Issue No. 20, March 2014
A Starting Point for Shared Equity
Industries have the means and most often the good intentions to make this world a better place. They are able to deliver new products, advanced technologies and alternative solutions to improve the lives of millions. Yet while industries possess the means, the consumer fuels the changes that drive these advances.
Nutrition labeling helped consumers understand and drive responsible food production advances in the 1990s, and more recently, eco-labeling extended consumers' and green investors' ability to encourage more environmentally responsible products for everyday use. But consumers' and investors' influence over how raw materials are extracted and processed for the products they use has been largely beyond reach, obscured by lack of awareness and separated by layers of the supply chain. That is, until now.
A standard known as EO100™ is on the verge of changing that. Equitable Origin (the EO in EO100) was formed to "promote best practices and continual improvement of responsible upstream oil and gas operations". EO100 is a tool that exploration and production operations are using to guide better social and environmental performance. By establishing a set of consistent, independently-audited performance targets for these operations to meet, the standard gives investors and ultimately consumers a means of objectively valuing socially and environmentally responsible oil and gas, thus giving consumers the power to influence better performance and empowering operators with justification for deepening investment in continuous improvement.
EO envisions "a new marketplace for fuels and petroleum-derived products – where consumers and businesses can select products that support responsible production, and energy companies are encouraged and rewarded for acting responsibly." The standard takes on some of the most difficult challenges faced by upstream oil and gas operations in developing countries today:
- Corporate governance, accountability and ethics
- Human rights, social impact and community development
- Fair labor and working conditions
- Indigenous peoples' rights
- Climate change, biodiversity and environment
- Project life cycle management
Tempted to write this off as a scheme to undermine the industry's ongoing efforts to improve performance? Consider that EO is a for-profit social enterprise squarely focused on generating shareholder value and a social return on investment. Several of EO's founders, directors and staff have experience in extractives industries and finance, and its standards are being vetted and shaped by a broad range of stakeholders, notably including oil companies themselves.
EO’s mission is to facilitate and encourage better social and environmental performance at the front end of the value chain, just as nutrition and eco-labeling have enabled consumers to do at the retail interface. And like those earlier initiatives, EO100's implementation won't be without its challenges. But it's a start.
Note: Acorn International has no financial interest in Equitable Origins. We are a completely independent consulting firm with no outside financial interests.
Acorn International Notes
Acorn Notes is a series of periodic papers to share ideas regarding EHSS and sustainability management for international industry.
Issue 21 - March 2014: Above-ground Facilities and Stakeholder Engagement: Deploying the 'CAC'
Issue 20 - March 2014: A Starting Point for Shared Equity
Issue 19 - March 2014: What It Takes to Run a Great Consulting Firm
Issue 18 - February 2014: Considering Human Rights - Trends and Lessons in Oil and Gas Impact Assessments
Issue 17 - June 2013: Managing Environmental Health in International Development Projects
Issue 16 - January 2013: Integrating Environmental and Social Performance throughout the Project Lifecycle
Issue 15 - January 2013: The State of Shale Play in 2013
Issue 14 - August 2012: Building Environmental and Social Governance in Host Countries
Issue 13 - May 2012: Human Rights and Business: A New Era
Issue 12 - February 2012: Extractive Industries Confront Pressure for Greater Transparency
Issue 11 - January 2012: Key Updates to the IFC Sustainability Policy and Performance Standards
Issue 10 - June 2011: Oil & Gas and NGOs: New Rules of Engagement?
Issue 9 - February 2010: Annual Study of Sustainable Development Priorities
Issue 8 - January 2009: Annual Study of Sustainable Development Priorities
Issue 7 - May 2008: Top Ten Lessons Learned About Health Impact Assessment
Issue 6 - January 2008: Annual Study of Sustainable Development Priorities
Issue 5 - September 2007: Results of web forum with our International Partners
Issue 4 - January 2007: Annual Study of Sustainable Development Priorities
Issue 3 - May 2006: Suggestions and tips for safe international travel
Issue 2 - January 2006: Annual Study of Sustainable Development Priorities
Issue 1 - November 2005: The Top 10 "unspoken" criteria for determining the success of EIAs