ISO 14000: Are environmental standards relevant to the oil and gas industry?

By David Vilder.

In a rapidly evolving political landscape of interdependence and lowering of traditional frontiers, new tools for environmental governance keep emerging with both successes and failures. Governments struggle to enact new regulations. They often face strong opposition from the business sector, or the political climate simply isn’t favorable [1]. Government regulation is also very costly, both in terms of political capital and finances. Since the 1980s, New Environmental Policy Instruments (NEPI) have emerged as a results of growing dissatisfaction toward traditional command and control policies [2].

Gulf of Mexico (May 6, 2010) -- Dark clouds of smoke and fire emerge as oil burns during a controlled fire in the Gulf of Mexico. The U.S. Coast Guard working in partnership with BP PLC, local residents, and other federal agencies conducted the "in situ burn" to aid in preventing the spread of oil following the April 20 explosion on Mobile Offshore Drilling Unit Deepwater Horizon. (Source: WikiCommons/U.S. Navy photo by Mass Communication Specialist 2nd Class Justin Stumberg/Released)

Gulf of Mexico (May 6, 2010) — Dark clouds of smoke and fire emerge as oil burns during a controlled fire in the Gulf of Mexico. The U.S. Coast Guard working in partnership with BP PLC, local residents, and other federal agencies conducted the “in situ burn” to aid in preventing the spread of oil following the April 20 explosion on Mobile Offshore Drilling Unit Deepwater Horizon. (Source: WikiCommons/U.S. Navy photo by Mass Communication Specialist 2nd Class Justin Stumberg/Released)

Eco-labels, in particular, have proliferated in the past 20 years. One of the most prominent is the ISO 14 000 family of environmental standards. In brief, ISO 14000 requires a company to assess all aspects of their production and their respective environmental impacts. It also requires an Environmental Management System (EMS), which must include an Emergency Preparedness and Response Plan (EPRP) [3]. Thousands of companies have been certified since the launch of the new standard in 1996, yet one sector remained slow to catch on: the oil and gas industry.

The trend is changing. All major oil and gas companies are moving toward an ISO 14000 certification or have already implemented it (Shell and Total amongst others) [4].   The issue – or the benefits – around eco-labels and such type of NEPI that are market-based is that they are voluntary standards motivated by the market (hence the name market-based!). In other words, there must be a perceived economic advantage for a company to move forward with the often costly certification. Economic advantage, in turn, is the results of both consumer awareness and uptake [2]. When these two elements are combined, an eco-label scheme can become quite successful at protecting the environment while benefiting the company (like the Forest Stewardship Council -FSC- for pulp and paper industry or ISO 14000 in some sectors) [2].

In the oil and gas sector, however, the potential benefits are often hard to grasp. Nobody thinks twice about which gas they put in their cars (except from reward schemes such as Air Miles). The logic behind ‘green’ gas is not the same as for organic tomatoes, yet there is one element of ISO 14000 that can be very beneficial for a company like Enbridge: an EPRP. EPRP can influence directly a company’s long-term operational risk, thereby reassuring investors and potential stakeholders [5]. Other players in the industry have made the move.

Cleaning work after the oil spill of the Exxon Valdez (source: Exxon Valdez Oil Spill Trustee Council)

How many more spills will be required before oil companies implement comprehensive and transparent EPRPs. On image: Cleaning work after the oil spill of the Exxon Valdez (source: Exxon Valdez Oil Spill Trustee Council)

References:

[1] GABRIEL, T., WINES, M., & DAVENPORT, C. (2014, 01 18). Chemical Spill Muddies Picture in a State Waryof Regulations. Retrieved 02 23, 2014, from The New York Times: http://nyti.ms/1eUSePM

[2] Kalfagianni, A., & Pattberg, P. (2013). Fishing in muddy waters: Exploring the conditions for effective governance of fisheries and aquaculture. Marine Policy, 38(1), 124–132.

[3] Willaert, T. (2014, 03 02). Major revision of ISO 14001 coming up: what is new in ISO 14001:2015? Retrieved 03 02, 2014, from DQS-UL CFS GmbH: http://dqs-cfs.com/2014/01/major-revision-of-iso-14001-coming-up-what-is-new-in-iso-140012015/

[4] Spence, D. B. (2011). Corporate Social Responsibility in the Oil and Gas Industry: The Importance of Reputational Risk. Chicago-Kent Law Review, 86(1), 59-85.

[5] The Great Lakes and St. Lawrence Cities Initiative. (2013). Final Oral Arguments Presented to the National Energy Board of Canada. Chicago, IL: The Great Lakes and St. Lawrence Cities Initiative.

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