Our research addresses the questions why transparency improves public accountability in the extractive sector, how, for whom and in what circumstances. Using a realist approach of policy design, a causal mechanism linking transparency and public accountability is tested on the case of Chile´s environmental reforms, during the first Bachelet administration (2006–2010). Our hypothesis is that transparency improves public accountability through a causal mechanism made of two sets of formulation and calibration activities producing the causal entities responsible for the policy outcome. In order to empirically assess this causal mechanism, we treat policy instruments of information, regulation, treasure and organization as expected empirical observations along the process. We run five series of hoop tests on these instruments and use Bayes theorem of likelihood to update our confidence in the hypothesized mechanism. Our findings indicate that transparency institutionalization is shaped by a policy style combining a decentralized coordination mode with genuine collaborative governance. This has practical implications, not only for Chile´s on-going application to the Extractive Industries Transparency Initiative (EITI) certification but also for any country interested in improving environmental governance in the extractive sector.