The Level of Corporate Transparency among the World’s Largest MNCs

Since 2010 Lead Researcher on four Transparency International projects on corporate transparency:

•  2011 Promoting Revenue Transparency: Report on Oil and Gas Companies

•  2012 Transparency in Corporate Reporting: Assessing the World’s Largest Companies

•  Transparency in Corporate Reporting: Emerging Markets Companies (2013)

•  Transparency in Corporate Reporting: Assessing the World’s Largest Companies – 2nd edition (2014)

Barbara Kowalczyk-Hoyer

Freelancing Economist and Independent Consultant

TRANSPARENCY INTERNATIONAL REPORTS The Level of Corporate Transparency among the World’s Largest MNCs

DATA VERIFICATION: •  by evaluated companies

TRANSPARENCY DIMENSIONS: •  reporting on anti-corruption programmes •  organisational transparency •  country-by-country reporting

REQUIRED DISCLOSURE: •  through corporate website •  free of charge •  publicly available

INDUSTRY FOCUS

Promoting Revenue Transparency: 2011 Report on Oil and Gas Companies

GLOBAL

Transparency in Corporate Reporting: Assessing the World’s Largest Companies, 2012

The Level of Corporate Transparency among the World’s Largest MNCs

COUNTRY-LEVEL REPORTING: •  revenues •  profit before taxation •  tax •  capital expenditure •  community / charitable contributions

ORGANISATIONAL TRANSPARENCY: •  dislosure of majority and minority holdings •  material holdings •  names, percentages owned, countries of incorporation

Possible additional criteria •  countries, in which companies conduct their business (countries of operations)

•  ALL entities instead of „material only”

OT and CBCR in TI 2012 report

„to provide information that will assist those seeking to appraise the organisation with regard to:

•  its corporate social responsibility,

•  investment risk

•  tax risk

•  its contribution by way of value added to the societies in which it operates

•  its contribution to national well-being by way of tax payment within those locations”

(Murphy 2003)

Distribution of results in TI 2012 report The Level of Corporate Transparency among the World’s Largest MNCs

country-by-country reporting84

101 5 3 1 1

0-­‐5% 50-­‐55% 95-­‐100%

# of MNCs

scores

organisational transparency

1

22 20

18 8

45

0-­‐5% 50-­‐55% 95-­‐100%

# of MNCs

scores

Source: Compiled by the author, data extracted from TI, 2012 and author’s estimates

Organisational transparency among largest MNCs: by geographical region % scores (scale from 0 to 100%)

72%

92%87%

75%68%

52% 50%

59%

78% 80%

56% 56%

41%38%38%

# ofcompanies

ENTIRE SAMPLE

105

Europe

39

Australia

5

Latin America

4

Asia

14

North America

41

Middle East

2

basic 2012 TI questionnaire

adding countries of operations - author's estimate

replacing "material" with "all" - author's estimate

Organisational Transparency (OT) – TI 2012 report The Level of Corporate Transparency among the World’s Largest MNCs

Source: Compiled by the author, data extracted from TI, 2012 and author’s estimates

Organisational transparency among largest MNCs: by industry % scores (scale from 0 to 100%)

Organisational Transparency (OT) – TI 2012 report

The Level of Corporate Transparency among the World’s Largest MNCs

72%

100%

90%

82% 81%

70% 69% 67% 65%

50%

59%

88%

75%

68% 69%

58%52%

57%53%

40%

# ofcompanies

ENTIRE SAMPLE

105

Utilities

4

Basic materials

7

Oil & Gas

17

Telecom-munication

8

Health Care

11

Industrials

6

Financials

24

Consumer goods & services

17

Technology

11

basic 2012 TI questionnaire

adding countries of operations - author's estimate

Source: Compiled by the author, data extracted from TI, 2012

Country-by-Country Reporting among largest MNCs: by geographical region % scores (scale from 0 to 100%)

Country-by-Country Reporting (CBCR) – TI 2012 report The Level of Corporate Transparency among the World’s Largest MNCs

3.7%

11.0%

5.7%

3.1%

1.4% 1.2%0.0%

# ofcompanies

ENTIRE SAMPLE

105

Australia

5

Europe

39

Asia

14

North America

41

Latin America

4

Middle East

2

Source: Compiled by the author, data extracted from TI, 2012

Country-by-Country Reporting among largest MNCs: by industry % scores (scale from 0 to 100%)

Country-by-Country Reporting (CBCR) - TI 2012 report The Level of Corporate Transparency among the World’s Largest MNCs

3.7%

10.8%

6.9%

5.9%

3.3%

2.3%1.7%

1.2% 1.0%0.3%

# ofcompanies

ENTIRE SAMPLE

105

Basic materials

7

Oil & Gas

17

Telecom-munication

8

Consumer goods & services

17

Financials

24

Technology

11

Utilities

4

Health Care

11

Industrials

6

50%

30%

30%

20%

20%

20%

10%

10%

10%

0%

Statoil

ONGC

Shell

Chevron

CNOOC Ltd

Total

BAT

GlaxoSK

SAP

24 other companies

NIGERIA50%

50%

40%

30%

20%

20%

20%

20%

20%

10%

10%

0%

Gazprom

Statoil

BP

ONGC

Allianz

Arcelor

Conoco

ENEL

Nestle

BAT

SAP

60 other companies

RUSSIA

40%

30%

20%

20%

20%

10%

0%

ENI

ONGC

Allianz

Arcelor

Chevron

SAP

30 other companies

KAZAKHSTAN

Source: TI, 2012, p.32

Disclosure of data by MNCs in chosen countries % scores (where 100% means full disclosure)

Country-by-Country Reporting (CBCR)- TI 2012 report The Level of Corporate Transparency among the World’s Largest MNCs

Country-by-Country Reporting (CBCR) - TI 2011 report The Level of Corporate Transparency among the World’s Largest MNCs

Source: TI, 2011, pp.37-39

Disclosure of data by large oil & gas companies in chosen countries % scores (where 100% means full disclosure)

69%

31%

23%

15%

15%

15%

15%

8%

8%

8%

0%

0%

Statoil

Talisman

Woodside

BHP

Eni

Hess

Repsol

BP

Conoco

Total

PetroChina

Sonatrach

ALGERIA54%

23%

8%

0%

0%

Marathon

Hess

Exxon

CNPC

GEPetrol

EQUATORIAL GUINEA92%

85%

15%

15%

8%

8%

8%

8%

0%

0%

0%

Eni

KazMunaiGaz

Lukoil

OMV

BG

BP

Chevron

CNPC

Exxon

PetroChina

Shell

KAZAKHSTAN

CBCR The Level of Corporate Transparency among the World’s Largest MNCs

OPPONENTS SUPPORTERS COMPANIES •  high costs •  „difficult” host countries

INVESTORS •  lower investment risk •  better forecasting HOWEVER •  individuall access to information preferred

CSOs •  development •  fair value sharing •  less space for corruption •  social responsibility of MNCs

GOVERNMENTS GOVERNMENTS •  less tax avoidance •  less illicit money flows •  development

•  competitive disadvantage for their MNCs •  „too much” light shed on governmental contracts with MNCs

ACCOUNTANTS •  tend to support companies HOWEVER • Tax Justice was created by an accountant