In certain industries, companies get to affix a special label to their products for adhering to socially and environmentally responsible practices. Coffee has the Fair Trade standard, the electronics industry has Energy Star, and oil has … the Equitable Origin standard?
The oil and gas industry can be pretty irresponsible; even someone with little knowledge of the industry can probably rattle off a handful of major oil disasters (Exxon Valdez, Deepwater Horizon, the Gulf War oil spill, to name a few). True, there are plenty of other major industries with bad reputations--the electronics industry is known for using toxic materials, and the massive agriculture industry has plenty of disasters under its belt. But there’s something inherently irresponsible about an industry that feeds us a toxic greenhouse gas-spewing product--one that is so addictive that we rely on it to power our society even though it comes in limited supply.
Nevertheless, the oil industry isn’t going away anytime soon. We might as well focus on cleaning it up. David Poritz, the 23-year-old founder of Equitable Origin, went to school with the son of the lead lawyer working on a lawsuit accusing Texaco and Chevron of dumping 18 billion gallons of dirty water used in oil production into the Amazon, sickening locals and causing massive environmental damage. Poritz had the chance to work with the lawyer on the case--an opportunity that he says inspired him "to develop a set of stakeholder-based standards" in the industry.
In 2009, Poritz founded Equitable Origin (formerly known as Gaia Certification), a startup attempting to ensure that oil companies in Latin America do right by the communities they work in. Think of it as a Fair Trade certification for the oil and gas industry.
Poritz says that he has worked with indigenous federations as well as companies in Mexico, Ecuador, Colombia, Brazil, and Peru on a process to rate oil companies on their practices throughout the petroleum extraction and production life cycle. The result is the EO100 Standard, a certification that rates companies based on six principles: corporate governance and accountability, human rights and social impact, fair labor, indigenous rights, climate change and environment, and project life-cycle management. Companies that score above a certain minimum level of performance in these areas are granted certification.
Equitable Origin--a company that counts the former president of Conoco Mexico among its board members--doesn’t actually perform audits on oil companies. Instead, it outsources the job to third-party organizations like PriceWaterhouseCoopers. "We facilitated the process to develop the standards, manage the Equitable Origin brand, and sell this to companies," says Poritz. So far, Equitable Origin has facilitated baseline audits for five oil companies. These companies, which were told during the baseline audits what they need to do to get certification, will be audited again in the second quarter of this year.
Poritz believes that there is one big reason why oil companies might be inclined to pursue certification: approval from the locals. "In Ecuador, Colombia, and Peru, there are tons of U.S.- and Canadian-based companies. Their biggest challenge is social license to operate," explains Poritz. "There’s no level of trust from community members. Having socially responsible practices audited enables them to more easily gain access to local stakeholders."
This is, says Poritz, the first certification program of its kind. Amy Mall, a senior policy analyst at the Natural Resources Defense Council, hadn’t heard of Equitable Origin before I mentioned it to her, but she agrees that it’s a worthy concept. "We think that companies can economically improve their practices and reduce environmental impact. Hopefully, they’re setting up standards that companies would be interested in achieving."
According to Poritz, Whole Foods has expressed interest in purchasing Equitable Origin certificates--a carbon offset-like system that allows buyers to put the Equitable Origin logo on products in exchange for purchasing certificates from the company. Certificates are generated by oil production from Equitable Origin-certified oil and gas companies.
There is still plenty of room for expansion in Latin America, but in the future, Poritz hopes to expand into the domestic natural gas industry, where social and environmental violations are commonplace. As in Latin America, concern from local communities might be at least partially assuaged by the presence of an Equitable Origin certification--if the certification program manages to take off. With so many dubious symbols and certifications used on product labels, Poritz will have to work extra hard in the U.S. to gain credibility.