Calvert Applauds SEC’s Defense of Oil and Mining Transparency Law
Lobby groups’ lawsuit threatens disclosure powers of regulators
Calvert commends the Securities and Exchange Commission (SEC) for its strong legal defense of a landmark transparency law included in the Dodd Frank Wall Street Reform and Consumer Protection Act (Dodd–Frank) that will provide material information to investors in the oil, gas and mining sectors. On March 22, oral arguments were heard in a lawsuit brought against the SEC by the American Petroleum Institute (API), the U.S. Chamber of Commerce, the Independent Petroleum Association of America, and the National Foreign Trade Council, which seeks to overturn Section 13(q) of the Exchange Act because the plaintiffs allege it violates companies’ First Amendment rights.
The SEC’s robust defense of the law is in line with its mandate to act in the interest of investors. In comments made at the August 22, 2012 meeting where the implementing rules for Section 13(q) were announced, SEC Commissioner Luis Aguilar stated plainly, “[t]he final rule we consider today is in the interest of investors.” SEC Chairman Elisse Walter also pointed out how investors may use the information disclosed pursuant to Section 13(q) and noted that the stability fostered by disclosures such as these contributes to more predictable investment conditions.
Calvert has played the leading role among investors in supporting the material disclosures required by Section 13(q) (previously Section 1504 of the Dodd-Frank Act). In doing so, we were among investors representing more than $1 trillion dollars in assets under management that submitted comments to the SEC in support of the law. In addition, Calvert's April 2010 report "Materiality of the Disclosure Required by the Energy Security Through Transparency Act" argued that disclosure required by Section 13(q) can provide investors with material information related to the increasing political risks faced by oil, gas and mining companies as well as improve insufficient business segment reporting.
Several companies and industry associations have sought to distance themselves from the lawsuit and support companion regulations in other jurisdictions. For example, Newmont Mining publicly supported an earlier version of the law and during the company’s earnings call on November 6, 2012, the third–largest gold mining company disassociated itself with the lobbying groups’ lawsuit. In a February 5 letter, the Norwegian oil company Statoil ASA said it “has explicitly withheld support for the litigation” and a former Royal Dutch Shell executive called the lawsuit an attempt to “turn back the clock on transparency” and warned his industry not to water down companion European regulations in a February 7 editorial in the Guardian newspaper. In addition, Canada’s two largest mining industry associations, the Mining Association of Canada and the Prospectors and Developers Association of Canada, have agreed to develop a disclosure framework by June 2013 that builds on the Dodd-Frank provision.
If the SEC fails in its refutation of the lawsuit’s arguments related to covered companies’ freedom of speech, corporate disclosure in these areas may be constrained with an adverse impact on investors. As such, Calvert calls on all investors to support the SEC in its defense of this much needed reform and the Commission’s boarder regulatory powers.
Calvert Investment Management, Inc., 4550 Montgomery Avenue, Bethesda, MD 20814