The Government of Canada is committed to improving transparency and accountability in the extractive sector. To this end, on June 12, 2013, Prime Minister Stephen Harper announced that Canada will be establishing new mandatory reporting standards for Canadian extractive companies with a view to enhancing transparency on the payments they make to governments.
Leading the way
This commitment builds upon Canada’s reputation as a global leader in responsible resource development. Already, Canada’s extractive sector has a well-established financial reporting system, which ensures transparency and the good governance of natural resource revenues.
The new reporting system will complement existing reporting requirements and be established with a view to: improving transparency; ensuring Canada’s framework is aligned with other G-8 countries and consistent with existing international standards, particularly those of the United States and the European Union; ensuring a level playing field for companies operating domestically and abroad; enhancing investment certainty; helping reinforce the integrity of Canadian extractive companies; and, helping to ensure that citizens around the world benefit from the natural resources in their country.
Building the foundation
Work on mandatory reporting is already underway. The Mining Association of Canada, the Prospectors and Developers Association of Canada, Publish What You Pay and the Revenue Watch Institute formed a Working Group to develop recommendations for a framework for mandatory reporting standards, which was published in January 2014. This framework, as well as stakeholder consultations, have informed the Government’s approach.
After extensive consultations with industry, provinces/territories, and non-governmental organizations, as well as information sessions and bilateral discussions with Aboriginal groups, various options for implementing mandatory standards were considered. In assessing these options, the following factors were considered:
- Low cost to industry and government;
- Coverage (i.e., captures payments made by public, and medium and large private extractive companies to all levels of government);
- Ensuring that the new standards do not place Canadian companies at a competitive disadvantage; and,
- Stakeholder input.
The Government’s proposed pan-Canadian approach would require Canadian extractive companies to publicly report payments $100,000 and over to all levels of government both domestic and abroad (including Aboriginal entities), on a project-by-project basis.
The approach would apply to public and private, medium and large mining, oil and gas companies operating in Canada that meet or exceed two of the following three thresholds: C$20 million in assets; C$40 million in net turnover; or 250 employees. Annual reports would be published on company websites and the public notified.
The new mandatory reporting standards are expected to be in place by June 2015.
Taking the next steps
Between now and June 2015, the Government will be working on developing the most effective vehicle for implementation.
Implementing mandatory reporting standards through the provincial securities regulators would be the preferred scenario. The advantage of this option is that it already captures publicly listed companies and is cost-effective as it would use an existing reporting infrastructure. This option is also supported by the mining sector and civil society.
The Government plans to work closely with the provinces and territories on this initiative, as they have an opportunity to play a leadership role and enact their own equivalent legislation. However, if this is not possible, the government will work on developing federal legislation. The federal approach will ensure equivalency both domestically and internationally in order to minimize the burden on industry.
Melissa Lantsman Director of Communications Office of Canada’s Minister of Natural Resources 613-996-2007
Or:
Media Relations
Natural Resources Canada
Ottawa
613-992-4447
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Telephone: 613-995-0947
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E-mail: questions@nrcan.gc.ca
