New Shareholder Resolutions Turn Up Pressure for Country-by-Country Reporting from U.S. Oil Giants

“Just the FACTs” is a round-up of news stories and information regarding efforts to combat corrupt financial practices, including offshore tax haven abuses, corporate secrecy, and money laundering through the financial system.

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Here is the State of Play

New Shareholder Resolutions Turn Up Pressure for Country-by-Country Reporting from U.S. Oil Giants

Amidst a wave of international efforts to shine a light on the secretive tax practices of large multinational enterprises (MNEs), FACT Coalition member Oxfam filed shareholder resolutions against oil giants Exxon Mobil, Chevron, and ConocoPhillips calling for the organizations to voluntarily publish tax data on a country-by-country basis. Advocates for corporate transparency, including the FACT Coalition, have long argued that public country-by-country reporting (PCbCR) represents an important tool in the fight against  multinational tax dodging and for investors seeking to allocate capital towards more sustainable profits and away from overly aggressive tax planning practices.

Earlier this year, two U.S.-based extractive companies, Hess Corporation and Newmont Corporation, became the first large American MNEs to voluntarily publish international tax data in line with the Global Reporting Initiative’s (GRI) standards, following similar moves in recent years by the UK-based Shell and BP, among others. Meanwhile, tech giants Amazon, Microsoft, and Cisco have all faced recent pressure from shareholders to publish more complete tax data, even as a number of jurisdictions around the world have adopted or announced plans to mandate PCbCR for certain large MNEs,  including the European Union and Australia, respectively.

The Australian proposal represents a particularly significant development, as it would be the first full PCbCR regime, with reporting beginning as early as periods starting in summer 2023. Like the more limited EU PCbCR regime adopted in December 2021, the Australian PCbCR regime will likely capture a number of U.S. MNEs. For example, large MNEs doing business within Australia such as Exxon and ConocoPhillips, which both maintain extensive material operations within the country, are likely to be covered by the Australian PCbCR proposal.

The SEC is also considering action on PCbCR in light of mounting pressure from investors and policymakers, while the Financial Accounting Standards Board (FASB) just this week has signaled its intent to recommend greater tax transparency from MNEs through its tax disaggregation guidance project, contemplating requirements on corporations to disclose cash taxes paid, as well as income tax paid at the state, federal, and foreign levels. This move by FASB would provide helpful, if incomplete, metrics for investors and other users of financial statements to assess MNE’s tax practices on a jurisdictional basis. In light of emerging, potentially competing international standards that will impact U.S. MNEs, FACT is calling on the SEC to advance a rulemaking implementing full PCbCR for large filers using its existing authorities under the Securities and Exchange Act. 

White House Announces Second Summit For Democracy, Rounding Out a “Year of Action” on Corruption

The Biden Administration announced the second Summit for Democracy – slated for March 29-30 – in a joint statement with partner nations on Tuesday. The Administration touted major progress on anti-corruption and transparency initiatives during the past “Year of Action”, including the rollout of the landmark Corporate Transparency Act’s (CTA) first final rule. An accompanying fact sheet also foreshadowed long-awaited regulatory action by FinCEN designed to tackle money laundering in the $50 trillion U.S. real estate market.

The Administration’s announcement comes just one week before commencement of the International Anti-Corruption Conference (IACC) in Washington, D.C., which will convene stakeholders from around the globe for a series of panels and workshops exploring novel strategies to advance the global fight against corruption. 

The FACT Coalition has been a key advocate for many of the anti-money laundering, transparency, and anti-corruption initiatives identified by the Administration as central to its Strategy on Countering Corruption. Though much progress has been made in the past year, it remains vital that the Biden administration and Congress continue to prioritize these initiatives in the months and years ahead by finalizing the implementation of the CTA, accelerating the introduction of new anti-money laundering regulations on the real estate and private investment sectors, passing the bipartisan ENABLERS Act, and ensuring that the agencies responsible for tracking down and stopping financial criminals have the resources that they need to get their jobs done.

Latest from FACT

FACT Submits Comment to State Recommending Measures to Crack Down on Financiers of Deforestation
The FACT Coalition submitted comments in response to a request by the Department of State for input on current strategies for combating international deforestation. Recommendations included subjecting U.S. financiers connected to illegal deforestation to due diligence requirements, and categorizing foreign environmental crimes like illegal logging as predicate offenses for money laundering.

FACT in the News

Cited In: Senate Weighs Expansion of Money-Laundering Rules
FACT Government Affairs Director Erica Hanichak was cited by the Wall Street Journal for a story on the ENABLERS Act on November 30. Hanichak drew attention to a leaked 2017 FBI memo alleging that an unnamed NY private equity firm received over $100 million in wire transfers from a single suspect Russian company, saying that “Such examples have given momentum to the effort to apply tighter anti-money-laundering rules to private-equity firms…”
Quoted In: U.S. oil giants Exxon Mobil, Chevron and ConocoPhillips Challenged Over ‘Secretive’ Tax Practices
FACT Executive Director Ian Gary commented on the introduction of shareholder resolutions against Exxon, Chevron, and ConocoPhillips for a story by CNBC’s Sam Meredith Monday, saying that the oil giants have fallen behind in reporting accurate and relevant tax data for investors and regulators.
“US extractive companies Hess and Newmont publish GRI-aligned tax reports, as do international oil companies including Shell, BP, and Total… Exxon, Chevron, and ConocoPhillips are seriously lagging behind their peers.” Gary’s statement was also quoted in Law360’s coverage of the new shareholder resolutions.
Quoted In: Corp. Tax Transparency Rules Could Paint Muddy Picture
FACT Policy Director Ryan Gurule was quoted extensively in coverage of the ongoing international trend towards country-by-country tax data reporting by Natalie Olivo for Law360. While Gurule praised international progress on tax transparency, he noted that competing reporting standards in different jurisdictions had the potential to increase reporting burdens on companies and promote asymmetrical information.
“The world, he said, may have ‘reached a tipping point’ where ‘it’s actually necessary for there to be symmetrical information in the marketplace,’” such as would be supplied by the SEC’s implementation of a “comprehensive, best-in-class standard” for PCbCR.

Recent and Upcoming Events

December 6-10: Uprooting Corruption, Defending Democratic Values
Register to attend the International Anti-Corruption Conference (IACC), the premiere global conference bringing together heads of state, community activists, non-profits, high-level policymakers, businesses, policy experts, and academics to address the increasingly complex challenges posed by corruption.
December 6: Public Consultation on FATF Guidance on Beneficial Ownership (Recommendation 24) and Transparency and Beneficial Ownership of Arrangements (Recommendation 25)
The Financial Action Task Force (FATF) is seeking feedback from nonprofit organizations and other relevant stakeholders on recently proposed guidance for Recommendation 24 and Recommendation 25, which together establish best practices around transparency and beneficial ownership information reporting for corporations, trusts, and other legal entities and arrangements. Feedback on the Guidance paper to Recommendation 24 and Recommendation 25 will be accepted until December 6, 2022.
December 12: US-Africa Leaders Summit Civil Society Side-Event Webinar: Mobilizing African Resources
Join the Advocacy Network for Africa, Africa Rising, and Interconnected Justice ahead of the second U.S.-Africa Leaders Summit for a webinar panel that will include discussion of the negative economic and corruption impacts of illicit financial flows out of Africa.
December 13: The Whiteness of Wealth with Professor Dorothy Brown
Join the FACT Coalition for a presentation on the racial implications of federal tax policy by Professor Dorothy Brown, author of The Whiteness of Wealth, on December 13 at the Open Gov Hub. Professor Brown will hold a Q&A session after the presentation.
December 15: FACT Happy Hour and Holiday Party
Join the FACT Coalition for drinks and hors d’oeuvres at our annual holiday party at the Open Gov Hub, 1100 13th Street, NW, Washington, D.C. Together with partners and allies at the Hub, we’ll be looking back on twelve months of anti-corruption and transparency victories, and looking forward to many more to come. We hope to see you there.

About the FACT Coalition

The Financial Accountability and Corporate Transparency (FACT) Coalition is a non-partisan coalition of more than 100 state, national, and international organizations working toward a fair and honest tax system that addresses the challenges of a global economy and promotes policies to combat the harmful impacts of corrupt financial practices.
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