February 11, 2013
Statoil Breaks with Trade Association over Lawsuit
by Robert Kropp
Calvert Investments commends Statoil for explicitly distancing itself from lawsuit filed by the
American Petroleum Institute that contests SEC regulation governing payments to governments.
In October of last year, industry trade groups including the American Petroleum Institute (API)
filed a lawsuit against the Securities and Exchange Commission (SEC) in which they seek to overturn
a recently enacted regulation requiring that companies in the extractives industries disclose their
payments to governments.
In late January, API, the US Chamber of Commerce, and two
other industry groups filed their final brief in the case. The brief argues that the SEC has
"crafted one of the most costly rules in its history, with adverse consequences for competition,
devastating losses for investors, and no ascertainable benefits."
The regulation is
offensive to First Amendment principles of free speech, the plaintiffs continued, "because the
content compelled here is intended to aid particular interests in a political dispute in other
In an email, Paul Bugala, Sustainability Analyst for Extractive Industries at
Calvert Investments wrote that if the US
Court of Appeals in the District of Columbia finds that the First Amendment rights of corporations
are violated by the rule, "It would throw into question almost any disclosure required by
regulators such as the SEC."
Furthermore, Bugala wrote, "API maintains that there is no
investor interest in seeing that Section 1504 or Section 13(q) of the Exchange Act is implemented
promptly and according to the statutory mandate. In fact, investors representing more than $1
trillion dollars in assets under management submitted comments to the SEC supporting the law."
The coalition of institutional investors includes TIAA-CREF, CalPERS, and CalSTRS, as well as
Calvert. In a letter
to the SEC, submitted in 2011, Bugala observed, "The world’s exploitable conventional energy
sources are receding further into areas where large-scale resource extraction has not taken place
"Unfortunately, many of these resource-producing operating environments pose
reputational, regulatory and taxation risks that current reporting required of SEC-registered
companies does not address adequately," he wrote. "Although some companies have taken productive
voluntary steps to improve their disclosure, capital providers need the audited, consistent and
comparable data regarding host government payments, such as taxes, royalties and bonuses that the
Energy Security through Transparency Act (S. 1700) would provide."
Calvert is also a
shareowner of Norway-based Statoil, ranked by Forbes in 2012 as the 20th largest oil company in the
world. In a 2012 speech, CEO
Helge Lund argued that Statoil's policy of disclosing payments to governments has not put it at a
competitive disadvantage, but has "put us in a position to effectively dialogue with NGOs
(nongovernmental organizations) and legislators."
It "goes without saying," Lund
continued, that such a course would be a beneficial route for the entire industry to take.
Following Lund's speech, Calvert called on him to publicly support the section of Dodd-Frank
that requires companies in the extractives industries to disclose their payments to governments.
And while a recent letter to Global
Witness stopped short of explicitly supporting the SEC regulation on disclosure of payments to
governments, Statoil's Vice President for Corporate Social Responsibility did state, "Statoil has
not supported the lawsuit initiated by API; in fact, Statoil has explicitly withheld support for
In response to the letter, Calvert stated, "We commend companies like
Statoil and Newmont Mining Corporation that have acknowledged the importance of these disclosures
to investors and other stakeholders publicly and we hope that their peers in the oil, gas and
mining industries will follow suit."
In 2012, Newmont Mining, the third largest mining
company in the world, announced that it would not support the API lawsuit against the disclosure
rule. Along with Statoil, Newmont is one of several companies that already disclose payments to
governments in every country in which they operate.