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Ineos in a state

Fracking is controversial and widely rejected by the communities where it could take place. But the oil company Ineos is pushing forward with its fracking plans in the UK. It seems content to do this at almost any cost to community good will, pursuing legal injunctions making any practical protest illegal.

The damage this is doing to its public relations seems without limit. By taking such a heavy-handed approach, Ineos is storing up trouble for years ahead.

What can possibly justify this? It’s (private) shareholders’ motives are unfathomable.

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Cuadrilla: back to the past?

However new the technology, Cuadrilla appears to be operating in the last century. The Cuadrilla website includes a section on how insignificant their earthquakes actually are and why water supply contamination just cannot occur.

Unconvinced, the citizens of Balcombe and environmental campaigners have been on the move. They are concerned about the direct impacts of fracking and the damage that releasing another source of fossil fuel will do to the environment.

What Cuadrilla has failed to do is properly acknowledge the concerns of the communities it impacts, going far beyond donations to local charities while they are drilling. It is not just a matter of going by the rules with the planning process – if they hadn’t done that they would have been stopped long ago. It is about taking stakeholders seriously. The issues raised by local community reaction and interaction and the views of NGOs are poorly represented on their website.

This could be BP back in the 1980s. The lessons that Shell and BP seemed to take on board for a short while in the late 1990’s and the first few years of this century- about transparency and stakeholder engagement – appear to have left little lasting legacy. BP was the first energy company to acknowledge the problem of climate change, breaking ranks with the industry at the time. This was during the John Browne era, when BP seemed to want to make progress towards sustainability.

The sad irony is that John Browne is now the Chair of Cuadrilla.

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Is a responsibility shared a responsibility halved?

The Deepwater Horizon disaster that polluted the Gulf of Mexico was all BP’s fault – wasn’t it? Well that is no doubt  just what is being expensively tested in the courts. How much should BP pay? For how much should subcontractors such as Transocean and Halliburton be responsible?

IIED has produced a new report on shared responsibility in the oil industry spelling out the ways in which supply chains should work together on social and environmental responsibility. And of course this is a problem that goes way beyond the oil industry. Increasingly extended supply chains are a general feature of globalisation.

The emphasis of the IIED report is on how companies and their supply chains can work together to avoid problems occurring in the first place, rather than on quantifying responsibility for the costs when the worst has happened. But the worst will happen from time to time. And you would have thought that having worked out how to share responsibilities in advance would not only reduce the chance of it happening, but also make more obvious how the cost of paying for it should be allocated.

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Oil on troubled waters

Why has the oil industry produced its own sustainability reporting guidelines – apparently leaving the GRI to its own devices?

The international oil industry has produced a new version of its sustainability reporting guidelines. This comes in the middle of the GRI oil sector supplement development. While the industry guidelines acknowledge the GRI – and even discuss how it differs – this is not a helpful step.

For more, see my GreenConduct Blog here.

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Oil in deep water

BP may have ruined one third of the Gulf of Mexico for 25 years. But as well as the cleanup, what of the future?

We need to know not only what BP’s policies and practices are for such dangerous operations, but also what those of all the oil companies are. Whether it is Shell, Exxon or a state-owned oil company, what controls will be put in place for the future? And will governments have a greater role?

There is deep water all over the world.

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BP: morally confused?

BP has denied responsibility for the giant oil slick which is threatening the USA. CEO Tony Hayward’s reasoning is that it is the rig operator TransOcean – not BP – that is responsible. This is to confuse moral responsibility and legal responsibility.  

Even legally, I am sure the contract between BP and Transocean is long, detailed and contains numerous references to safety. Did BP try to lessen the safety provisions or did they not set them high enough? As for moral responsiblity, I wonder if BP has come across the idea of supply chain responsibility? It is now commonplace for major companies to accept responsibility for the actions of their suppliers acting to fulfil a contract – think of child labour, for example.

Of course BP is positioning itself for the giant legal battles that are sure to follow. But politically, it will not be helpful that they, along with other oil companies, appear to have lobbied to prevent better safety standards being imposed.

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How do you drill for oil responsibly in the Falklands?

Falklands Oil & Gas is all set to start drilling for oil around the Falkland islands. Is it possible to do this responsibly?

There are issues around environmental impact – many of which are shared with all other oil companies. But there is also the issue of the political ramifications of drilling in contested waters. However in their most recent Annual Report, there is just 1 page on responsibilities (and no accompanying Sustainability Report). There is not even a single mention of Argentina!

I suppose ‘caveat emptor’ is a basic business principle.

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Constructing the Compact

The Global Compact is facing a real challenge in its handling of the complaint against PetroChina by NGOs.

If it fudges the issue, its credibility will be undermined.  If it de-lists PetroChina, it will appear to be going backwards. So if PetroChina will not respond constructively, then perhaps the Global Compact should.

One root of the problem is the structure of the Global Compact.  It combines setting the standard with judging those who try to apply it.  This gives it the potential for conflicts of interest.  Dealing with such issues is a well-trodden path.  Maybe it is time the Global Compact set out on that journey.