Equitable Origin: Ethical Trade Certification for Oil and Gas Companies

Ethical trade (often called fair trade) is doing quite well as a market concept these days. As a business model, an ethical certification program that promotes high quality products, good employee rights and respect for the environment can be applied just about anywhere and in any market. Textiles, produce and candy that are grown or manufactured under rigorously enforced certification programs, in general, garner higher prices and a better customer reputation than many non-certified products.

Still, the latest ethical trade concept to turn up on the market may seem at first glance like an oxymoron.

Ethical trading for petroleum products?

Equitable Origin is the world’s first certification program for oil and gas products. According to its website, EO is the brainchild of Rhodes Scholar David Poritz and biologist Manuel Pallares. Its goal is to “catalyze a new, economically viable norm for extractive industries where environmental and biodiversity protection is optimized and local communities benefit socially and economically from production.”

Like other ethical trade programs, Equitable Origin offers a certification system that evaluates the company and its products on metrics and a series of performance targets. Those performance targets are based on six principles embodied in its EO100 Standard: company governance and ethics, human rights, employee working conditions, respect and approach toward indigenous rights, environmental stewardship and climate change, and project life cycle management.

Climate change standard

As with most readers, my curiosity immediately jumped to the standard on climate change. How can a performance system rate an oil and gas company on how it approaches climate change and protecting the environment when the product itself (not to mention the process that extracts it) may be the fundamental contributor to climate change?

As always, the answer is in the questions it asks.

The rating system is geared toward operator responsibility and compliance, and gives reachable goals to guide the company in best management practices. The reasoning is clear: oil and gas production isn’t going away any time soon, so why not teach the industry how to best minimize climate change through spill protection, respecting biodiversity and the ecology and by reducing ozone depleting procedures? It’s a noble approach that’s been needed for some time, and may genuinely help expand environmental protection practices.

Indigenous rights and land ownership

The standard takes the same approach to indigenous rights by encouraging practices that foster respect for cultural traditions and land rights. It sets benchmarks that companies must comply with that show an earnest effort to engage indigenous land owners in finding solutions.

Still, I wonder how this program could go far enough in protecting indigenous rights. The standard provides a clear method for dialogue - which is a valuable step - but it doesn’t rule out the power of the company to have the tribe or family relocated. What happens when the tribe doesn’t want oil exploration on its land?

And will a certification process that makes it easier for oil and gas companies to promote themselves as “sustainable” or “fair trade” actually help us avoid a climate crisis? Or does it simply give those companies a stronger argument for putting off the switch to more renewable energies?

EO’s website is fully developed in English and provides a compelling argument for its services, which is interesting since the company is designed to operate in Colombia and Ecuador (its Spanish-language portal is still under construction). There is also limited information in Spanish on Colombia’s government-run website Colombia.co, which has apparently endorsed the certification company.

For now, at least, EO’s promotion is clearly directed toward English-speaking readers and removing the sense of doubt that many may have about whether an industry whose very product is earmarked by the Intergovernmental Panel on Climate Change as the principal cause of climate change can actually go sustainable.

Images of the Lago Agrio oil field area in Ecuador courtesy of Julien Gomba