Sustainable Energy: Keeping Community in Mind

By Marcela Pinilla
From the Winter 2012 Edition of Values

The magnificence and fragility of the Amazon Rainforest can only be fully grasped by being in it. Coursing through the jungle the Amazon River crosses the borders of Bolivia, Brazil, Colombia, Ecuador, and Peru. The surrounding rainforest is home to more species of plants and animals than any other terrestrial ecosystem in the world. An estimated quarter million indigenous people reside in the Amazon in villages, some in voluntary isolation. Beneath this teeming abundance, rich hydrocarbon deposits have long attracted the energy exploration and production (E&P) companies.

For years, concerned investors and stakeholders have met with energy companies to discuss ways to minimize the human and environmental impacts of energy development in areas such as the Peruvian jungle. Early in October Walden and a dozen ICCR (Interfaith Center on Corporate Responsibility) members led by Boston Common Asset Management and the Church of the Brethren Benefit Trust met with ConocoPhillips to continue a multi-year dialogue that has included the nongovernmental organization Amazon Watch. In 2011 ConocoPhillips updated its human rights position to be consistent with the principles of the International Labour Organization Convention 169 concerning indigenous and tribal peoples, and the United Nations Declaration on the Rights of Indigenous Peoples. In so doing, ConocoPhillips came closer to best practice policy for indigenous rights: free, prior, and informed consent, especially in Peru where the company describes its process as “Free, Prior, and informed engagement and consultation.” It continues to set new standards by seeking to develop social performance indicators for indigenous rights into a comprehensive sustainable development approach to E&P.

The day of the meeting ConocoPhillips announced it would not pursue further oil exploration activities in oil blocks 123 and 129 in Peru. Its press release stated that it “reached this decision as part of the company’s broader strategic effort to re-evaluate [our] investments and asset portfolio.” Although ConocoPhillips asserted that neither environmental nor social factors influenced the decision, the announcement came amidst growing protests by thousands of inhabitants of the city of Iquitos, Peru. The Nanay River Basin is a tributary of the Amazon River that provides drinking water to half a million people living in the city and was also a main ConocoPhillips exploration site in the area.

For now, ConocoPhillips is largely transitioning out of Peru. The company puts forth its experience there as a model for involving local indigenous communities in E&P development. Walden commended the company for its early focus on indigenous groups in what it calls a “bottom-up” consultation process as well as the broad scope of resources including the International Petroleum Industry Environmental Conservation Association, the International Council for Metals and Mining, Global Reporting Initiative, and Equitable Origin.

Whether impelled by a desire to manage reputational risk or by a strategic plan to optimize a company’s portfolio of assets, it is clear that there are growing sustainability challenges ahead for E&Ps in their pursuit of increasingly scarce and more difficult to obtain fossil fuels in sensitive environments. ConocoPhillips’ steps toward better tracking of, and responding to, its social and environmental impacts will benefit the business, the people, and the land it touches.