Paul Bugala, Senior Sustainability Analyst for Extractive Industries at Calvert Investments, explains why Wall Street and the developing world need mandatory oil and mining payment transparency. This piece is part of a larger blog series on transparency in the extractives industry. Stay tuned for more updates on this topic.
Imagine you had to make one decision that could change your community and livelihood dramatically. Wouldn’t you want to be 100 percent sure your decision created the best opportunities possible for you and your family?
On the flip side, what if that decision involved an investment of millions of dollars? You would want all the information you could find about the possible outcomes and risks of your decision, wouldn’t you?
Today, across the globe, citizens of resource-rich yet poor countries and investors in oil, gas and mining companies have a problem just like this. These odd couples both need to make very important decisions about natural resource projects and the companies that undertake them, but they don’t have enough information to make sure their choices are right.
Without the disclosures required by the Cardin-Lugar Amendment (Section 1504 of the Dodd–Frank Wall Street Reform and Consumer Protection Act), investors cannot put an accurate dollar amount on the risk to their investments caused by things like social or political conflict. In turn, citizens of countries where those investments are taking place don’t have the necessary information to hold their governments accountable for the cash windfalls from those resources, or to make informed decisions about whether natural resource development is the right choice for their communities.
The disclosures mandated by Cardin-Lugar also create broader benefits that local communities, investors, companies and consumers around the world can all share. The stability that happens when a country’s citizens feel they are getting a fair return on their natural resources lowers the risk of investing in companies that operate there. In addition, it also lowers a company’s cost of doing business and, in turn, may lower the costs of some of the commodities on which the entire world depends.
The support of ONE and its members is critical in making the case that these disclosures matter. You’re helping ensure that the world’s choices about natural resource development and investments are fully informed ones.
You can find out more about sustainable and responsible investing at www.calvert.com and follow Paul on Twitter at @paulbugala.