Social and Environmental Aspects of the Oil and Gas Sector. Ocean Conservatory Forum Tel-Aviv, Israel. February 10, 2014.

Transcription

1 Social and Environmental Aspects of the Oil and Gas Sector Ocean Conservatory Forum Tel-Aviv, Israel February 10, 2014 Michael Oxman

2 What is BSR? We act as an honest broker between business and society, combining our industry experience, sustainability expertise, and global reach to help companies create coherent strategies that leverage their core competencies and institutional capacity. Sustainability Expertise Industry Experience Global Reach Any industry, any issue, any location 300 companies 15 partnerships 50 countries We work with some of the largest corporations in the world across 11 industry practices. Energy and Mining Practice is our single largest within advisory services We lead a wide range of partnerships and collaborative initiatives to create industry-wide solutions. Collaborative initiatives encompassing energy/mining include Environmental Services Working Group and Human Rights Working Group We work all over the world, with eight offices and competency in more than 15 languages and dialects. Energy and Mining Practice is distinguished by its global work at HQ and at he asset level. 2

3 Sample BSR Energy & Mining Members / Engagements Anglo Alcatel-Lucent Gold Ashanti Antofagasta Aramex International plc AREVA Group Argonaut Best Buy Gold, Inc. Barrick Bloomberg Gold L.P. Corporation BP Boeing plc Chevron Cisco Systems Conoco Philips Coca-Cola Dong Energy COSCO ENI S p A ExxonMobil Duke Energy Freeport-McMoRan Ford Motor Company Copper GE & Gold Inc. Gerdau Hitachi S.A. Gold Hyatt Fields Hotels Exploration Goldcorp, IBM Inc. IAMGOLD Kraft Foods Corporation Kinross Levi Strauss Gold Corporation & Co. Li & Fung, Ltd. Nevada Mining Association Nyrstar NV Occidental Pan American Silver Rio Blanco Copper Rio Tinto plc Royal Dutch Shell Sagittarius Mines, Inc. Schlumberger Sempra Energy South American Silver Corporation SunPower SunTech Teck Resources Limited Tiffany & Co. Twin Metals Minnesota VALE

4 Agenda Energy Industry CSR Trends Industry Response to Trends Collaboration Examples 4

5 Energy Industry CSR Trends 5

6 An Evolving Energy Industry Paradigm for CSR The convergence of sustainability and business fundamentals requires integrated management of CSR issues and opportunities globally and locally. Energy Issues Selected CSR Energy Trends Affordable Energy Climate Change Commercial Incentives Technical Risk Employment Access to Finance Poverty / Inequality Corruption War / Conflict Criminality Working Conditions Lack of Social Services Environmental Incidents Biodiversity Water Scarcity Failed States / Role of Government National Security Maturing CSR standards define minimum and best practice performance. Project stakes heighten resource nationalism, stakeholder attention, and opportunism. Cumulative impacts necessitate multistakeholder engagement Transparency requirements by downstream users, investors, lenders, and public authorities reach new levels Social and legal license increasingly overlap to prove no harm and deliver local benefits. 6

7 Growth of Standards and Guidelines on Performance Unprecedented growth of standards, codified best practices, and cross-sectoral collaboration and engagement. ILO Declaration on Fundamental Principles and Rights at Work Equator Principles IFC Performance Standards v1.0 Kazakhstan Local Procurement Targets Indonesia Local Content Regulation ISO Argentina Import Regulations OECD Guidelines on Multinational Enterprises Extractives Industry Transparency Initiative 1990 OHSAS UN Global Compact UN CEO Water Mandate 2010 Scope 3 GHG Protocol Climate Reporting Australian Carbon Pricing Scheme 1980 IFC Environmental and Social Safeguard Policies and its Disclosure Policy 2000 ICMM Principles ISO IFC Performance Standards v2.0 UN Guiding Principles on Human Rights What s next? Black Economic Empowerment in South Africa Global Reporting Initiative G3 US Foreign Corrupt Practices Act (FCPA) Voluntary Principles on Security & Human Rights SEC Ruling on Conflict Minerals and Sec UK Anti-Bribery Law California Transparency Act International Cyanide Management Code Environment Social / Human Rights Economic Inclusive 7

8 Companies Recognizing Impacts on Bottom-Line Social License Traditionally Thought of Only In Reputational Terms CSR Today Extends to Four Major Impact Areas in the Energy Industry Environmental and Social Issues Cross Over in CSR Domain Social License Issues Human rights Indigenous peoples Corruption/bribery Community unrest Security Labor/working conditions Labor migration Road safety Social License Issues Climate and energy Material toxicity and chemicals Water (scarcity, efficiency, and treatment) Waste management Land use and biodiversity Raw material use Noise, dust and related emissions

9 Examples of Financial Impacts Social license risks and impacts are increasingly quantifiable - improving alignment with management systems & commercial objectives Rio Tinto in Sub-Saharan Africa estimated Expected Value of sustainability investments at more than $318 MM Newmont Mining in Ghana land acquisition six months ahead of schedule, decrease in grievances, reduction in spending on security Shell Philippines (offshore project) - $6 MM in community consultation costs resulted in $50-$72 MM in savings through accelerated construction schedule 9

10 Energy Industry Response to Trends 10

11 Company / Industry Responses Focus on Integration CSR has become more about business priorities and less about philanthropy Topics covered under CSR energy umbrella are generally predictable and managed through increasingly systematic approaches. Challenges still remain on both the company and stakeholder agendas. Systematic Approaches Materiality and Impacts (includes engagement) Management Strategy, Policies and Systems Execution, Monitoring, & Accountability Transparency, Reporting and Disclosure CSR Topics Climate Water Safety & Environment Social License to Operate Community Relations & Development Human Rights Public Policy Employment & Procurement

12 Integration through Management Systems Achieve local sustainable performance through corporate- and field-level activities integrating environmental and social performance issues Issue Identification & Alignment Do No Harm Formalized Impact Assessments Stakeholder / Community Engagement Water access / quality Resettlement Respect Human rights In-migration Livelihoods Community health and safety Strategy Development & Management Planning Benefit Creation Implementation and Monitoring Local Content and Business Development Strategic Community Investment Capacity Building Stakeholder/Community Engagement Examples ExxonMobil s Environmental and Socioeconomic Management Process Shell s Venture Support Integrators 12

13 Even Stakeholder Engagement Is Increasingly Systematic CSR agenda for strategy and integration Social, Environmental and Economic Risks and Opportunities Stakeholder Engagement

14 Collaboration Thru Multi-Lateral Initiatives Bilateral Partnerships Industry / Business Organizations 14

15 Voluntary Principles on Security and Human Rights Objective: To maintain the security of project activities and operations in a framework that ensures respect for human rights. Performance Standards Risk assessment Identification of security risks Potential for violence Human rights records Interactions between companies and public security Security arrangements Deployment and conduct Consultation and advice Responses to human rights abuses Interactions between companies and private security Key Points: Only guidelines specifically developed for extractives sector to maintain the safety and security of their business operations while ensuring respect for human rights and fundamental freedoms Developed by a multistakeholder initiative - governments, mining and oil/gas companies, and NGOs 15

16 IFC Performance Standards Objective: For IFC clients to manage environmental and social risks and impacts so that development opportunities are enhanced. Performance Standards 1. Assessment & Management of Environmental and Social Risks and Impacts 2. Labor and Working Conditions 3. Resource Efficiency and Pollution Prevention 4. Community Health, Safety, and Security 5. Land Acquisition and Involuntary Resettlement 6. Biodiversity Conservation and Sustainable Management of Living Natural Resources 7. Indigenous Peoples Key Points: Internationallyaccepted benchmark Assess environmental and social performance of largescale projects Reference standard for Equator banks 8. Cultural Heritage 16

17 Materiality to Companies and Stakeholders IMPORTANCE TO STAKEHOLDERS/ COMMUNITY DEVELOPMENT Potential Criteria Government Priority Community Priority Reach Community Ownership Anticipated Community Benefit INFLUENCE ON BUSINESS SUCCESS Potential Criteria Focus Area Risk Partnership Sustainable Financing Impact Measurement Biodiversity Oil Spill Response Local Community Development Capacity Building Infrastructure Education Health From BSR Strategic Community Investment Tool 17

18 Corporate / NGO Partnership Examples Examples Dow $10 million partnership with the Nature Conservancy, established in 2011 Common Topics Biodiversity Oil Spill Response Local Community Development Capacity Building Infrastructure Education Health Shell and Earth watch Institute became strategic environmental partners in 2008 in support of biodiversity, conservation, social investment, and capacity building. ExxonMobil numerous partners on Women s Economic Opportunity International Petroleum Industry Environmental Conservation Association (IPIECA) contains numerous case Studies and compendium of Oil/Gas Partnership Examples The Global Initiative: Partnership for Enhanced Oil Spill Response While the new Colorado proposal doesn t address all the issues surrounding oil and gas development, the governor and the state s regulators should be applauded for their efforts in bringing forward these common sense air pollution measures, which were agreed to and supported by EDF, Anadarko Petroleum, EnCana, and Noble Energy. 18

19 Innovative / Recent Examples of Partnership Designed for existing operations -- supplements ESHIAs Public evaluation of tool (BSR) Used at mines, smelters, paper mills, forests, sugar estates, quarries Conducted every three years Used at >55 sites in 16 countries Partnership implementations with local NGOs in Chile, Namibia and Brazil Unique features: encourages participatory planning and requires public disclosure of findings and follow up The Center for Sustainable Shale Development (CSSD) is an unprecedented, collaborative effort of environmental organizations, philanthropic foundations, energy companies and other stakeholders committed to safe, environmentally responsible shale resource development. Benedum Foundation Chevron Citizens for Pennsylvania s Future (PennFuture) Clean Air Task Force CONSOL Energy Environmental Defense Fund EQT Corporation Group Against Smog and Pollution (GASP) Heinz Endowments Pennsylvania Environmental Council Shell William Penn Foundation 19

20 Comments / Questions Michael Oxman Director, Energy & Extractives moxman@bsr.org 20