World Bank sees uniform social responsibility programs by oil firms

Oct. 23, 2001
Oil and gas companies are increasingly adopting comprehensive programs of social responsibility worldwide. Such programs are seen now as essential to not only to good relations in the areas in which industry operates but even crucial to business success.

Bob Williams
Executive Editor
Oil and Gas Journal

BUENOS AIRES, Oct. 23 -- Oil and gas companies are increasingly adopting comprehensive programs of social responsibility in their operations throughout the world.

Such programs are seen now as essential to not only to good relations in the areas in which industry operates but also as critical to business success.

This trend is evolving to the point where there is accelerating momentum within the industry to standardize social responsibility programs via adoption of industry best-practices standards.

This theme emerged from a number of presentations in late sessions Monday at the 18th World Energy Congress in Buenos Aires.

Corporate responsibility

Pierce Riemer, director general of the World Petroleum Congress, acknowledged the growing role of corporate responsibility initiatives in oil and gas operations embodied within a collaborative effort of WPC and the International Petroleum Industry Environmental Conservation Association (IPIECA). The national memberships of the two associations represent over 90% of the world's oil and gas production and consumption.

Riemer noted that the international petroleum industry is collectively striving to address society's needs by helping to develop solutions and responses that are socially, economically, and environmentally acceptable by:

-- Developing partnerships with key United Nations bodies, nongovernmental organizations, and other industry associations.

-- Searching for cost-effective solutions based on sound science.

-- Conducting consultations with key stakeholders.

These efforts are being undertaken against a backdrop of changing roles of government, business, and the public with regard to oil and gas operations.

Governments are concentrating more on setting frameworks and policies rather than detailed planning and implementation, Riemer noted. At the same time, the public often lacks confidence in governments to provide solutions and are distrustful of industry appearing to implement government policies in a nonregulated environment. So it follows that the public is playing a growing role in the decision-making processes involving oil and gas operations. The widespread perception that international oil and gas corporations have growing clout -- even to the point of being above the law -- fosters a growing expectation that oil and gas companies also participate in the development of solutions to social issues, Riemer said.

The primary areas of social responsibility focus for oil and gas companies, Riemer noted, then should be:

-- Developing and implementing effective management systems and guidelines and then sharing them.

-- Developing clean, efficient technologies, such as low-emissions combustion systems and heliportable seismic equipment and drilling rigs.

-- Promoting technology transfer and local training.

-- Improving air quality, along the lines of the Auto-Oil initiatives in the developed countries.

-- Building a sustainable oil spill contingency preparedness and response capability, such as that fostered by IPIECA's Oil Spill Working Group.

-- Developing options to help mitigate the risks of climate change at a lower cost to society. Riemer in particular cited the enormous potential of carbon sequestration in industry operations helping to allay concerns over the prospect of catastrophic climate change.

-- Operate responsibly in sensitive environments by relying on such tools as the Interactive Map Service, an online biodiversity geographic information system, for oil spill contingency plans, environmental impact studies, and land use planning.

-- Promoting greater stakeholder dialogues through initiatives such as social impact assessment studies.

The promotion of excellence in social responsibility performance by oil and gas companies has prompted WPC to launch as a theme for the September 2002 World Petroleum Congress in Rio de Janeiro: The Petroleum Industry: Excellence and Responsibility in Serving Society.

World Bank role

Multilateral lending agencies such as the World Bank will play an increasingly important role in helping to standardize the best practices of oil and gas companies when it comes to social responsibility, according to Eleodoro Mayorga Alba, head of the World Bank's Department of Oil, Gas, & Chemicals.

This is especially true regarding the interaction between oil and gas industry operations and affected indigenous peoples.

Mayorga emphasized the growing role of indigenous peoples in the oil and gas project decision-making process, claiming that the industry is "way ahead" of other industries in this regard.

He cited a string of case studies from northern Canada, Papua New Guinea, Nigeria, and the High Amazon that provide an overview of lessons learns and examples of best practices in social responsibility involving indigenous people.

While noting that such best practices have been largely the exclusive province of major oil companies, Mayorga advised, "These practices should become widespread, especially among the smaller companies."

He stressed the importance of early consultation of indigenous people in project planning, noting that "Exploration campaigns in licensed blocks in Ecuador, Colombia, and Peru are suffering costly delays because early consultations were not carried out in time."

Mayorga also recommended that oil and gas companies act to ensure that indigenous people share directly in the economic benefits from oil operations, because, "in most countries, they don't own the resources and have no direct rights."

Delays in land titling are a serious constraint in this regard, and oil companies should support the trend in international law to recognize that traditional occupancy is sufficient evidence of property rights, he said.

Oil companies also have a similar responsibility with regard to governance and human rights, Mayorga said, noting that particular care needs to be taken to ensure that security arrangements with the government do not lead to human rights abuses.

And oil companies have an obligation to make private social investments on behalf of indigenous peoples affected by their operations, focusing on areas such as health, education, infrastructure, and economic self-sufficiency projects.

Such best practices are gaining ascendancy in industry operations as agencies such as the World Bank supports new initiatives to "mainstream" the industry's best practices. Mayorga noted that the World Bank has committed additional funding to disseminate these emerging best practices of oil and gas companies worldwide.