Mikkelsen A., Langhelle O. (eds.) Arctic Oil and Gas. Sustanability at Risk?

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Alternatively, relationships based on mutual exchange of information and trust

give a kind of satisfaction and in themselves provide motivation to continue the

relationship. For example, in Alaska, a reduction in trust may have led to a reduction

in attendance at public hearings. Power-based strategies lead to suspiciousness or

worse. The use of ultimatums is the extreme of this strategy.

To promote an

approach to negotiating with communication that is consistent with strategic

CSR, appropriate institutions and arenas for negotiation need to be constructed.

Many of the partnership agreements between oil and gas companies are more like

signals of intention. Many of the meetings between representatives of the

NGOs/local communities and the companies are not explicitly seen and defined

as negotiations, and thus not planned. (In fact, the people attending the meetings

may not even realize these are negotiations.) Redefining all kinds of contact

between stakeholders and the companies might make the collaboration ‘cleaner’.

It is, therefore, important for companies pursuing strategic CSR to label these

contacts explicitly as part of the negotiating process. This also means that the

partnerships have to be expanded from being short-term contact with NGOs and

authorities to include long-term planning and development actions.

Continuous engagement with all relevant stakeholders is a prerequisite for

effective reviewing of impacts and options. The oil and gas companies have

already taken partnership into use, but the practice seems fragmented, dominated

by external affairs thinking and only marginally linked to the core business activities.

Partnership is a tool for transforming stakeholder engagement and dialogue into

joint actions, as ‘everyone does what they do best’. These partnerships are instru-

mental in finding solutions to defined problems. They also provide learning

opportunities for all five major actors associated with community development

(see Figure 13.1). In addition, deliberation between the five major actors can

provide cultural change, new perspectives, trust and respect that may enhance

sustainable development on the community level.

Community-based intermediary organizations

Community-based intermediary organizations (CBIO) are community-led,

apolitical, non-profit organizations seeded by industry, government or development

organizations. CBIOs are designed to fulfil some or all of the following four

roles: First, they provide communities impacted by industry operations with the

institutional and technical competence to engage effectively with company operations.

Second, they act as the voice of the community in relation to operational concerns

and ways to mitigate negative impacts and monitor industry commitments. Third,

CBIOs build an agreement in the community on developmental concerns and

priorities, including opportunities to benefit from the industry’s operation.

Fourth, they participate in addressing broader community concerns and local

development priorities through direct delivery of projects and services.

The main advantage of CBIOs lies in their long-term capacity building, strategic

and independent nature. Leveraging this advantage, CBIOs are a mechanism by

which oil and gas companies can proactively and systematically build long-term

376 A. Mikkelsen, R. D. Camp II and R. E. Anderson

Managerial implications 377

relations with local communities, respond to their operational concerns and

contribute to local development priorities. For example, one of the ideas behind

stakeholder engagement is to use existing organizational and technical capacity

within communities to engage with existing institutions like NGOs through

community liaison officers, advisory panels, foundations and company-managed

social investment programmes. However, some communities have low- or non-

existent technical and organizational capacity to address the potential impacts and

benefits of oil and gas projects effectively. In these cases, companies focused on

strategic CSR should consider supporting the establishment of a new engagement

structure that links corporate planning and monitoring systems, strategies, goals

and objectives with CBIO involvement.

Community-based intermediary organizations come in different forms and

may serve a wide range of issues according to local conditions, priorities and

existing capacities in a given community. Impact-oriented CBIOs (often referred

to as Industry Relations Committees), for example, focus principally on enhancing

community understanding and the ability to participate in decision-making

processes concerning the environmental and social impacts of the industry,

including development of mitigating strategies and monitoring of any commit-

ment. One example of an impact-oriented CBIO is the subsistence Advisory

Panel at the North Slope. The weakness of this type of CBIO is that the discussion

can easily be very short-sighted and, instead of moving activities towards sustain-

able development, may focus instead on short-term wishes for goods, equipment

or infrastructure in the communities, which are easier to identify and implement.

Benefits-oriented CBIOs are sometimes referred to as Community Development

Corporations. They focus principally on assisting communities in building their

capacity to address local community development priorities, such as health,

education, housing, employment and income generation and community safety.

Many communities lack the experience time, expertise or resources to participate

and influence engagement on issues that affect them directly, or to take advantage

of potential benefits related to the industry’s activity. CBIOs are in this way a first

step. However, their main focus is not business development, and there seems to be

a growing consensus amongst external stakeholders to different kinds of industry

that the private sector and market mechanisms should play a greater role in poverty

reduction and environmental stewardship alongside more traditional aid and

grant-oriented approaches to development. As a consequence of this, the Shell

Foundation in 2002 launched a social entrepreneurship initiative with a new way

of thinking by looking for long-term business opportunities linked to their core

business and to needs in the communities where they operate.

The idea is to work

on environmental and social impacts of their own activities at the same time as

they are developing business, the third element of sustainable development. By

doing this, it is possible to design investment partnerships to: (1) provide business

development support to small and medium enterprises (SMEs) to increase their

financial performance; (2) leverage local capital into investment funds for enterprise

by offsetting technology and financial risks and (3) apply commercial credit

appraisals to SMEs in order to ensure higher levels of financial viability.

378 A. Mikkelsen, R. D. Camp II and R. E. Anderson

Conclusions

To be effective at promoting sustainable development in Arctic communities,

corporate social responsibility needs to be proactive/strategic and intended to

contribute to the company’s triple bottom line. The success of these programmes,

in turn, is a function of the quality of the stakeholder engagement, the effectiveness

of the social performance programme, the delivery and the progress on social

investment and social impact management. Without a comprehensive plan that is

communicated to the public, it is difficult to measure the effectiveness of the

social performance of the companies and transparency is halted, increasing the

risk of choosing short-term facilitation over long-term business relations and

development processes such as education and skill development. Our case studies

have shown that most stakeholders see education as the key for development for

local communities. The lack of such education and the lack of development of

skills needed in the oil and gas industry is the number one challenge of the future

for oil and gas companies. To reach the target of sustainable development,

the companies need to be proactive in developing a normative core of sustainable

development, building environmental and social factors into their economic

models, rather than doing this only when they are forced to by the possibility

of damage to their reputation. Developing a normative core of sustainable

development as business value means taking the lead and proactively using CSR

as a competitive advantage through participatory management tools.

Notes

1 For example, see Anderson and Bone (1995a, b), Anderson (1995) and Notzke (1994).

2 A plain text version of the Declarations is available at: http://www.iwgia.org/sw1592.asp.

3 http://www.co.north-slope.ak.us/nsb/default.htm.

4 NPR-A Grant document.

5 How each of areas are linked to the normative core of sustainable development are

discussed in Chapter 4.

6 http://www.unhchr.ch/htlm/menu3/b/62.htm and http://www.worldbank.org.

7 http://www.dog.dnr.state.ak.us/oil/products/publications/northslope/nsaw2004/

NS_2004%20Mits.pdf and http://www.dog.dnr.state.ak.us/oil/products/publications/

beaufortsea/bsaw2004/BS_2004Mits.pdf.

8 At the North Slope of Alaska there are negotiations between the Natives, their Alaskan

Eskimo Whaling Commission (AEWC) and the companies about a ‘Good Neighbor

Policy’.

9 In Nigeria, local people in situations of poverty, resignation and hopelessness have

used sabotage and other illegal means to acquire benefits from oil resources.

10 An example of this is Shell Foundation’s social entrepreneurship that was launched

in June 2000 (UK-registered charity with an endowment of US$250 million). This

foundation is part of the Shell Group commitment to long-term sustainable development.

It emerged from external stakeholder engagement combined with a review of social

investment across the group carried out in the 1990s. Given the Shell Foundation’s

mission to be a catalyst for partnerships that deliver sustainable solutions to those

social and environmental challenges in which the energy industry and multinational

corporations have a particular role and responsibility, two core programmes were

developed. The first was a Sustainable Energy Programme to tackle the social

and environmental issues associated with energy production and consumption both

globally and locally (access to modern energy service; household energy and health;

sustainable transport and biodiversity). The second was a Sustainable Communities

Programme to address the problems and challenges faced by vulnerable communities

in the process of globalization. This programme comprised two main goals. The first

goal was to maximize market access and supply-chain opportunities by assisting local,

community-linked enterprises to produce and supply goods, services and inputs for sale

or purchase by or through larger enterprises nationally and internationally. The second

goal was to develop local markets and supply chains by piloting innovative ways for

small and medium enterprises, NGOs and others to work with established, larger-scale

enterprises, including transnational companies, to stimulate local markets and develop

products, supply chains and distribution systems. The Shell Foundation does not

provide funding to operating units within the Shell Group to address local issues related

to operations or to mitigate negative impacts. This type of investment falls under social

impact management. Similarly, the Shell Foundation is not involved in philanthropy.

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380 A. Mikkelsen, R. D. Camp II and R. E. Anderson

Index

Aboriginal Pipeline Group (APG),

181–86, 194

Agenda 21, 15, 17, 22, 24, 64, 85

Alaska

Alpine Bay, 2, 129, 140, 148, 151, 153,

155, 158, 165, 170

Coastal Zone Management Act in, 145

Constitution, 147

economy of, 141

government in, 117

indigenous peoples’ rights in, 129

(see also indigenous peoples: legal

rights of)

leasing and permitting in, 144

National Petroleum Reserve–Alaska

(NPR-A), 140, 145, 155, 160–61,

368

natural resource ownership in, 121

North Slope (see North Slope of Alaska)

North Slope Borough (NSB), 117, 144,

154–57, 163–65, 170

Permanent Fund, 147, 157

planning and zoning in, 145–46

property rights in, 121, 143, 294, 321

(see also Alaska Native Claims

Settlement Act; indigenous

peoples: legal rights of)

revenues, 147–48, 148

Treaty of Cession (1867), 128

Alaska Coalition, 150–51, 165, 168

Alaska Eskimo Whaling Commission

(AEWC), 142, 150, 154, 163–64, 378

(see also whaling)

Alaska National Interest Lands Conservation

Act (ANILCA), 129, 143, 163

Alaska Native Claims Settlement Act

(ANCSA, 1971), 121, 123, 128–29,

133, 135, 141–44, 148–49, 157–58,

339

Alaska Permanent Fund, 147, 157

Alberta, 8, 175, 181, 188, 327

Alberta tar sands, 181

alcohol and drug abuse, 140, 152, 159,

188, 191, 322

Aleut International Association (AIA), 40

Alpine Bay, 2, 129, 140, 148, 151, 153,

155, 158, 165, 170

Alpine Satellite Development Plan, 153, 158

American Convention on Human Rights,

306

American Declaration on the Rights and

Duties of Man, 292, 306

Antarctica, 50–51, 54, 235

Arctic

cooperative agreements, 94 (see also

specific agreement)

economy, 32, 319

environmental characteristics, 47, 51,

209–12

ice sheet, 45–46, 50–54, 52

income, 319

oil reserves, 2, 3, 227

petroleum industry in, 88, 88, 351

petroleum production in, 319

regulatory framework for, 89–95

sustainable development in, 25–30

warming of, 50–53, 194

(See also Canada; Norway; Russia;

United States)

Arctic Athabaskan Council (AAC),

30, 40

Arctic Climate Impact Assessment

(ACIA), 32–33, 38, 331, 344

Arctic Council

Arctic Oil & Gas Guidelines (Arctic

Council), 79

chairmanship, 1, 15, 344

climate change and, 326

(Figures in bold, tables in italics)

Arctic Council (Continued)

Framework Document (Chapeau) for

the Sustainable Development

Program (Arctic Council), 28

history, 1, 27

Policy Document, 33–34

petroleum exploration and production

and, 341

Sustainable Development Action Plan

(SDAP), 28–29

sustainable development and, 4, 15

Working Group on Sustainable

Development (WGSD) of,

15, 28

Arctic Environmental Protection Strategy

(AEPS), 25–27, 325, 333

Arctic Flora and Fauna: Conservation and

Status (CAFF), 36, 333

Arctic Gas consortium, 173, 177

Arctic Human Development Report

(AHDR), 25, 29–30, 87, 318–22

Arctic Institute of North America, 282

Arctic Monitoring and Assessment

Program (AMAP), 26, 30, 35–36

Arctic National Petroleum Reserve, 140,

145, 148, 166, 368

Arctic National Wildlife Refuge (ANWR),

140, 143, 155, 161, 165–68, 334,

342–43

Arctic Slope Regional Corporation (ASRC),

129, 144, 148, 150–51, 158,

Assessment of Oil and Gas Activities in the

Arctic (AMAP), 38

Awas Tingni case, 306–7

Barents Sea

environmental organizations and, 210

fisheries in, 283

foreign policies and, 228–30

geography, 207, 209

ice cover, 279

integrated management plan for, 208

management of, 343

petroleum activities in, 207–8,

215, 279

Beaufort Sea, 8, 153, 163, 174–76, 188

Bellona, 210, 213, 215, 221, 282

bioacoustics, 154

biodiversity, 1, 4, 22, 29, 35–36, 97, 210,

283, 326, 330, 333–35

bribes, 374

British Petroleum Ltd., 211, 247–49

Brundtland Commission, 6, 16, 18, 19, 58,

64–65, 75, 343

business

community-based intermediary

organizations and, 376–77

corporate social responsibility and (see

corporate social responsibility)

developmental activities of, 74

economic paradigm and, 353

economic responsibilities of, 70–72, 76

ethical paradigm and, 353–54

global economy and, 88

government and, 362

institutional capacity building, 72,

74–75, 76

institutional (public) responsibilities of,

70, 72–76, 76

issue management by, 370

negotiations with indigenous peoples

by, 375–77

philanthropy by, 164, 368

rectification paradigm and, 353

societal responsibilities of, 76, 352–53,

372

support centers, 190

sustainable development and, 74

Calgary, University of, 282

Canada

Calder decision and, 123, 176–77

emissions by, 329

co-management boards in, 124

federal government in, 113–15

indigenous peoples’ rights in, 123–25,

124, 173, 187, 292

Kyoto Protocol and, 327

local government in, 116

National Energy Board (NEB), 184

natural resource ownership in, 120,

184–87

in Nunavik, 2

in Nunavut (see Nunavut)

property rights in, 120, 124, 177–78,

184–87, 294, 339, 363

provincial authority and rights in, 115

territories of, 116 (see also Northwest

Territories; Nunavut; Yukon

transfer payments in, 124

Treaty 8 in, 123, 179

Treaty 11 in, 123, 179

Canada Petroleum Resources Act (Canada,

1985), 117, 121

Canadian Arctic Resources Committee,

192–94

Canadian Association of Petroleum

Producers (CAPP), 185

382 Index

Canadian Wildlife Federation, 193

carbon dioxide

atmospheric, 45, 47–50, 50, 53

emissions, 329, 344

geological reservoir for, 48

in soil, 48

tax of Norway, 205

vegetation content of, 48–49

Carbon Sequestration Leadership Forum

(CSLF), 34

cash economy, 8, 142, 150, 157–60, 165

Circumpolar Biodiversity Monitoring

Program (CBMP), 37. (See also

biodiversity)

Circumpolar Protected Areas Network

(CPAN), 333

climate change

assessment, 29, 45

corporate social responsibility and, 80

definition, 22

evidence for, 47, 51, 193, 215, 329

(see also ice sheet)

fossil fuel consumption and, 33

global warming and, 6, 46–48, 51–53,

151, 261, 331, 334

governmental responses to, 326–28,

344

human health and, 46

indigenous peoples and, 193, 281, 321,

360

land clearing and, 33

modeling, 45, 52

petroleum industry and, 32–34, 39, 93,

214, 326, 330–31, 344

sea level, 45, 47, 50–54

sustainable development and, 343

Climate and Environment Changes in the

Arctic (CECA), 51

Community-based intermediary

organizations (CBIOs), 376–77

Conflict Avoidance Agreements (CAA),

163–64. See also Good Neighbor

Policies

ConocoPhillips Oil Company, 129, 155,

163–64, 181, 249

Conservation of Arctic Flora and Fauna

(CAFF), 26, 36–37, 333, 335

Convention on Biological Diversity

(CBD), 23, 332

Convention Concerning Indigenous and

Tribal Peoples in Independent

Countries. See International Labour

Organization Convention 169 on

Indigenous and Tribal Peoples

Convention on the Elimination of All

Forms of Racial Discrimination

(CERD), 299

corals, 45–46, 210

corporate social responsibility (CSR)

business forces and, 68

business responsibility in, 60–61, 60,

70-77, 311–12, 352–53, 354, 355

capitalism and, 68–69, 77

classical approach to, 59, 60, 70–71,

352, 355, 363, 363, 365

climate change and, 80

corporate/community partnerships and,

374–77

corporate managers and, 67

definition of, 57–58, 62

development issues and, 62

ethical and moral basis for, 366

governance model for, 67, 69

governmental regulation and, 65–66

history of, 59, 66–67

institutional capacity building and, 72,

74–75

institutional transformation and, 5

management and, 364–78

social activist approach to, 60, 60,

62–63, 70, 352–53, 355, 363

social demanding approach to, 60, 60,

352, 355, 363, 365

stakeholder approach to, 59, 352–53,

355, 363, 365, 367–70, 373

sustainable development and, 5, 64–70,

80, 351–55, 355, 366–67

transparency in, 374