Commerce, transparency and civil society: Lessons from the EITI for the forest sector

1. Commerce, transparency and civil society: Lessons from the EITI for the forest sector Presentation to Supply Chain Management and Illegal Timber Meeting Chatham House, 3rd April 2006 David Young, Global Witness

2. Transparency and the “resource curse” • Transparency is only part of wider reforms. It will not combat corruption over night but is… • Critical in resource-rich countries that depend on resource revenues. Forest sector revenues in Africa – opportunity or threat? • Good for sustainable business and good for sustainable development by promoting a more stable investment climate. • Key to continuity of supply – to reduce risks to businesses and threats to resource • Fundamental if the international community is meet the Millennium Development Goals – two-thirds of the world’s poorest people live in resource-dependent countries.

3. Extractive Industry Transparency Initiative • International multi-stakeholder initiative involving… • payers of revenues (companies) • recipients of revenues (governments) • users of revenue information (civil society) • donor governments, IMF, World Bank, EBRD • Investors • So far ~20 countries committed to implementation • Voluntary for governments to sign up to • To date housed within DFID and the World Bank. Launched by UK Prime Minister Tony Blair in response to calls from the Publish What You Pay (PWYP) coalition www.publishwhatyoupay.org

4. EITI Key Features • Regular publication of company payments and government revenues in a publicly accessible and comprehensive manner • Minimum criteria define the necessary credible steps to improve transparency • Credible, independent audit of figures • Reconciliation by a credible, independent administrator • All companies including state-owned enterprises must comply • Civil society is actively engaged as a participant in the design, monitoring and evaluation of this process and contributes towards public debate • A public, financially sustainable work plan and timetable for all the above is developed with capacity building constraints identified and addressed by donors

5. Role of civil society • The state recognises the need to include civil society in order that the EITI has public credibility • Core to EITI is a multi-stakeholder coalition of NGOs, industry, investors, home and host governments and IFIs (the ‘curious coalition’) • Civil Society groups are openly invited to ‘launch’ events, and subsequently serve on working groups • Substantially involved in decision-making, including substantive representation on EITI stakeholder committees overseeing implementation • Rules are agreed about civil society representation, and groups are given the time and resources to fulfill this role • There are also rules against conflict of interest (GONGOs), and protecting civil society against fear of threat or intimidation by government

6. Independent Forest Monitoring (IFM) • IFM is an independent third party that • by agreement with state authorities provides • an assessment of legal compliance • observation of and guidance on official forest law enforcement systems • It is evidence-based; subject to a validation process; identifies systemic weaknesses; and thus changes the operating environment: • better laws • effective enforcement • civil society holding government to account

7. IFM: EITI for forests? • Both depend on a ‘curious coalition’ based on common policy interests • Both are voluntary by government, but compulsory on companies • Both are obliged to put information of public interest in the public domain • The EITI enjoys international support and momentum • The EITI has an explicit process for including civil society at all stages • The EITI primarily operates in the oil sector, and on ownership and revenues (not the commodity itself) • IFM touches on the fundamental question of how the resource should be exploited at all