What is the Natural Resource Charter?
The Natural Resource Charter is a set of principles to guide governments and societies’ use of natural resources so these economic opportunities result in maximum and sustained returns for a country’s citizens. The Charter outlines tools and policy options designed to avoid the mismanagement of these natural diminishing riches and work towards ensuring their ongoing benefits.
How is the Charter organized?
The Charter is organized around twelve core Precepts that offer guidance on key decisions governments face, beginning with whether to extract resources in the first place and ending with decisions that determine how generated revenue can produce maximum good for a country’s citizens.
THE PRECEPTS
Overarching Issues
1. The development of natural resources should be designed to secure maximum benefit for the citizens of the host country.
2. Extractive resources are public assets and decisions around their exploitation should be transparent and subject to informed public oversight.
3. Competition is a critical mechanism to secure value and integrity.
Upstream Issues
4. Fiscal terms must be robust, to anticipate changing circumstances and ensure the country continues to get the full value from its resources.
5. National resource companies should be competitive, commercial operations. They should avoid conducting regulatory functions or other such activities.
6. Resource projects may have serious environmental and social effects, which must be addressed and mitigated at all stages of the project cycle.
Downstream Issues
7. Resource revenues should be used primarily to promote sustained economic growth, by enabling and maintaining high levels of domestic investment.
8. Effective utilization of resource revenues requires that domestic expenditure be built up gradually to take account of revenue volatility.
9. Government should use resource wealth as an opportunity to secure effective public expenditure and to increase the efficiency of public spending.
10. Government policy should facilitate private sector investment in response to new opportunities and structural changes associated with resource wealth.
Global Responsibility
11. The home governments of extractive companies and international capital centers should require and enforce best practice.
12. All extractive companies should follow best practice in contracting, operations and payments.
Within the Charter document, each Precept is explained in three sections: 1) a brief outline; 2) a more complete explanation of the issues governments must confront and recommended solutions; and 3) a more technical discussion of underlying issues.
Who is the Charter for?
The Charter is meant to provide guidelines for governments of all resource-rich countries from the United Kingdom to the Ivory Coast. These governments have both the sovereign right and moral responsibility to use their natural wealth for the maximum economic benefit of their people. For civil society in these countries, the Charter principles are intended to be a rallying point and an advocacy tool to promote natural resource extraction that is conducted ethically and to the benefit of the community. As government and civil society in resource rich countries are not the only important decision-makers, the drafters of the Charter have also recommended these principles be used by international companies, intergovernmental organizations, and governments of countries that import significant amounts of resources.
Who is behind the Charter?
The Charter has no political heritage or sponsorship. The drafters are an independent group of experts in economically sustainable resource extraction, assembled by Paul Collier, director of the Centre for the Study of African Economies at OxfordUniversity. The drafters comprise the Charter’s Technical Group, which will continue to incorporate views, feedback, and input into the Charter on an annual basis. The Charter is governed by an Oversight Board chaired by Ernesto Zedillo, former President of Mexico.
How does the Charter fit with other efforts?
The Charter is not intended to substitute or supplant existing initiatives or guides on best practices. Its content draws on international guidelines such as the EITI, the International Monetary Fund Guide on Resource Revenue Transparency, the Equator Principles, ICMM Principles for Sustainable Mining, and UN conventions on human rights and corruption. The drafters say that the Charter is meant to complement this existing body of knowledge.
The Charter is not a binding agreement or protocol. It is as a blueprint for the countries and companies who work to meet its recommendations.
What is the future of the Charter?
The Charter is a living document that continues to be refined through consultations among policy makers, civil society organizations, industry experts and other stakeholders involved in meeting the challenges associated with harnessing natural resource wealth.
The Charter group has been soliciting input in global and regional meetings as well as on the web, to inform the refinement of the Charter recommendations. The consultations are also seen as an opportunity to build support, advocacy and grassroots activity around the Charter. Readers of the Charter draft have been asked to share their expertise in order to address any concerns about the content, focus or emphasis of the Charter, as well as suggestions for how to make the Charter the most useful set of guidelines possible.
Where can I find more information?
You can read the Charter and share your feedback by visiting the Charter website at: www.naturalresourcecharter.org
