Lights, camera, revolution

Despite the fact that protest movements are, by their nature, hard to pin down a year in advance, it is possible to predict to a certain degree what factors will influence the impact they could have on government policies and corporate reputations. Charles de Mornay Davies, WMRC, provides a region-by-region overview of the most significant activism 'hotspots' likely to affect companies in the coming year.

In 2001 the Kyoto Protocol talks in Bonn (COP 6.5) constituted perhaps the single most significant global catalyst for activism. In the first instance, the talks themselves brought protestors to Bonn. This activism was also replicated in local protests, as environmental NGOs and lobbying groups stepped up their campaigns to push for government support of the protocol in individual countries.

The Kyoto talks are scheduled to continue in 2002, with the eighth round of negotiations, COP 8. According to the European Commission, all 15 Member Sataes of the EU aim to ratify by June 2002. This would mean that the Kyoto Protocol could conceivably come into effect in time for the tenth anniversary Earth Summit (Rio+10) in Johannesburg, South Africa, in September 2002.

Green issues will be brought increasingly into the public eye through media coverage of the Rio+10 talks. The arrival of the Bonn talks in 2001 compelled corporations and governments to reveal their stance, either for or against Kyoto. When US President George W. Bush unveiled his controversial energy policy, which rejected the Kyoto process, any US energy company that supported his policy - or directly condemned Kyoto - became a target for environmental campaigners.

Rio+10 is likely to present a similar scenario, magnified by the 10-year run-up to the summit. Companies that expressed even limited support for the Kyoto process, such as BP and Shell, benefited from the positive, free publicity on the back of the talks, as well as the goodwill of environmental NGOs. Rio+10 will present a significant opportunity to energy companies - or a threat to those that do not address the issues that are likely to be broached.

Region by region
President Bush has faced significant obstacles in trying to develop a final draft of energy legislation. It has proved especially difficult to garner sufficient support for a bill that allows exporation for oil and gas in Alaska's Arctic National Wildlife Refuge (ANWR) - probably the most contentious issue facing the energy industry in 2002. If the Democrats, who have so far managed to stall the bill's passage throught the Senate, lose the fight to prevent ANWR drilling and an unscathed bill emerges in 2002, environmentalists may set up shop in Alaska.

The green lobby continues to stress that ANWR drilling will threaten the existence of rare species of animals by damaging their feeding grounds, and disrupting their reproductive cycles and seasonal migratory patterns.

Environmentalists are likely to find substantial support for their campaigns from within Canada, where the Canadian government has made clear its opposition to drilling in the territory. Protests by Canada's indigenous peoples are becoming increasingly vocal.

An 1899 treaty enshrines the right of indigenous peoples to live off the land. As oil and gas development progresses and groups feel increasingly that the treaty is being ignored, incidents involving disruptive protests by these peoples have risen. In British Columbia, protests have brought oil and gas exploration and production activities to a halt.

Oil and gas companies are increasingly seeking to enter into consultation with indigenous groups, as well as provincial governments, in order to try to avert costly delays to projects. Many firms planning to step up activities in regions like British Columbia and the North-West Territories in 2002 will have to cede ownership stakes in oil and gas projects to these groups in order to move ahead.

Latin America
Corporate Social Responsibility is moving up the agenda in Latin America, with state oil companies increasingly accepting their role in protecting the environment. Petrobras, which has been hit by higher insurance premiums and heavy fines following the sinking of the world's largest offshore oil rig in 2001, has learnt to its cost how damaging oil spills can be for public relations.

If 2001 is anything to go by, however, the primary issue that energy firms in Latin America will have to face up to will be indigenous protest over land rights. In Peru, this will be a particular priority as President Alejandro Toledo is of indigenous descent, and upholding indigenous rights was one of his electoral promises.

When the E&P concession for the huge Camisea natural gas field in Peru's Amazon region was held by the Shell-Mobil consortium, it was lauded as a model example of how companies can develop a major project in an environmentally sensitive area, with minimal disruption. the Pluspetrol-led consortium, which plans to start exploratory drilling in Camisea in March 2002, has been encouraged to follow its predecessor's example. The rights of indigenous people is an issue that will always be a factor for investors in the energy sector. Local protests sometimes gain international backing and investors across the region would do as well to keep an eye on how things develop in Peru.

W/C Europe
In Europe, the future of nuclear power has provoked protests across the board, both within parliaments and by individual compaigning organisations. In Central Europe, the issue perhaps most representative of wider protests across the region was the movement opposed to the re-opening of the Czech nuclear power plant in Temelin.

The movement had a strong presence in Germany, Austria, and the Czech Republic. This has overlapped with actions by environmental groups in Germany and Western Europe that have been monitoring nuclear waste shipments that are transported by road and rail to reprocessing centres. The anti-Temelin opposition managed to force German giant, E.on, to drop its contracts with Czech state-owned power producer, CEZ, to export electricity from the Czech Republic. It was also backed by political opposition from the Austrian coalition's far-right Freedom Party, which threatened to use its right of veto to obstruct the Czech Republic's bid to join the EU. In 2002, the Temelin issue is likely to remain a recurrent concern, as its capacity increases and it is included in the privatisation package of CEZ.

Anti-nuclear protests are also likely to be seen across Europe. The nuclear reprocessing plant at Sellafield in the UK will face continued opposition from green groups and the Irish government. In 2002, we can expect to see these protests gathering pace, as litigation proceeds (Greenpeace vs UK Government; Ireland vs UK Government) and as fuel reprocessing transports continue. As they do so the impact on government policy may affect investors across the board, with possible consequences for the Czech Republic's accession to the EU, the UK's commitment to the increased use of nuclear power, and the German Government's stance on nuclear power (having already pledged to phase out nuclear plants).

The main risks for companies in this regard can therefore be split into the direct risks (being caught up in NGO protest campaigns) and indirect risks (derailing investment decisions such as E.on's export contract with CEZ), and more doubts over the nuclear industry in general.

Environmental protest and activism will continue to manifest itself in two characteristic forms in the year ahead. In the wealthier North-East Asian nations, particularly Japan, South Korea and Taiwan, environmental awareness is on the rise. The possibility exists for new scandals and revelations of environmental abuse by companies to emerge.

Past abuses, often taking place with the connivance of local officials, are only now coming to light. Taiwan, in particular, has witnessed serious environmental degradation as a result of two decades of rapid industrialisation. For the first time its politicians are putting credible environmental regulations in place. The nuclear issue is also likely to remain sensitive. With Japan, South Korea and Taiwan so heavily dependent on energy imports, the public remains divided over the issue, and the balance of opinion either for or against is inconclusive.

Looking elsewhere in the region, environmental activism is likely to rise in India and Indonesia, reflecting the strengthening of civil society that is taking place in those countries. Local activism is already on the rise in Indonesia, but will continue to face difficulties from the persistent influence of local-level military officials and bureaucrats. Despite its democratic heritage, local environmental opposition is also a relatively new phenomenon in India.

The Narmada Dam is only the most prominent of many environmental issues in India, where protesters are using modern communications and media to champion their cause in a wider world.

Thailand provides the best example of how environemtnal issues have become more inflammatory, as the power of civil political discourse increases. Thailand has more energy related environmental disputes that any other country in the region. From the Hin Krut and Bo Nok power plants, to the Songkhla gas pipeline, to the Pak Moon Dam, Thailand provides countless examples of local communities successfully delaying and challenging government and foreign investment projects which they feel are not in their best interests. Whilst many of these projects are likely to get the go-ahead in 2002, new issues and controversial projects may come to the surface in their place.

Although environmental activism is not particularly prevalent across Africa, it does play a part in locally-focused protests by community groups. These protests focus on immediate, local concerns such as workers' rights, oil spills and any areas of interaction between companies and local communities. Community groups are becoming increasingly fluent in co-ordinating actions against companies whose actions affect them directly.

In Nigeria in 2001, both Shell and ChevronTexaco ended up in the courts following disputes with local communities. In Nigeria, the degree of sustainble indigenous employment opportunities is often at the root of local community agitation and frustration, and the chances of new legislation to address these concerns are relatively high.

Foreign investors in Africa's energy industry, particularly the petroleum sector, must be prepared to accommodate calls for the active participation of indigenous companies, especially in E&P activities. If legislation emerges in the leading energy exporting countries, emerging exporters are likely to take similar steps. The best preparation on the part of foreign investors would be to have concrete proposals on engaging indigenous firms in operations right from the outset of planning such sovereign investments. New and/or improved legislation or policy on this issue could emerge in Angola, Nigeria, Gabon, or even Equatorial Guinea.

Implications for investors
Even though protests are unpredictable, some factors do emerge concerning the differing environmental movements around the globe. For companies to protect their reputations effectively, or indeed in some cases even carry out their day-to-day operations, consideration for the social and environmental impact of energy projects must form part of any major company's strategy. Looking at the protests across different continents it is also clear that even though environmental movements form an increasingly coherent global network, different regions can be seen to have their own kind of environmental activism with its own specific and recognisable characteristics. Companies with global interests can therefore benefit - or suffer - from the extent to which they are able to address these differing local demands. Where companies do not communicate effectively in an open dialogue with local communities, NGOs and campaigners, the threat of protest remains an unknown quanitity, and thus an additional risk for projects.

With the Rio+10 conference and the Kyoto process coming to a head in 2002, this is clearly a year where companies can benefit from taking a progressive approach to issues of environmental and social responsibility, reaping the rewards of diminished risk from protestors, and positive, free publicity from environmentally-focused media coverage. Instead of thinking in terms of damage limitation and defensive reputation management, by adopting a pro-active, engaged approach to environmental concerns, corporations can take advantage of international interest in energy issues.



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