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  3. Natural Resource Charter

Precept 12: Role of international community

Governments and international organizations should promote an upward harmonization of standards to support sustainable development.

Governments and international organizations that finance, or influence, the policies affecting extractive industries play a vital role in supporting the decisions made by resource-rich governments. In addition to national regulators of countries in which extractive companies are domiciled, such international organizations include, but are not limited to the World Bank and International Monetary Fund (and their respective lending agencies); aid donor governments; the Organization for Economic Co-operation and Development; United Nations agencies; export credit agencies; organizations such as the African Union, the European Union, G8 and G20; and the global finance community. International civil society also plays a key role in maintaining pressure on these actors to improve their policies as well as in the monitoring of states and companies.

Following are the key areas in which the international community can enhance the governance of resource extraction around the world.

Promote, monitor and enforce public disclosure requirements of the extractive industry

See Precept 2 disclosure requirements.

Governments, international organizations and other actors can improve transparency by establishing and enforcing a set of international standards for financial and accounting records, as well by disclosing contractual terms. Public disclosure of information throughout an extractive project, from exploration licensing to project clean-up, is a vital mechanism for helping citizens and investors hold governments and companies to account. In addition to legislating for global mandatory reporting requirements, these organizations should support the implementation of the Extractive Industries Transparency Initiative in resource-rich developing countries as a complementary, voluntary standard that promotes dialogue among stakeholders at the national and international levels.

Ensure that extractive industry projects comply with internationally recognized human rights standards

Governments should clearly set the expectation that all companies in their jurisdiction respect human rights—at a minimum those contained in the International Bill of Human Rights and the International Labour Organization’s Fundamental Principles and Rights at Work.

Illicit financial flows are estimated to cost developing countries over US$1 trillion annually—US$10 for every US$1 received in aid.
—Dev Kar and Devon Cartwright-Smith, 2009.

Under the UN Guiding Principles for Business and Human Rights (UNGPs), international organizations should promote and support host states in fulfilling their duty to protect human rights and ensure company compliance with the obligation to respect human rights in the context of extractive industry projects.

Actors that support the extractive sector financially or through guarantees should require due diligence procedures, consistent with the UNGPs that prevent potential and actual human rights abuses resulting from extractive projects. They should pay special attention to differential effects determined by gender, race, age and other factors.

Ensure that extractive projects comply with environmental and social standards

See Precept 5 on social and environmental concerns.

The extractive industries can have significant negative impacts on both the living standards of local people as well as on the local and global environment. International organizations should set, facilitate, incentivize or require appropriate project operating standards that limit such effects, including the assessment of impacts. Export credit agencies, as well as public and private lenders, should require due diligence, as well as monitoring and reporting on compliance with international environmental and social standards. Many international organizations, including the UN and the International Finance Corporation, have recognized that indigenous peoples have special rights that must be protected.

Reduce illicit financial flows and corruption

See Precept 4 on tax abuses and Precept 7 on revenue flows.

International organizations must do more to reduce illicit financial transactions, and to curtail transfer-pricing abuse, use of tax havens, and other tax avoidance and evasion techniques. Such measures include banking regulation, and the confirmation of ownership in all banking and securities accounting. Asset-looting has been particularly prevalent in countries with large resource windfalls; international organizations should require and facilitate the freezing or recovery of stolen assets when malpractice is identified. International organizations should furthermore work together to reduce corruption and bribery, ensuring strong legislation and enforcement of measures to counter such practices.

Support the exchange and extension of extractive industry skills

Many resource-rich developing countries have yet to accumulate the essential capacity to translate resource wealth into sustainable and inclusive development. International organizations and governments should play a significant role in helping to build the capacity of government, the legislature, media and civil society in these countries. Efforts should be both concerted and coordinated to maximize efficacy. Normative frameworks such as the Natural Resource Charter and the Africa Mining Vision can help various actors coordinate and harmonize approaches to resource governance.

Within all the areas identified, governments and other international organizations should work together to promote an upward harmonization of standards.

For more information about implementing the principles of the Natural Resource Charter precepts, click here.

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    Publications

    Big Sellers: Exploring the Scale and Risk of National Oil Company Sales

    Briefing
    14 June 2019
    Alexander MaldenJoseph Williams

    How and Why the Myanmar Government Should Publish Petroleum and Mining Contracts

    Briefing
    27 May 2019
    Sebastian SahlaHosana ChayRobert Pitman

    Tip-Toeing Toward Transparency: Jade and Gemstone Sector Disclosures in Myanmar (Myanmar language)

    13 February 2019
    Paul Shortell

    Mongolia's Missing Oil, Gas and Mining Contracts

    Briefing
    11 February 2019
    Robert Pitman

    Бодлогын хураангуй: Монгол Улсын газрын тос, уул уурхайн ил болоогүй гэрээнүүд

    11 February 2019
    Robert Pitman

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    Tools

    The Natural Resource Charter in Myanmar (pamphlet)

    Natural Resource Charter Benchmarking Framework

    News & Insights

    Five Questions About How Debt Relief Initiatives Will Work for Resource-Rich Countries

    David Mihalyi
    9 June 2020

    The Proof is in the Politics: Fossil Fuel Interests and Domestic Energy Transitions

    Aaron Sayne
    21 May 2020

    Three Proposals for Mineral-Dependent Countries During the Coronavirus Pandemic

    Andrew Bauer
    1 May 2020

    Tips for African Negotiators Doing Deals with China: Rebalancing Asymmetries

    Hervé LadoFolashadé Soulé
    25 February 2020

    Should the OECD’s Proposal for a “Unified Approach” on Corporate Taxation Exclude Extractive Industries?

    Thomas LassourdThomas Scurfield
    28 November 2019

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    Other Precepts

    P1
    Precept 1: Strategy, consultation and institutions
    Resource management should secure the greatest benefit for citizens through an inclusive and comprehensive national strategy, a clear legal framework, and competent institutions.
    P2
    Precept 2: Accountability and transparency
    Resource governance requires decision makers to be accountable to an informed public.
    P3
    Precept 3: Exploration and license allocation
    The government should encourage efficient exploration and production operations, and allocate rights transparently.
    P4
    Precept 4: Taxation
    Tax regimes and contractual terms should enable the government to realize the full value of its resources consistent with attracting necessary investment, and should be robust to changing circumstances.
    P5
    Precept 5: Local effects
    The government should pursue opportunities for local benefits, and account for, mitigate and offset the environmental and social costs of resource projects.
    P6
    Precept 6: Nationally owned resource companies
    Nationally owned resource companies should be accountable, with well-defined mandates and an objective of commercial and operational efficiency.
    P7
    Precept 7: Revenue distribution
    The government should invest revenues to achieve optimal and equitable outcomes, for current and future generations.
    P8
    Precept 8: Revenue volatility
    The government should smooth domestic spending of revenues to accommodate revenue volatility.
    P9
    Precept 9: Government spending
    The government should use revenues as an opportunity to increase the efficiency of public spending at the national and sub-national levels.
    P10
    Precept 10: Private sector development
    The government should facilitate private sector investments to diversify the economy and to engage in the extractive industry.
    P11
    Precept 11: Roles of international companies
    Companies should commit to the highest environmental, social and human rights standards and contribute to sustainable development.

    Related events

    Natural Resources for Sustainable Development (September 2019)

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    Open Government Partnership Global Summit 2019

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    Tuesday, May 28, 2019 - 08:00 to Friday, May 31, 2019 - 18:00
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    Kapuscinski Development Lecture: Governance, Capture and Corruption

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    Friday, March 1, 2019 - 13:30 to 14:45
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    Extractive Industries Transparency Initiative (EITI) Global Conference 2019

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    Executive Course on Oil, Gas and Mining Governance 2018

    Event type: 
    Training
    Monday, September 10, 2018 - 09:00 to Friday, September 14, 2018 - 20:15
    Oxford, United Kingdom

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    • Topics
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