US-listed energy and mining companies will be spared the detailed anti-corruption reporting required in Europe and Canada under regulations the Securities and Exchange Commission adopted on Wednesday.
The rules will require companies to disclose payments to foreign governments, a move aimed at alerting authorities to possible pay-to-play transactions.
They do not include more specific anti-corruption disclosures required by UK, EU and Canadian regulators, including project-by-project breakdowns, however. Several companies, including BP, Shell, Eni and Norway’s Equinor, asked the SEC to align its rule with reporting standards in other jurisdictions.
Under the US regulation, passed by a divided SEC, companies such as ExxonMobil and Chevron will not be required to report payments associated with specific project contracts. Companies complying with detailed international reporting standards could use those disclosures to satisfy the SEC’s new requirements, the agency said.
The vote comes in the waning weeks of Donald Trump’s presidency, and Ken Rivlin, a partner at Allen & Overy, said it appeared to be an attempt to help US companies before Joe Biden’s appointees brought a tougher approach to regulations next year.
“This looks like one of many areas where the Trump administration is seeking to potentially complicate the Biden agenda,” Mr Rivlin said.
Despite the comparatively lax SEC rule, Mr Rivlin said most companies would ultimately need to make more detailed disclosures because of “pressure from shareholders” to show they are meeting environmental, social and governance (ESG) investing criteria.
Wednesday’s vote marks the third time the SEC has finalised resource extraction rules in the US, which were mandated in the 2010 Dodd-Frank Wall Street reform law.
The initial version, which included disclosure requirements for specific projects and was adopted in 2012, was thrown out by a federal court. In 2017, Congress and the Trump administration blocked the SEC’s second attempt, which also included project-by-project payment disclosures.
The American Petroleum Institute, a lobbying group representing companies including ExxonMobil and Chevron, fought the SEC’s more stringent regulations, arguing they put US companies at a competitive disadvantage in many parts of the world.
Overseas companies told the SEC earlier this year that the additional disclosures mandated by other jurisdictions imposed minimal additional expense, according to Allison Lee, a Democratic commissioner on the SEC. She cited disclosures from Total, the French energy group, which put its annual reporting costs at about $200,000 per year.
The SEC’s final rule would reduce the number of companies that were required to make disclosures, cut the amount of information disclosed and reduce liabilities for those who did not disclose, said Ms Lee, who voted against the rule and is expected to lead the agency when Mr Biden becomes president.
With the final rule, “we are not ensuring sufficiently granular disclosure to enable citizens to combat corruption”, Ms Lee said. “We are not heeding the numerous calls from [companies] who have asked us to harmonise our rules with the international standard.”