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
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
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.
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
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.
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
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
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
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
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
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