By Irina Slav
- Global charity and Big Oil shareholder Oxfam has taken aim at three supermajors’ tax reporting procedures, stating they are harming poorer nations.
- They want the three supermajors to publish tax transparency reports that follow the standards of the Global Reporting Initiative – a sustainability standard-setting organization
- None of the three companies targeted with the resolution have responded.
A global charity, which is also a shareholder in a number of large multinational companies, has slammed U.S. Big Oil majors for having non-transparent tax practices, which put poorer countries at a disadvantage.
In a series of shareholder resolutions filed with Exxon, Chevron, and ConocoPhillips, charity Oxfam said that the three’s tax practices’ “lack of transparency creates a material risk for long-term investors who want to safeguard against risks of reputational damage and the possibility of shelling out millions due to lawsuits, blocked projects, and renegotiation of fiscal terms.”
The argument that Big Oil should go green so it can avoid the abovementioned problems is not a new one. What’s new seems to be the focus on Big Oil’s tax reporting procedures and the suggestion it is harming poorer nations.
It is hardly a coincidence that the resolutions coincide with the conclusion of COP27, where the so-called Global South, meaning the poorer nations of the world, became the focal point of discussions after several countries demanded what they called climate reparations.
They claimed they were already suffering the worst effects of a changing climate that wealthier nations were responsible for, so they needed to be compensated for this. Despite long-time opposition to the very idea of discussing any form of compensation, the EU and the U.S. suddenly did an about-turn and not only agreed to discuss it, but the EU even presented an actual proposal for a loss-and-damage fund to take care of that compensation.
Meanwhile, Big Oil is already the target of windfall taxes. In the United States, the supermajors are under threat of such taxes, although with Republicans winning the House, the threat may have diminished. Yet other jurisdictions where they operate might also decide to get on the windfall profit tax wagon.
The scope of Oxfam’s resolutions is truly global. They want the three supermajors to publish tax transparency reports that follow the standards of the Global Reporting Initiative – a sustainability standard-setting organization, which, according to its website, aims to help “businesses and other organizations take responsibility for their impacts, by providing them with the global common language to communicate those impacts.”
Commenting on the resolutions, Oxfam America’s policy lead on extractive industries and tax, Daniel Mule, said, “Oil and gas companies frequently point to their contributions to the tax base in producer countries as a justification for their continued operations, particularly in poor countries, but secretive tax practices make it impossible to verify whether the companies actually contribute to shared prosperity.”
“If oil and gas projects are alleviating poverty, why hide the numbers?” Mule added, certainly driving the message home.
Oxfam also noted in its report on the news that other supermajors, including TotalEnergies, BP, and Shell, already report their performance under GRI standards, as do U.S. majors Hess Corp. and Newmont.
Per the organization’s website, the GRI standards appear focused exclusively on sustainability in the broadest sense. The standards help companies “to understand and report on their impacts on the economy, environment and people in a comparable and credible way, thereby increasing transparency on their contribution to sustainable development,” GRI says, adding that they are also relevant for shareholders, policymakers, capital markets, and the civil society.
None of the three companies targeted with the resolution has responded. The resolution suggests fossil fuels are on their way out, which is hardly a surprise, and the companies might have something to say about that, but it is difficult to argue the transparency case: transparency is invariably seen as a positive. Whether this positive would lead to equally positive results remains to be seen.