Guidance Note: EITI Requirement 6.1
Social and environmental expenditures
|This guidance note refers to the 2019 EITI Standard.|
In addition to taxes levied by central, regional and local governments, extractive companies often make social and environmental contributions in the areas where they operate. These contributions can be made to central, regional or local governments, communities, non-governmental organisations or other third parties.
Social and environmental payments – either in-kind or cash – are a form of contribution from companies with the aim of supporting social development or to account for potential environmental impact. In some cases, these social or environmental expenditures are based on legal or contractual obligations. In other cases, companies make voluntary social or environmental contributions.
Communities do not always know how much companies are obliged to contribute according to their contracts. Misunderstanding about what constitutes a mandatory and voluntary social and environmental expenditure and lack of access to the contractual terms can make public oversight challenging. It is thus important to be transparent about the expectations and the actual contributions made to provide a more complete picture for all stakeholders involved.
Government stakeholders and citizens have a particular interest in ensuring that the social and environmental expenditures are effective and reach the intended beneficiaries. Companies also have an interest in demonstrating their positive contribution beyond fiscal payments, managing community expectations and ensuring that the expenditures they make and the projects they are directed towards are well managed and executed.
Requirement 6.1 of the EITI Standard requires that significant mandatory social expenditures and environmental payments are disclosed and reconciled where possible. This note provides step-by-step guidance to multi-stakeholder groups (MSGs) on how to report on social and environmental expenditures, offers examples from implementing countries and outlines opportunities to strengthen the dissemination and use of data.