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The United Kingdom has achieved a high overall score in implementing the 2019 EITI Standard

Outcome of the Validation of the United Kingdom

Decision reference
2021-63 / BM-51
Decision basis
EITI Articles of Association 2019-2021, Article 12.1. ix)

Board decision

The United Kingdom (UK) has achieved a high overall score in implementing the 2019 EITI Standard (90 points). The overall score reflects an average of the three component scores on Stakeholder engagement, Transparency and Outcomes and impact.

The EITI Board commends the UK for achieving a high score on “Outcomes and impact” (91 points). This reflects the MSG’s efforts to ensure that the EITI becomes a tool for increasing the accessibility of extractive data and centralising information on opportunities for multi-stakeholder input to extractive industry governance. The UK’s achievements in improving transparency in beneficial ownership disclosures have established best practice that have inspired other EITI implementing countries. The COVID-19 pandemic has curtailed MSG plans for in-person outreach across the country, affecting progress to build local stakeholder engagement. The UK was awarded one additional point for the effectiveness and sustainability of EITI implementation.

On “Transparency”, the UK reached a high score (90 points). The UK has made commendable efforts to strengthen data management systems of the 11 extractive licensing authorities. Most non-financial information required by the EITI Standard now appears to be systematically disclosed on government websites, with UKEITI disclosures of extractive payments and revenues leading EITI implementing countries in their timeliness. The UK is encouraged to lead international best practice in disclosures related to licensing and contracts by addressing gaps identified in this Validation. There is an opportunity for the UKEITI to expand public disclosures of environmental aspects of extractive industry governance, including in environmental taxes and in monitoring rules and practices, responding to growing public demand for this kind of information.

The UK achieved a high component score also on “Stakeholder engagement” (90 points). The MSG is exercising its oversight role effectively. The government and extractive companies have mostly sustained a high level of commitment. The civil society constituency’s efforts to engage stakeholders from communities hosting extractive activities are commendable, even if they have not yet been successful in ensuring direct participation of such groups on the MSG.

The Board has determined that the UK will have until a next Validation commencing on 1 October 2024 to carry out a corrective action regarding contracts (Requirement 2.4). 

Failure to demonstrate progress on “Transparency” in the next Validation may result in temporary suspension in accordance with Article 6 of the EITI Standard. In accordance with the EITI Standard, the UK’s MSG may request an extension of this timeframe or request that Validation commences earlier than scheduled.

Corrective actions and strategic recommendations

The EITI Board agreed the following corrective action to be undertaken by the UK. Progress in addressing this corrective action will be assessed in the next Validation commencing on 1 October 2024:

  1. In accordance with Requirement 2.4.a, the UK should disclose any contracts and licenses that are granted, entered into or amended from 1 January 2021, including relevant annexes, addendum and riders where applicable. In accordance with Requirement 2.4.c.ii, the UK should publish a comprehensive overview of all active extractive contracts and licenses, indicating which are publicly available and which are not. For all published contracts and licenses, it should include a reference or link to the location where the contract or license is published. If a contract or license is not published, the legal or practical barriers should be clearly documented and explained and comprehensively resolved ahead of the second phase of Validation for Requirement 2.4 starting in January 2022.

The UK is encouraged to consider the following recommendations to strengthen EITI implementation:

Outcomes and impact

  1. To strengthen implementation and the alignment of EITI objectives with national priorities, the UK is encouraged to consider ways of strengthening the UKEITI’s engagement on the energy transition debate with a view to expanding the leadership by example for other EITI implementing countries, as is planned by the MSG for 2022. The MSG may wish to consider ways to strengthen its role as a platform for public debate on domestic and international policy issues relevant to EITI.

  2. To strengthen implementation, the UK may wish to consider additional capacity-building efforts, especially with civil society, to improve public understanding of UKEITI findings and encourage use of the information by citizens, the media, and others. The UK could consider opportunities to use the UKEITI to facilitate access and citizen input to existing channels of multi-stakeholder consultations on extractive governance, for example by building on their work to date in referencing ongoing public consultations on the UKEITI website.

  3. To strengthen the accessibility and usability of data, the UKEITI and government are encouraged to ensure that extractive sector data used in all charts and tables published by UKEITI is systematically published in machine readable and inter-operable format, and to code or tag EITI disclosures and other data files so that the information can be compared with other publicly available data in accordance with Requirement 7.2.d.

  4. To further strengthen the UKEITI’s accountability, the MSG is encouraged to consider innovative ways of engaging the broader constituencies in the MSG’s annual review of outcomes and impact of implementation in accordance with Requirement 7.4, building on the findings of its impact assessment in 2020.

  5. In order to increase its impact and the efficiency of its activities, the UKEITI may wish to consider mechanisms to more closely align the findings of impact studies with annual work planning and activity planning.

Stakeholder engagement

  1. To further strengthen civil society engagement, the civil society constituency is encouraged to continue outreach efforts toward civil society representatives from local communities hosting extractive industries and to sustain efforts to further broaden the constituency. The constituency is encouraged to consider what new areas of UKEITI focus, such as the energy transition and prospects for strategic minerals, could help engage a broader segment of civil society in EITI implementation.
     
  2. To strengthen implementation and the multi-stakeholder oversight of EITI implementation, all constituencies on the MSG are encouraged to continue efforts to ensure that all MSG seats are filled by members that are proactively engaged in all aspects of EITI implementation. As the MSG continues its strategic discussions about the future focus of UKEITI on emerging areas of implementation, such as oil and gas infrastructure decommissioning, prospects for strategic minerals and other areas such as the energy transition, it may wish to reconsider the structure of constituencies’ representation on the MSG to ensure that all appropriate stakeholders are represented on the MSG to make a meaningful contribution on these areas. All constituencies on the MSG, including government, are encouraged to consider proactive ways of fulfilling the national UKEITI objective of contributing to international efforts to further transparent and accessible disclosure systems, including in collaboration and peer exchanges on emerging issues of focus for UKEITI including environmental aspects of the extractive industries, the energy transition and beneficial ownership transparency.

Transparency

  1. To strengthen environmental aspects of EITI implementation, the UK may wish to consider using its EITI disclosures to cover the rules and practices of environmental management and monitoring of extractive investments in accordance with Requirement 6.4.a. The UK could also consider disclosures on regular environmental monitoring procedures, administrative and sanctioning processes, as well as environmental liabilities, environmental rehabilitation and remediation programmes in accordance with Requirement 6.4.b.

  2. To strengthen implementation, the UK is encouraged to ensure public disclosure of information on awards and transfers of licenses on an annual basis, for all types of extractive licenses awarded by each of the 11 licensing authorities. This information should include the technical and financial criteria assessed, as well as clarity on license transfer rules and practices.

  3. To strengthen implementation, the UK is encouraged to ensure that information on active licenses in the mining, oil and gas sectors is comprehensively disclosed, at the least for licenses held by material companies include in the scope of UKEITI reporting. This information should include license coordinates, dates of application, award and expiry, and commodity(ies) covered.

  4. To strengthen implementation, the UK is encouraged to ensure that the MSG publishes an assessment of the comprehensiveness and reliability of beneficial ownership disclosures of all companies holding or applying for a mining or oil and gas license on a regular basis as a means of providing a diagnostic of disclosures in practice. The UK is urged to ensure that any politically exposed persons be identified in public disclosures of the beneficial ownership of extractive companies in accordance with Requirement 2.5.d.

  5. To strengthen implementation, the UK may wish to publish clarifications of whether there are any instances of multiple extractive agreements that are substantially interconnected and considered to form a single project for the purposes of levying any revenue streams imposed at a project-level in the UK.

  6. To strengthen implementation, the UK may wish to consider strengthening disclosures in the framework of Requirement 5.3 to address issues of public concern highlighted in the UKEITI’s 2020 impact study, such as the energy transition and intergenerational equity.

  7. To strengthen implementation, the UK may wish to reconsider its approach to materiality and expand the scope of UKEITI disclosures of financial data to include indirect taxes related to the environment such as the Aggregates Levy, disclosing the requisite information listed under Requirement 6.1.b. In order for Requirement 6.1 to be considered exceeded, the UK would have to ensure comprehensive and reliable disclosures of voluntary social expenditures and environmental payments to government, while ensuring that disclosures of information mandated under Requirement 6.1 was systematically disclosed through government and company systems.

The government and the MSG are encouraged to consider these recommendations, and to document the MSG’s responses to these recommendations in the next annual review of outcomes and impact of EITI implementation.

Background

Overview of the extractive industries

An overview of the extractive industries is accessible on the country page of the EITI website for the UK.

History of EITI implementation

The history of implementation is accessible on the country page of the EITI website for the UK.

Explanation of the Validation process

An overview of the Validation process is available on the EITI website. The Validation Guide provides detailed guidance on assessing EITI Requirements, while the more detailed Validation procedure include a standardised procedure for undertaking Validation by the EITI International Secretariat.

The International Secretariat’s country implementation support team include Sam Bartlett, while the Validation team was comprised of Alex Gordy, Christopher Wilson, Mark Burnett and Matt Mossman.

Confidentiality

The practice in attribution of stakeholder comments in EITI Validation reports is by constituency, without naming the stakeholder or its organisation. Where requested, the confidentiality of stakeholders’ identities is respected, and comments are not attributed by constituency.

Timeline of Validation

The Validation of the UK commenced on 1 July 2021. A public call for stakeholder views was issued on 1 June 2021. Stakeholder consultations were held virtually on 7-22 July 2021. The draft Validation report was finalised on 16 August 2021. Following comments from the MSG on 13 September 2021, the Validation report was finalised for consideration by the EITI Board.

Resources

Scorecard for United Kingdom: 2021

Assessment of EITI requirements

  • Not met
  • Partly met
  • Mostly met
  • Fully met
  • Exceeded
Component View more
Score

The three components of Validation each receive a score out of 100, as follows:

Low 0-49
Fairly low 50-69
Moderate 70-84
High 85-92
Very high 93-100
View more

Outcomes and impact

91 High
Scorecard by requirement
Assessment
Assessment of EITI Requirements

Validation assesses the extent to which each EITI Requirement is met, using five categories. The component score is an average of the points awarded for each requirement that falls within the component.

Outcomes and impact

1.5 Work plan

90

There is no evidence of back-sliding since the previous Validation, in which Requirement 1.5 was assessed as “satisfactory progress”.

7.1 Public debate

90

Resolution of conflicts within the civil society constituency has allowed the MSG to focus more attention on outreach and dissemination of UKEITI findings. There is clear evidence of progress since the previous validation on the coordination of communication activities to explain and promote EITI data.

7.2 Data accessibility and open data

90

The launch of the new UKEITI website in 2020 has made a tangible improvement in the MSG’s efforts to make UKEITI data comprehensible and accessible. The new website is widely viewed by MSG members as a robust platform through which the UK can centralise extractive data that is systematically disclosed on various government and company websites. On the extractive industries’ contribution to the economy, the ONS publishes gross value-added data, the Department for BEIS publishes employment data and the OGA publishes government oil and gas revenues in open format, although data on government revenues from mining and quarrying are not yet published in open format.

7.3 Follow up on recommendations

90

There is a clear mechanism for the MSG’s consistent follow-up on recommendations from past EITI Reports and Validation, with reforms since the previous Validation for instance in systematic disclosures of licensing rules across the 11 licensing authorities in the UK as a result of follow-up on EITI recommendations.

7.4 Review of outcomes and impact of implementation

90

The MSG has undertaken efforts to review the outcomes and impact of the EITI beyond the minimum required aspects of this provision. Having published annual progress reports in the 2014-2018 period, the MSG transitioned to a standalone impact study in 2020 that sought views from different stakeholders on EITI implementation in 2013-2020. The requirement’s overall objective of regular public monitoring and evaluation of implementation that ensures the EITI’s accountability has been addressed. However, encouraged aspects of the requirement including documentation of the MSG’s efforts to take gender considerations and inclusiveness into account have not yet been comprehensively addressed, which implies that Requirement 7.4 has not yet been exceeded.

Effectiveness and sustainability indicators

1

Stakeholder engagement

90 High
Scorecard by requirement
Assessment
Assessment of EITI Requirements

Validation assesses the extent to which each EITI Requirement is met, using five categories. The component score is an average of the points awarded for each requirement that falls within the component.

Multi-stakeholder oversight

1.1 Government engagement

90

The government is actively engaged in EITI implementation. There is robust representation across relevant government departments on the MSG.

1.2 Company engagement

90

With some exceptions related to some of the financial data on government revenues, the data curated on the UKEITI website appears to be consistently and systematically disclosed by individual reporting agencies and organisations. Stakeholder consultations have consistently suggested that the main value added by the UKEITI website is the collection, curation, and presentation of data that is disclosed elsewhere.

1.3 Civil society engagement

90

Civil society is actively engaged in EITI implementation, having resolved the civil society constituency challenges that were disruptive in the period covered by the previous Validation. The civil society constituency’s efforts, supported by the UKEITI Secretariat, to engage stakeholders from communities hosting extractive activities are commendable, even if they have not yet been successful in ensuring direct participation of such groups on the MSG.

1.4 MSG governance

90

The MSG appears to be functioning in an efficient and equitable manner, with adequate representation from the three constituencies and robust representation across relevant government departments. The pandemic has curtailed MSG plans for in-person outreach across the country, which has affected progress to build local stakeholder engagement. The MSG appears to be fulfilling its role of representing the views of the three broader constituencies, within the constraints of limited public interest in UKEITI findings and local stakeholders’ capacity constraints.

Transparency

90.5 High
Scorecard by requirement
Assessment
Assessment of EITI Requirements

Validation assesses the extent to which each EITI Requirement is met, using five categories. The component score is an average of the points awarded for each requirement that falls within the component.

Overview of the extractive industries

3.1 Exploration data

90

The UKEITI disclosures on its website and through its UKEITI annual reviews continue to provide comprehensive information on the extractive industries and their contribution to the economy. This information is systematically disclosed on government websites.

6.3 Contribution of the extractive sector to the economy

90

Legal and fiscal framework

2.1 Legal framework

100

The UKEITI disclosures and respective government websites continue to provide comprehensive information on the legal environment and fiscal regime for the extractive industries, with reference to systematic disclosures.

2.4 Contracts

75

UKEITI has described the policies and practices of each of the 11 licensing authorities in the absence of an overarching government policy on disclosure of all extractive contracts. All NSTA licenses are publicly disclosed in full text. The 20121 Report documents these disclsoures and notes that the UK has mostly met the objective of Requirement 2.4 in ensuring public accessibility of licenses and contracts in the extractive sector. There however several gaps in disclosures related to the technical aspects of the requirement, specifically relating to public accessibility of all licenses and contracts.

6.4 Environmental impact

Not assessed

The UK has not yet fully met the objective of this requirement, which is therefore marked as “not assessed”. The UK has not provided relevant legal and administrative rules for environmental management but has shared high-level details on how policy is expected to restrict domestic petroleum extraction and may revive domestic minerals extraction, with a particular focus on climate policy. Nonetheless, the 2021 report highlights the independent Committee on Climate Change as the main advisory body to the government on the energy transition, and the North Sea Transition Deal as a government agreement with petroleum producers to address the energy transition and protect energy jobs.

Licenses

2.2 Contract and license allocations

90

Stakeholders consulted appeared to consider that the objective of providing a public overview of awards and transfers of oil, gas and mining licences, the statutory procedures for licence awards and transfers and whether these procedures are followed in practice had been achieved despite what were considered to be minor technical gaps in disclosures. The number of data gaps has significantly declined since the period reviewed in the previous Validation.

2.3 Register of licenses

90

In the 2021 Report stakeholders consulted agree that the requirement’s objective of ensuring the public accessibility of comprehensive information on property rights related to extractive deposits and projects had been fulfilled. The number of data gaps has significantly declined since the period reviewed in the previous Validation. Licence registers are available online from most licensing authorities that have issued active licences, leases and options in the mining or petroleum sectors, and cover all active licences regardless of the materiality of the licence holder's payments to government.

Ownership

2.5 Beneficial ownership

90

The government has established a clear policy on and definition of beneficial ownership in law and regulation. Beneficial ownership information is collected and made publicly available by Companies House for entities that hold and apply for licenses in the extractives industry. Quality assurances are in place and publicly documented, while the Companies House beneficial ownership registry covers all extractives companies. UKEITI reporting has highlighted publicly listed companies and identified the stock exchanges where they are listed and has disclosed specific links to relevant companies’ stock exchange filings in accordance with Requirement 2.5.f.iii as part of the 2020 Payments Report published after the start of Validation.

State participation

2.6 State participation

Not applicable

There is no evidence of back-sliding since the previous Validation, in which Requirement 2.6 was assessed as “not applicable”.

4.2 In-kind revenues

Not applicable

There is no evidence of back-sliding since the previous Validation, in which Requirement 4.2 was assessed as “not applicable”.

4.5 SOE transactions

Not applicable

There is no evidence of back-sliding since the previous Validation, in which Requirement 4.5 was assessed as “not applicable”.

6.2 SOE quasi-fiscal expenditures

Not applicable

There is no evidence of back-sliding since the previous Validation, in which Requirement 6.2 was assessed as “not applicable”.

Production and exports

3.2 Production data

90

The UKEITI disclosures on its website and through its UKEITI annual reviews continue to provide access to comprehensive information on mining, quarrying, coal, oil and gas production and exports. This information is systematically disclosed on government websites.

3.3 Export data

90

The UKEITI disclosures on its website and through its UKEITI annual reviews continue to provide access to comprehensive information on mining, quarrying, coal, oil and gas production and exports. This information is systematically disclosed on government websites.

Revenue collection

4.1 Comprehensiveness

90

The 2021 EITI Report provides full comprehensive and reliable disclosures of company payments and government revenues

4.3 Infrastructure provisions and barter arrangements

Not applicable

There continues to be no barter-type arrangements in the UK.

4.4 Transportation revenues

Not applicable

There continues to be no transportation revenues in the UK.

4.7 Level of disaggregation

90

Disaggregated figures for company payments and government revenues from oil, gas and mining are published, disaggregated by government entity, revenue stream and company. The UK has defined the term 'project' in legislation, a definition that is consistent with that in Requirement 4.7. All of the material government revenues from the extractive industries that are levied on a per-project basis have been published disaggregated as such.

4.8 Data timeliness

100

The UK has fully met the objective of this requirement in producing 2019 UKEITI data within one year of the end of the calendar year covered and given the MSG’s approval of the reporting period.

4.9 Data quality and assurance

90

There is no evidence of back-sliding since the previous Validation, in which Requirement 4.9 was assessed as “satisfactory progress”.

Revenue management

5.1 Distribution of revenues

90

The UKEITI disclosures and respective government websites continue to provide comprehensive information on the management of extractive industry revenues and related expenditures. This information is systematically disclosed on government websites.

5.3 Revenue management and expenditures

Not assessed

There is no evidence of back-sliding since the previous Validation, in which Requirement 5.3 was marked as “not assessed”. The UK does not appear yet to have addressed all aspects of Requirement 5.3 through systematic disclosures by government entities and extractive companies.

Subnational contributions

4.6 Subnational payments

Not applicable

The UKEITI has demonstrated that there are no material direct subnational payments by the extractive industries in the UK.

5.2 Subnational transfers

90

The UKEITI disclosures and respective government websites continue to provide comprehensive information on subnational transfers of extractive revenues to Northern Ireland.

6.1 Social and environmental expenditures

90

The UK has fully met the objective of Requirement 6.1, given that the corrective action on mandatory social expenditures has been addressed and that the new requirements on environmental payments to government are not considered applicable given the MSG’s materiality decisions. The UKEITI has published companies' unilateral disclosures of mandatory social expenditures ('Section 106 payments'), with detailed information on the one reporting company's Section 106 payments including disaggregation by beneficiary, confirmation that the payment was made in cash and description of the purpose of each expenditure, published just after the commencement of Validation on the UKEITI website. he UKEITI has piloted aggregate disclosures of environmental taxes from the extractive industries in the 2020 UKEITI Annual Review (2019 data), although it has maintained its traditional material decisions (since the 2014 EITI Report) to exclude indirect taxes on the extractive industries (e.g., taxes on consumption rather than production) from the scope of UKEITI reconciliation. The UKEITI has not disclosed any voluntary social or environmental expenditures where applicable.

Countries
United Kingdom