Resolved clauseRESOLVED: Shareholders request that the Board of Directors issue a tax transparency report to shareholders, at reasonable expense and excluding confidential information, prepared in accordance with the recommendations set forth in the Global Reporting Initiative’s (GRI) Tax Standard, including disclosure of payments to governments.
Whereas clauseSupporting Statement: Tax transparency is increasingly important to investors. The PRI, representing investors with $89 trillion
assets under management, states that, “For investors, tax risk is financially material at the individual asset level. With tightening regulations and shifting societal expectations, tax avoidance activities of multinational enterprises have attracted large fines and highlighted growing reputational, governance, and earnings risks.”1 96% of US companies expect more tax disputes as governments increase scrutiny over corporate tax avoidance.2
In 2021, 136 countries signed a global tax reform framework.3 The proposed Disclosure of Tax Havens and Offshoring Act, passed by the House of Representatives, would require public country-by-country reporting (CbCR) of tax data by SEC-registered companies.4 Further, in November 2021, the European Union approved a directive to implement CbCR for large multinationals.5 In April 2023, the Australian government released draft legislation that requires CbCR for large multinationals doing business in Australia.6 ConocoPhillips does not disclose revenues or profits in non-US markets, nor foreign tax payments, with adequately disaggregated data. This challenges investors’ ability to evaluate the risks of taxation reforms, and whether ConocoPhillips’s tax practices ensure long term value creation. Tax authorities across the globe have repeatedly challenged ConocoPhillips's taxation approach, producing significant costs for the company.7
In 2020, for example, ConocoPhillips settled a $179 million tax bill with Vietnam.8 Despite this, ConocoPhillips is retreating from its transparency commitments, including withdrawal from the Extractive Industries Transparency Initiative, limiting investor access to details about payments to governments around the world.9 While ConocoPhillips’ subsidiaries file statutory reports for operations in Australia, Colombia, Malaysia, the Netherlands, Norway, Singapore, and the United Kingdom, CbCR cannot be fully useful if it only
includes select jurisdictions.
The GRI Standards are the world’s most utilized corporate reporting standard.10 The GRI Tax Standard is the first comprehensive global standard for public tax disclosure. It includes four components. GRI 207-1, 207-2, and 207-3 require companies to disclose their approach to tax governance, control, and risk management; stakeholder engagement; and management of tax concerns. 207-4 requires CbCR of financial information including revenues, profits and losses, and tax payments in each jurisdiction.11 GRI 207 also recommends disclosing “industry-related and other taxes or payments to governments.” A GRI-compliant tax transparency report would bring ConocoPhillips in line with peer companies – including many in the oil, gas, and mining industries12 – who report using GRI 207.13 ConocoPhillips already reports CbCR information to OECD tax authorities privately, so any increased burden is negligible.