Activists and Extractive Industries: An Alliance Against Social Development?

WINNING ENTRY IN THE YOUNG SCHOLARS THINK PIECE SERIES, FIRST EDITION: EXTRACTIVE INDUSTRIES

This contribution is published as part of the Young Scholars Think Piece Series which aims to provide promising young researchers with an opportunity to present their research on social development and contribute to the diversity of ideas within the development community. The winning pieces have been selected for their alternative perspectives and the way they highlight marginalized viewpoints and bringing neglected issues to the fore. 

Martin Tengler is a Czech student at Oxford University, reading for an M.Sc. in Global Governance and Diplomacy. In the past, he has worked as an external consultant at the Oxford Institute for Energy Studies,

Activists and extractive industries: An alliance against social development?

Compared to the situation 20 years ago, it is now not unusual for activists from environmental nongovernmental organizations (ENGOs) to work together with multinational corporations (MNCs) in extractive industries. Activists and corporations create joint agreements and standards that seemingly improve the environment and the social development of the area covered by the agreement. Some would say this shows that, even in the presence of an incapable state, social development is possible through the work of ENGOs. This think piece argues otherwise. Putting an equal sign between activists and positive social development is dangerous and creates a risk of government and public complacency, which shifts discursive power toward extractive industry corporations. If extractive industries are to have a positive impact on social development, ENGOs need to work less with or against corporations and more with the state.

The paper first defines the terms extractive industries and social development. It then frames the problem in a discussion of power and its different types, noting that a lack of structural power makes activists dependent on industry funds and a lack of discursive power makes companies dependent on activist support. This leads to a vicious cycle of dependency that only the state can break—although not in all circumstances. Finally, the Canadian Boreal Forest Agreement is discussed as an illustrative example.

Defining the terms

The World Bank defines extractive industries as oil, gas and mining. The European Union adds logging to the mix. Other sources, including the UNDP, provide similar definitions. For the purposes of this paper, then, let us define extractive industries as those industries that extract natural resources, including but not limited to oil, gas, minerals and lumber.

Defining social development is more difficult. However, for the purposes of this paper, which is concerned with the questionable accountability in some areas of environmental governance, the UNRISD definition is most appropriate. UNRISD defines social development as “processes of change that lead to improvements in human well-being, social relations and social institutions, and that are equitable, sustainable, and compatible with principles of democratic governance and social justice” (UNRISD, 2011). This paper will show that ENGO-corporate cooperation is often not aligned with the last two principles of social development—democratic governance and social justice.

Activists, corporations and power

To understand the incentives behind activist-corporate cooperation, a discussion of power is in order. Boström and Hallström, drawing on Barnett and Duvall (2005), define three broad factors of power: institutional, structural and discursive (Boström & Hallström, 2010, pp. 49-54). The institutional factor is concerned with normative arrangements mostly outside of ENGO-corporate relations, but structural and discursive power will form the basis for our discussion.

Structural power refers to an actor’s position in the underlying structure, in this case in global capitalism. Global capitalism necessarily provides corporations with a privileged position in governance because of their superior material and financial resources. There is a significant imbalance in structural power distribution between activists and corporations as corporations normally possess more structural resources.

Discursive power refers to the perceived public legitimacy of an actor’s discourse and the ability of that discourse to shape public debate. The public is generally more likely to favour ENGOs fighting for a cause rather than corporations that extract natural resources for profit. Therefore, ENGOs tend to have stronger discursive power than corporations.

These power imbalances create an unlikely cycle of dependency where, in order to gain discursive legitimacy and marketing opportunities, corporations seek official ENGO approval of their actions by hiring activists for joint partnerships, labeling, environmental consulting and monitoring. ENGOs in turn give companies their approval to gain the structural resources they need to continue engaging in social discourse (Dauvergne & LeBaron, 2014, p. 3). ENGOs gain these resources either directly through corporate sponsorship and presence on corporate boards, or indirectly by gaining wider support from other donors for successfully concluding agreements. Below I argue that this activist vulnerability to corporate interests is dangerous as it undermines the principles of democratic process and social justice in social development.

(Un)Democratic Governance, Transparency and Accountability

The problem with activist-corporate dependency is that the resulting governance arrangements often lack transparency and accountability, have only loose oversight and are inherently undemocratic. This lack of democratic process is at odds with our concept of social development, which emphasizes principles of democratic governance at its core. ENGOs may work in pursuit of what they deem to be the wider public interest, but as unelected organizations they cannot be considered structurally to represent the public interest. Some sceptics claim that activists in fact represent their own interests. I would add that those activists who work with companies on a paid basis also inherently represent the interests of those companies.

In addition to being unelected and thus fundamentally undemocratic, ENGOs often lack transparency and accountability. Many organizations have

"no more than a loose oversight by a board (often composed largely of friends, who are in some cases paid), periodic elections of officers (with low rates of participation and sometimes dubious procedures), occasional general meetings (with sparse attendance), minimalist reports of activities (that few people read) and summary financial records (which often conceal as much as they reveal)." (Scholte, 2011, pp. 230-231)

Scholte recommends concurrent participation by parliaments, judiciaries, official experts and the mass media to improve civil society accountability.

The Case of the Canadian Boreal Forest Agreement

With the above characteristics in mind, let us now consider the Canadian Boreal Forest Agreement, a case academics have so far under-examined. In 2010, a consortium of 21 logging corporations signed the Agreement with nine ENGOs, including Greenpeace and the David Suzuki Foundation. Through the Agreement, the consortium declared 28.4 million hectares of boreal forest¹ to be a protected area where logging would not occur. The reason was to preserve the habitat of the Boreal Caribou that the continuous logging was endangering. Instead, the companies could harvest lumber without interruption in other areas that the environmentalists deemed acceptable.

The problem was, however, that the parties negotiated the agreement in a non-transparent manner, behind closed doors. They failed to consult some important stakeholders, including indigenous peoples whose land also fell under the Agreement. The situation was further aggravated by the fact that the ENGOs that signed the Agreement also agreed to come to the aid of the participating logging companies should anyone try to attack the Agreement.

Avrim Lazar, President and CEO of the Forest Products Association of Canada at the time, summarized this commitment during the 2010 press conference that accompanied the signing of the Agreement:

"One interesting piece of the agreement is, with Greenpeace, David Suzuki, Forest Ethics, Canadian Parks and Wilderness on our side, when someone else comes and tries to bully us, the agreement actually requires that they come and work with us in repelling the attack, and we’ll be able to say ‘fight me, fight my gang.’" (Lazar, 2010)

The Agreement was a win-win situation. MNCs got a boost in their discursive power by having prominent ENGOs backing them up. In turn, ENGOs have gained better visibility, which can lead to improved access to financial resources through increased sponsorship.

Despite the high hopes invested in it, the Agreement proved difficult to enforce. In 2013, Greenpeace and Canopy pulled out of the Agreement, alleging that Resolute Forest Products Inc. broke the deal by logging in one of the Agreement’s protected areas in Ontario and Quebec. The details of the case are still under investigation, but in an attempt to remain part of the Agreement and conserve its hard-won reputation, Resolute has filed a lawsuit against Greenpeace seeking reparations worth seven million Canadian Dollars.

A Regulatory Culture Based on Market Solutions?

Perhaps the most remarkable part of this Agreement was not who took part in it, but who did not. That is, the state stood completely silent as activists and corporate representatives negotiated the Agreement. Such inaction may set a dangerous precedent, as Michael Bloomfield noted in his 2013 paper on ENGO shaming campaigns.² Bloomfield argues that shaming campaigns “run the risk of promoting a regulatory culture based on market solutions” (Bloomfield, 2014, pp. 5-6).

If shaming campaigns run such a risk, then activist-corporate deals such as the Canadian Boreal Forest Agreement run the risk even more. In this sense, the Agreement could set a dangerous precedent where the state sits back while discursive-power-hungry corporations and cash-strapped ENGOs forge shady deals that are inherently undemocratic and do not promote social development. Such government complacency gives extractive industries implicit approval, further transferring discursive power to corporations in their pursuit of natural resource extraction.

Bloomfield further notes that one of the main ways in which market-based initiatives achieve popular support is by not tackling core issues such as overconsumption and inequality. In other words, when all the forest outside of the Agreement has been cut down, the area under the Agreement’s protection will inevitably face the chainsaw as well. The government should make clear what is permissible to cut down and what is not.

The Return of the State Regulator

Given the cyclical nature of ENGO-corporate power relations, a third actor must enter to address this problem of undemocratic decision making. The only actor with democratic credentials and the discursive and structural power to intervene is the state. State representatives should sit in at ENGO-corporate discussion tables and consider how the issues at stake might affect interest groups not present at the negotiating table, as well as the environment. The state should also consider providing enforcement mechanisms of such treaties, making companies liable for breaking their commitments. This would prevent breakups of agreements as was partially the case with the Canadian Boreal Forest Agreement.

The reader might bring up a valid counterargument: there are many countries with governments so dysfunctional that they would certainly not improve, and might even worsen, the situation. Indeed, the above solution relies on the assumption that the government in question is more democratic and more accountable than the ENGOs and corporations it regulates. In other words, government participation would only improve social development in countries with democratically elected and accountable governments, such as Canada. Otherwise shady agreements and bribes might occur, resulting in resource extraction without social development. In such jurisdictions, activist-corporate deals may well remain the best alternative.

In addition, one might ask if deals like the Canadian Boreal Forest Agreement would be necessary at all if the state was regulating effectively. That is indeed true, but no government is one hundred percent effective, no government represents fully all of its subjects, and not all governments are interested in becoming environmental leaders. That is why activists exist in the first place, to keep governments—and corporations—in check. In fact, activists often engage in politics to make the state act. The state needs to understand these signals by monitoring activist-corporate relationships.

Conclusion: Breaking the Cycle

This paper has argued that ENGOs and extractive industry corporations depend on each other for power. ENGOs require structural power, while corporations need discursive power for their continued existence. By providing each other with the required type of power, ENGOs and corporations create a cycle of dependency. Agreements may then result that, although seemingly beneficial to all players, are negotiated behind closed doors in inherently undemocratic ways, benefitting largely only those who signed them. Such deals do not necessarily contribute to social development in the best way, despite their shiny looks.

To break this cycle of dependency, an accountable and democratic government needs to join the process. It should include all stakeholders at the negotiating table and assume responsibility for enforcing the agreement.

The government could also tackle the fundamental problems: overconsumption and sustainability of resources. It could start by monitoring resource extraction and, for example, requiring that every tree cut be replanted. In the case of non-renewable resources, the government should focus on dealing with overconsumption by incentivizing alternative products, recycling and landfill mining.
Finally, governments must cooperate to achieve the best results globally, while preventing corporations from escaping to jurisdictions with laxer environmental standards. This will be a tough task, but one well worth pursuing if we are to escape the corporation-activist dependency cycle.

REFERENCES

Bloomfield, M. J. 2014. Shame campaigns and environmental justice: corporate shaming as activist strategy. Environmental Politics, 23(2):263–281.

Boström, M. & Hallström, K. T., 2010. NGO Power in Global Social and Environmental Standard-Setting. Global Environmental Politics 10(4), pp. 36-59.

Dauvergne, P. & LeBaron, G. 2014. Protest Inc. The Corporatization of Activism. 1 ed. Cambridge, MA: Polity Press.

Scholte, J. A. 2011. Building Global Democracy? Civil Society and Accountable Global Governance. Cambridge: Cambridge University Press.

UNRISD. 2011. Social Development in an Uncertain World. UNRISD Research Agenda 2010-2014. Geneva: UNRISD.

FOOTNOTES

¹ Boreal forest, also known as Taiga, refers to forests from about 50°N to 70°N.

² Bloomfield defines shaming campaigns “as activist campaigns that make strategic use of public shaming – a tactic built upon the notion that when a consumer-facing firm’s brand reputation is linked to unsavoury practices along their supply chains, the firm’s management will be incentivised through economic and social pressure to join activists in condemning these practices.” (Bloomfield, 2014, pp. 2).

ABOUT THE AUTHOR

Martin Tengler is a Czech student at Oxford University, reading for an M.Sc. in Global Governance and Diplomacy. In the past, he has worked as an external consultant at the Oxford Institute for Energy Studies, where he helped edit a paper on the New German Energy Policy. He currently serves as Treasurer of the Oxford Energy Society, a student-led body focused on the study of energy and extractive resources. His master’s thesis compares the effectiveness of the EU Emissions Trading System and a possible carbon tax system in reducing the EU’s overall carbon emissions.