attendees from the UK government presented a study that estimated the value of beneficial ownership (BO) information in the Companies House register to the private sector was about GBP 4,400 per organisation per year, while for the public sector this was around GBP 2,600 per user per year. Studies such as this can shore up domestic political backing for ongoing efforts to compile BO data, as well as providing methodological inspiration on how to determine the impact or value of registers. Yet they must also be interpreted with caution. In Europe, one presenter showed that the introduction of requirements to disclose beneficial owners appears to have led to a decline in inflows from non-European Union (EU) financial havens. However, they argued that it may primarily be legitimate actors who have foregone investment into the EU, as opposed to the illicit actors who are the intended target of these deterrence measures.
BO data use goes well beyond anti-money laundering (AML), and impact measurement should include areas such as public procurement and tax. The range of novel data use projects and impact studies represented at the Symposium also showed that the value of BOT is not limited to the traditional remit of financial crime. In terms of tax, one presentation examined how Ecuador’s government built on requirements to disclose beneficial owners to improve its tax earnings. This research suggests that, following the introduction in 2015 of an additional 3% levy on firms owned by entities in tax havens, the number of tax-haven owned firms reduced by about 30%, while domestic corporation tax earnings simultaneously increased by approximately 17%. In the case of public procurement, research on Chile suggested that incorporation of BO data into state contracting, alongside better analysis and a public information campaign, has helped reduce conflicts of interest in government tenders. To support measurement of these kinds of impact in public procurement, Open Ownership has developed a starter guide that uses a flexible three-track evaluation framework which can be tailored to jurisdictions with different governance environments, data conditions, and institutional capacities.
Other researchers are working with BO information to promote broader corporate and democratic accountability. The Euromedia Ownership Monitor platform includes data per country on legal ownership, economic control, management, and relations on major media organisations in Europe, with the aim of bolstering democratic accountability. Meanwhile, initiatives such as the Global Energy Monitor’s Energy Ownership Tracker use BO data to help promote corporate accountability in the energy sector; users can view ownership stakes of above 5% in energy projects worldwide. Based on preliminary findings, other Symposium research-in-progress suggests that requirements to disclose ownership information in the energy sector can lessen a collective action problem in which firms concentrate polluting emissions in plants they jointly own. Additional projects under development examine the degree to which company ownership transparency is variously associated with levels of compliance with environmental regulations, labour laws, or even the detection of risks of fraud and crime in sports clubs.
Measuring the impact of BOT is not always a straightforward endeavour, but new ideas are emerging. The array of methodologies used to measure impact reflect that the question of how to do so effectively is generating new ideas and approaches. In many cases, it is challenging to isolate the effects of BOT reforms and data use from changes in the broader geopolitical and economic sphere. More difficult still is the task of convincingly demonstrating that requirements to disclose this information have had deterrent effects, such as preventing illicit financial transactions. In addition, there is the perennial problem that researchers can only work with the available data, which can mean that many of the potentially highest-risk jurisdictions are excluded from such studies.
Notwithstanding such challenges, proposed methodologies and systems of measurement continue to emerge, using different metrics to identify cases of successful implementation, data use, and changes resulting from policy reforms. This can include implementation-related outcomes, such as how many records exist and what the perceived level of quality is. It can also include outcomes reflecting levels of compliance, such as the proportion of entities that have registered their beneficial owners, how many have applied for exemptions, and how many sanctions are applied for noncompliance. If data use is viewed as the key metric, then the number of data users, the frequency of use, the perceived utility of data, and how these levels change over time may be more relevant, alongside an assessment of how these compare to historical trends or the number of companies registered in a given jurisdiction.
The observation of tangible changes that occur as a result of reform implementation and data use are sorely needed, as well as a robust interpretation of these changes.
In each case, these indicators alone will not provide the complete picture or tell the full story of impact. The observation of tangible changes that occur as a result of reform implementation and data use are sorely needed, as well as a robust interpretation of these changes. For example, a reduction in the number of bidders for procurement rounds following BOT reforms may point to a reduction in bid rigging, but it could equally indicate adverse changes in tender requirements. In sum, while these various pieces of data may constitute important starting points for impact measurement, further innovation and a contextualised assessment of the data will be required to capture and understand BOT’s full impact.
Generating evidence of impact for beneficial ownership transparency
In addition to observing impact through their work, there is much that civil society organisations (CSOs) and researchers can do to generate additional evidence of impact from data use. The keynote speaker at the Symposium, Elizabeth Dávid-Barrett, Director of the Centre for the Study of Corruption at the University of Sussex, offered valuable perspectives based on her research and practitioner experience in anti-corruption work.
Dávid-Barrett explained that a good first step is to engage with a wide variety of academics, government officials, and representatives from civil society and the private sector in order to develop an understanding of: i) how people view the issue of corporate transparency; ii) why they are interested in it; and iii) how they might use the data in their jobs or lives.
Ideally, this would include those who can generate change from the top-down, such as donors and regulators, as well as those who work from the bottom-up, such as civil society and the media. At the end of this process, it should then be possible to identify specific use cases for the data and, based on these discussions, to develop a theory of change which outlines who would be interested in the reform, how it could be achieved, and for what purpose.
In addition, Dávid-Barrett explained that it is important to remember that topics like BOT may be technical in nature and thus careful attention to messaging is crucial to gaining broader appeal. One way to do this is to link the work to other topics, such as artificial intelligence, which already form part of the public conversation. Alongside this, pro-transparency groups must consider ways to make the topic seem real and concrete rather than overly technical and abstract in nature, for example, via narrative stories of impact.
Doing so will often involve thinking about how to engage audiences who are interested in using data to create change. One example Dávid-Barrett shared was holding a hackathon with civil society groups and students to find new ways to use and apply the data. Such initiatives do not always produce results, but when they do, they can provide a good narrative story of impact. While this work takes time and persistence, the experience of previous transparency campaigns suggests that, done well, it can ultimately pay dividends.