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Cairn is committed to being open and transparent in all aspects of its business, communications and reporting.

Payments to governments

There are a number of transparency initiatives applicable to Cairn that require additional reporting on payments to governments now and in the future. The two main initiatives applicable to Cairn are the European Union Accounting Directive and the Extractive Industries Transparency Initiative (EITI).

The EU Accounting Directive applies to Cairn as a listed extractive company and requires parent companies to disclose certain payments to governments on a country-by-country basis for the entire Group. It was recommended that adoption commence on or after 1 January 2016; however, the UK adopted early with an effective date for accounting periods commencing on or after 1 January 2015.

The EITI is an international standard that is voluntarily entered into by governments in order to promote openness in respect of the management of revenues from natural resources. We support transparency of tax contributions and other payments to governments and as such became a Participating Company of the EITI in September 2013.

Under EITI regulations, governments disclose how much they receive from extractive companies operating in their country and companies disclose how much they pay. Payments are then validated and reconciled by an independent administrator appointed by the EITI Multi-Stakeholder Group (MSG). Implementation of the EITI in every participating country requires appointment of an MSG. Norway joined the EITI in 2009, Senegal in 2013 and the UK in October 2014, and all have appointed MSGs. No other countries in which Cairn operates have joined. We are actively participating in EITI working groups in Senegal.

As Cairn operates in various territories with diverse tax obligations and requirements, we are committed to ensuring that in every territory we comply fully with local tax rules and regulations. Cairn‘s Tax Policy does not permit any artificial tax planning and, in managing its tax affairs, the Group must align any planning with genuine commercial activity.

Payments required to be disclosed under the EU Accounting Directive are aligned to those required to be disclosed under UK EITI and comprise the following:

  • production entitlements;
  • taxes levied on income, production or profits (excluding VAT, personal income tax or sales tax);
  • royalties;
  • dividends; and
  • signature, discovery and production bonuses.

As at 31 December 2015, Cairn’s remaining holding in Cairn India Limited (CIL) was approximately 10%. The retroactive tax claim made by the Indian Tax Department is addressed in the Financial Review of the 2015 Annual Report.

As in previous years, we have disclosed our payments to governments. These disclosures include both payments to governments included in our EITI reporting, such as corporate income tax, licence fees and withholding tax suffered, and additional payments made including VAT, payroll taxes and social security costs.

Our EITI submission has been made to Companies House; a copy of which is available in the Report on payments to governments PDF (0.40Mb).

In 2015, we also accommodated the requirements of the EU Accounting Directive and improved the way in which we report information. We have incorporated a comparison of data for 2014 (see Payments to Governments).

Sustainable social investment

We seek to make a positive social impact in locations in which we work. We contribute to community and social development through our core business activities, such as energy and infrastructure in the countries in which we operate as well as through payment of taxes, employment opportunities, skills development and trade with local enterprises. We ensure we apply our Anti-Bribery and Corruption (ABC) management system when dealing with contractors to ensure transparency.

Cairn also adds to benefits generated by our operations through focused and appropriate social investment. We have set criteria for social investment activities that aim to ensure that longer-term projects are sustainable, with plans in place from the outset to continue without Cairn‘s contributions, typically beyond an initial three-year period. Our projects are also developed through a process of community engagement, consultation and participation and using a transparent decision-making process that aims to ensure that any payments made are aligned with our Business Principles and comply with our ABC management system.

In 2015, we commenced implementation of a four-stream social investment programme in Senegal with the following themes: ‘education and training‘; ‘enterprise development‘; ‘environmental health and wellbeing‘; and ‘charitable giving and humanitarian aid‘ (see Social and economic benefits delivered in Senegal).

Communicating with shareholders

Communications with shareholders are given high priority by the Board. The Company has implemented the provisions of the Companies Act 2006 regarding electronic communication with its shareholders, in order to give shareholders more choice and flexibility in how they receive information from the Company. Cairn responds promptly to correspondence from shareholders and its website contains a wide range of information on the Company, including a dedicated investor relations section.

In order to ensure that the members of the Board develop an understanding of the views of major shareholders, there is regular dialogue with institutional shareholders, including meetings with executive management after the announcement of the year-end and half-yearly results. The Chairman is available to attend a number of these meetings. The Board is kept informed of any issues raised by shareholders as a standing agenda item in Board papers, through feedback at pre-Board meetings and following results or other significant announcements. In addition, the Company maintains an investor relations database, which details all meetings between the Company and its investors or other related stakeholders. All analyst reports relating to the Company are also distributed to the Board.

A list of the Company’s major shareholders can be found on the Institutional investors page. The Company recognises that the success of the comply-or-explain approach under the UK Corporate Governance Code depends on an ongoing and open dialogue with shareholders, and remains committed to communicating with shareholders, as well as proxy voting agencies, on any matter they wish to discuss in relation to the Company‘s governance.

Communicating with other stakeholders

For a new project or country entry, we undertake a stakeholder identification exercise. We draw on local, corporate and external knowledge to do this. From this, we develop a Public Consultation and Disclosure Plan (PCDP), which is matched to stakeholder concerns, the materiality of issues and risks to the business. Engagement plans are therefore bespoke to each project. PCDPs are regularly updated.

Our stakeholder engagement model follows the principles of ‘Materiality’, ‘Inclusivity’ and ‘Responsiveness’ as defined in AccountAbility‘s AA1000 Accountability Principles Standard (AA1000 APS). This ensures that we engage with internal and external stakeholders, identify and assess our most important Corporate Responsibility (CR) issues, and address and respond to them in a structured way.

We also use the Global Reporting Initiative (GRI) Sustainability Reporting Guidelines G4 at a ‘Core’ level. We follow its content principles of materiality, stakeholder inclusiveness, sustainability context and completeness; and its quality principles of balance, comparability, accuracy, timeliness, clarity and reliability.

In 2015, we have increased our feedback from stakeholders on material issues for the Company by focused stakeholder engagement with representative groups by an independent expert (see Community engagement and Stakeholder views on Materiality).


of payments paid to the Senegalese Government in 2015.


total group social investment in 2015.

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