Late last month, US President Joe Biden threatened higher taxes on oil company profits if the industry giants don’t work to cut gas prices.
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Oxfam filed shareholder filings against U.S. oil giants Exxon Mobil, Chevron and ConocoPhillips on Monday, saying a lack of transparency into its global tax practices poses a significant risk to long-term investors.
The international aid agency said corporate tax practices are undermining the public’s interest in a fair tax system – particularly in countries in the Global South “with the greatest need for tax revenue”.
“The flimsy tax disclosures by Exxon, Chevron and ConocoPhillips leave investors, watchdog groups and the general public in the dark about the companies’ secretive tax practices,” said Daniel Mulé, political director for extractive industries and taxes at Oxfam America, in a statement.
ConocoPhillips confirmed it had received a shareholder proposal from Oxfam and will consider it ahead of its annual general meeting in May next year. The company added that it “remains committed to complying with all applicable disclosure requirements in the countries in which we operate.”
A Chevron spokesman said the company “complies with all applicable tax laws.
Exxon Mobil did not respond to a request for comment when contacted by CNBC.
This comes amid a broader push for greater tax transparency from large corporations, particularly as people around the world feel the pressure of a cost-of-living crisis.
Oil companies have been repeatedly criticized for their global tax operations. And in recent months, energy giants have faced growing calls for a windfall tax after posting record-breaking profits thanks to a surge in oil and gas prices following Russia’s invasion of Ukraine.
If oil and gas projects alleviate poverty, why hide the numbers?
Policy leadership on extractive industries and taxes at Oxfam America
Late last month, US President Joe Biden threatened to impose higher taxes on oil company profits if industrial giants don’t work to lower gas prices, and accused energy giants of “war profiteers”.
“Today’s record profits for oil companies aren’t because they’re doing anything new or innovative,” Biden said Oct. 31. “Their profits are a godsend of war – the bonanza of the brutal conflict that is ravaging Ukraine and harming tens of millions of people around the world.”
Together, Exxon Mobil, Chevron and ConocoPhillips reported earnings of over $35 billion in the third quarter.
“Oil and gas companies often point to their contributions to the tax base in producing countries as justification for their continued operations, particularly in poor countries, but secretive tax practices make it impossible to verify that the companies are actually contributing to the common prosperity,” Oxfam told Americas Mule.
“If oil and gas projects alleviate poverty, why hide the numbers?” he added.
‘Let the Sunlight In’
According to Oxfam, the tax practices of Exxon Mobil, Chevron, and ConocoPhillips pose a risk to investors who want to protect themselves from potential reputational damage and the possibility of “getting out millions from lawsuits, deadlocked projects, and renegotiations of tax terms.”
To rectify this, Oxfam asked companies to publish reports detailing their tax practices in line with the Global Reporting Initiative’s tax standard, which includes public country-by-country reporting of financial, tax and employee information.
A Tax Justice Network report released earlier this month showed that public country-by-country reporting could reduce tax revenue losses due to cross-border profit shifting by at least $89 billion.
According to Oxfam, the oil and gas sector is considered a particularly high-risk sector for corporate tax avoidance – and reiterates that burning fossil fuels is the main cause of the climate emergency.
Chevron last month reported its second-highest quarterly profit ever.
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“US resource companies Hess and Newmont publish GRI-compliant tax reports, as do international oil companies such as Shell, BP and Total,” said Ian Gary, director of the Financial Accountability and Corporate Transparency Coalition, an international transparency advocacy group.
“Exxon, Chevron and ConocoPhillips are seriously lagging behind their competitors,” Gary said.
The resolutions are due to be presented to Exxon Mobil, Chevron and ConocoPhillips shareholders at their annual general meetings next May.
“Shareholders need a full understanding of potential risks,” said Jason Ward, senior analyst at the Center for International Corporate Tax Accountability and Research.
“Companies should respect shareholders and lead the way to let the sunlight in,” he added.