Environmental Justice and the SEC: Transparency Empowers Citizens
The term environmental justice often calls to mind, at least to me, urban and more localized settings, rather than a global and international scale. However, it is a multifaceted front that heeds many forms of action, and employs the clich?? ???think globally, act locally.???
In response to the economic recession in the United States, Congress in 2010 passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (???Act???) with one purpose being ???[t]o promote the financial stability of the United States by improving accountability and transparency in the financial system.??? Title XV of the Act includes Section 1504, popularly known as the Cardin-Lugar Amendment, which requires disclosure of payments by resource extraction issuers???that is, a company required to file annual reports with the Securities and Exchange Commission (???SEC???) that engages in the commercial development of oil, natural gas, or minerals???to both the United States and foreign governments. Section 1504 states that it ???shall support the commitment of the Federal Government to international transparency promotion efforts relating to the commercial development of oil, natural gas, or minerals.???
In a May 17, 2010, floor speech supporting the amendment that ultimately became Section 1504, Senator Dick Lugar reiterated, ???The essential issue at stake is a citizen???s right to hold its government to account.??? While noting ???that many resource-rich countries that should be well off are, in fact, terribly poor,??? Sen. Lugar reminded the Senate floor that ???[t]ransparency empowers citizens, investors, regulators, and other watchdogs and is a necessary ingredient of good governance.??? Indeed, this transparency would be a tool for citizens to hold to account their government???s decisions ???in the management of valuable oil, gas, and mineral resources and revenues.??? On August 22, 2012, the SEC fulfilled Section 1504???s mandate and adopted final rules requiring payment disclosures. The SEC summarized the lengthy rules in a press release.
The Act and the SEC???s rules will hopefully prove to be a powerful tool for citizens in the U.S. and in foreign countries to hold their governments accountable. They are an example of one method of tackling the many problems that environmental justice seeks to address. As Senator Lugar said, transparency ???would help empower citizens to hold their governments to account.??? Transparency is an important part of aiding citizens to direct their own lives in a socially and environmentally just manner.
The Federal Government???s actions, however, also portray a common shortcoming in transparency: both access to and ability to understand disclosed information. Perhaps smaller, more localized governments, from New York City, to the state and federal levels, and throughout the world, will increase transparency to allow citizens to hold them accountable for economic decisions that disproportionately and negatively impact the health, environmental and social well-being of some while increasing the livelihood of others. Moving forward, perhaps legislators and administrators should also account for the broad audience of readers who might need to make use of disclosed information. In the meantime, as the SEC???s rules come into effect and companies begin to abide by them, the world will witness the depth of their impact.