Grassroots Environmental Governance

Community engagements with industry

Leah Horowitz, Michael Watts, Leah Horowitz, Michael Watts, Leah S. Horowitz, Michael J. Watts

• Publisher: Routledge
• Year: 2016
• ISBN:
  9781317303060
• Edition: 1
• Topic: Economics
• Subtopic: Sustainable Development
• Index: Economics

Grassroots movements can pose serious challenges to both governments and corporations. However, grassroots actors possess a variety of motivations, and their visions of development may evolve in complex ways. Meanwhile, their relative powerlessness obliges them to forge an array of shifting alliances and to devise a range of adaptive strategies.

Grassroots Environmental Governance presents a compilation of in-depth ethnographic case studies, based on original research. Each of the chapters focuses specifically on grassroots engagements with the agents of various forms of industrial development. The book is geographically diverse, including analyses of groups based in both the global North and South, and represents a range of disciplinary perspectives. This allows the collection to explore themes that cross-cut specific localities and disciplinary boundaries, and thus to generate important theoretical insights into the complexities of grassroots engagements with industry.

This volume will be of great interest to scholars of environmental activism, environmental governance, and environmental studies in general.

1
Introduction

Engaging with industry and governing the environment from the grassroots

Leah S. Horowitz and Michael J. Watts

The governance of industrial expansion

Industry provides us with the products upon which we have grown to rely and which we take for granted as necessary for survival, yet it pollutes our air, water, and soil, contributes significantly to climate change, causes biodiversity loss, and leads to the exploitation of workers. Economic growth, fuelled by the productivity increases associated with the rise of industrial manufacturing since the eighteenth century, has however been seen as both the source of and the solution to modernity’s devastating ecological footprint as cleaner, more efficient technologies emerge, environmental regulations increase, and more highly-educated populations gain greater environmental awareness. The famous Environmental Kuznets Curve, an inverse U-shaped arc, depicts the rise, peak, and fall of environmental degradation as a modern society increases its regulatory capacity and the self-reflexive knowledge and expertise to pursue, as Ulrich Beck calls it, “ecological modernization”. But the Kutznets Curve masks the fact that wealth is correlated with ever-increasing consumption, and that domestic regulations are no indicators of the environmental impacts of imported products (Atıl Aşıcı and Acar 2016). In other words, wealthier countries simply allow poorer nations to engage in the dirty industries to which their own citizens no longer wish to be exposed. The export of environmental and social harms, such as pollution and resource depletion, associated with industrial expansion, represents a type of “spatial fix” (Harvey 1982) in which global inequities are the twin of “pollution havens” (Rauscher 2005), the repositories of exported toxic electronic waste and other detritus from the global North. Industrial wastes, in turn, result from capitalism’s “treadmill of production” (Schnaiberg 1980), the constant and inevitable drive toward overproduction and overconsumption as companies continually seek new markets simply to survive. The global division of labor regarding industrial waste is of course replicated within the advanced industrial states: polluting industries preferentially locate their facilities in neighborhoods that lack the economic and political clout that would afford them support from decision-makers within national or local governments. These are usually poor communities, and often comprised of people of color (Mohai, Pellow, and Roberts 2009). Environmental injustice, in short, is multi-scalar.

As economic operations increasingly compete in a global arena, governments lose much incentive or indeed ability to regulate corporations, which simply regime-shop for the most favorable regulatory environment. This pressures governments into a neoliberal “race to the bottom,” a competition to attract industry and the jobs and tax revenue it represents, not to mention campaign donations and other financial support for politicians, by loosening environmental standards. Fearing businesses’ emigration, states shift from a position of regulator toward a position of “facilitator” or “enabler” of firms’ own self-regulation (Gouldson and Bebbington 2007), effectively “subcontracting” regulatory responsibilities to the corporations themselves (Ayres and Braithwaite 1992, 103). Simultaneously, “socially responsible” investors have begun to screen, and pressure, potential funding recipients. For instance, in 1998 the International Finance Corporation adopted “Environmental and Social Safeguard Policies” directed at clients, and in 2001 the Financial Times Stock Exchange created an index, FTSE4Good, which listed companies that met criteria for environmental and social performance.

Corporations, meanwhile, have embraced the opportunity to demonstrate self-regulation, as a means of pre-empting formal regulation through voluntary codes of conduct. These efforts have translated into a discourse and practice of Corporate Social Responsibility (CSR), the idea that businesses should protect, or even benefit, local communities and ecosystems. The notion that businesses have moral duties can be traced back to nineteenth century debates about industry’s social role (Sadler 2004), but CSR fully emerged in the early 1980s (Hilson 2012). CSR can be seen as a type of “roll-out neoliberalism” (Peck and Tickell 2002), part of a wider movement consisting of reforms designed to address the social and environmental harms that had resulted from “roll-back neoliberalism,” which had exclusively aimed to free markets from regulation. However, this move toward CSR stemmed not from altruism but from the profit motive, as corporations had identified a “business case” for being a good “corporate citizen” (Zadek 2001): The costs of ignoring community demands had begun to outweigh the costs of addressing them, as openly admitted by industry representatives (Humphreys 2000).

Clearly, governments and corporations are not the only entities governing corporate practices. Extra-governmental organizations, groups, and individuals play a growing role in influencing decision-making processes, particularly regarding environmental concerns, as recognized by a burgeoning scholarship of environmental governance (Reed and Bruyneel 2010). In response, industry – like neoliberalization (Springer 2011), or capitalism itself (Gibson-Graham 2006 (1996)) – seeks to create a context that can support and enable its operations. This context is not only political and economic, in the form of a favorable regulatory environment and bailouts on an as-needed basis (a continual process of “rescheduling the crisis” [Harvey 1989]), but also social. Companies need to show that they have obtained a “social license to operate,” a “critical mass of public consent” for their operation – or at least the appearance thereof, in the eyes of governments, activists, and funding bodies (Owen and Kemp 2013, 31). In the process, CSR must adapt to local circumstances, articulating in each instance with local politico-economic conditions, as well as with cultural ideologies and practices (Horowitz 2015). One means of demonstrating this “social license” is the Impact and Benefit Agreement (IBA), a company-community contract that may include sponsoring community activities, providing local jobs, ensuring environmental safeguards and/or making efforts to preserve cultural heritage (O’Faircheallaigh 2012). However, these attempts to win hearts and minds may stand in lieu of more far-reaching changes to environmentally damaging industrial processes. Furthermore, corporations are keenly aware of the socio-economic context in which they operate. They will expend less effort in communities that possess less political influence (Pellow and Brulle 2005; Gouldson 2006), and where possible may manipulate or intimidate vulnerable communities into putatively accepting the project in spite of its environmental and social harms (Calvano 2008), often in exchange for desperately needed jobs (Auyero and Swistun 2009).

In what has become a “risk society” (Beck 1992), publics increasingly mistrust governments’ and corporations’ ability or willingness to protect citizens from industrial risks. They may feel the need to take matters into their own hands through processes of “informal regulation” (Pargal and Wheeler 1996, 1315) – social pressure, threats to corporations’ reputations (increasingly important in a globalized world), and even the threat or use of violence. The emergence of “multi-stakeholder initiatives” is precisely an index of how civic groups, governments and capitalist enterprises have been drawn together into complex new configurations, typically promoted as the sorts of governance mechanisms required by the globalization of capital (see Burca et al. 2014; Carothers and Brechenmacher 2014).

Grassroots and the rise of multi-stakeholder initiatives: the case of the extractives sector

When viewed from the perspective of globalization and the new forms of environmental governance, the extractives sector is an especially rich and compelling domain to explore how local grassroots organizations are drawn into multi-stakeholder initiatives. What is especially striking is the degree to which not just the oil and gas industry but the entire extractive and minerals industry has become one of, if not the most significant sector in which both voluntary and mandatory governance structures have been promoted by intentional interventions over the last three decades. A five-hundred-page book like Blood Oil authored by legal theorist Leif Wenar and published in 2015 – devoted to anti-corruption laws, voluntary transparency institutions, resource validation and certification systems, commercial and multilateral embargoes and sanctions, and direct revenue distribution mechanisms in the global extractive industries – is a striking example of the density, complexity and multi-scalar character of contemporary governance mechanisms that inhere in the oil complex. The fact that a moniker such as “blood diamonds” or “blood oil” now has such worldwide currency – supported now by a considerable array of national and international NGOs devoted to extractives, and bolstered by global business modalities such as the UN Global Compact – confirms the fact that from the late 1990s a new set of global norms have arisen around oil and gas, minerals, and natural resources. Far from being exclusively or primarily addressing extractive regimes, the rise of these transnational multi-stakeholder initiatives (MSIs) – voluntary partnerships between government, civil society and the private sector – points to an increasingly prevalent strategy for promoting governmental and corporate responsiveness and accountability to citizens (Brockmeyer and Fox 2015). While most MSIs involve voluntary social and environmental standards – the proliferation of Corporate Social Responsibility programs for global companies is a parallel development – a handful of global instruments, like EITI (the Extractive Industries Transparency Initiative) in the extractives sector but also entities like COST (the Construction Sector Transparency Initiative) and GIFT (the Global Initiative on Fiscal Transparency) focus on information disclosure, public governance and participation in the public sector. How then do we account for the rise of a new international transparency norm now widely espoused by the world’s largest mining and oil corporations, governments and international financial and aid institutions alike and how do civil society and grassroots organizations participate? This question is especially interesting insofar as it arose at a time when resource commodity prices were booming, capital flows deepening and the prevailing ideological ethos was unsympathetic to the very idea of regulation.

The emergence of this norm in the global oil and gas industry is particularly puzzling for several reasons (see Gillies’s 2010 excellent account). First, the industry is vast and institutionally complex. Disclosure and transparency would logically encompass everything from revenue flows (payments from companies to governments, communities, civic organizations as well as flows between government entities such as tax entities and sub-national states and local governments), revenue management (investment strategies, windfall accounts, oil savings funds), revenue expenditures (budgetary processes, sub-national revenue formulae, contracting), and industry operations (from bid round criteria to contracts to production and reserve data to legal, regulatory and operating structures). The regulatory terrain capable of taking on the oil complex is potentially vast. Second, the period in which these norms arose was one, generally speaking, of buoyant oil prices in which oil states enjoyed leverage and power, as did the petro-elites who benefitted from increased oil revenues. The post 9/11 US strategy to diversify supply stimulated the expansion of a number of oil-suppliers in West Africa, the Caucasus and elsewhere, many of which were hardly models of probity and good governance. Third, transparency and disclosure is advocated as a means to enhance government accountability among a class of resource-dependent producers – “petro-states” – which are customarily seen not just as exemplars of poor governance, systemic state deficits and endemic corruption, but the toughest and most demanding of political environments in which any reform effort might be prosecuted: they are limit cases and exceptionally hard nuts to crack. Furthermore, all of the classic traits of the resource curse would logically increase the political costs associated with adopting a new transparency norm. Fourth, political analysts (see Gillies 2010) suggest that international norms arise when they are likely to prevent bodily harm and protect personal liberties or protect vulnerable groups. A norm devoted to budgets, disclosure and auditing is therefore not intuitively plausible, or at the very least would demand the difficult task of linking, say, transparency to protection. Indeed a norm purporting to link transparency to development outcomes such as education or health indices would have to identify both causal mechanisms and a set of indicators deployed for prescriptive purposes. And not least, the world of “Big Oil” has, for almost all of its history, been viewed with deep popular suspicion, has operated often with high degrees of secrecy, is a highly “securitized” industry in which local and international security forces protect its assets, and in its operations in the Global South has for the most part been able to operate, in virtue of its technological capability and corporate and political power, with impunity. The same might be said of the national oil companies (NOCs), many of which through joint ventures with international oil companies (IOCs) have emerged as powerful players. Which is to say, why might large, powerful IOCs and NOCs voluntarily sign up to become more transparent and in theory more accountable in view of the sorts of exclusive political settlements constructed in and around petro-states?

If norms are typically seen to arise through a process of “grafting” (building upon and benefitting from their adjacency to more established norms), and to “norm entrepreneurs” who advocate for and are capable of assembling coalitions (and ultimately signatories) to a set of institutional arrangements (Gillies 2010), then how might one explain the emergence (and widespread adoption) of a transparency norm in the oil and gas industry, and the emergence of its institutionalized form as the global EITI in 2003? And how might we account for a certain sort of rapid success? In a little over ten years, 48 countries had become signatories (31 certified as compliant) supported by 88 major oil and gas and mining companies and in 35 countries disclosure audits had occurred for 1.2 trillion dollars in government revenues. And not least, how and in what ways has the norm spawned a massive institutional proliferation – in effect a dense global network of institutions and organizations – which now populate the extractives sector as part of what one might call the “multi-stakeholder initiatives universe”?

The founding moment – the critical juncture – of the transparency norm, and what came to be EITI, was the decade of the 1990s. A confluence of forces and trends proved to be crucial and all linked in complex ways to globalization. First, the global extractive industries – over four billion people reside in what are termed “extractive economies” – became an object of academic and policy scrutiny operating under the moniker of the “resource curse”. A body of research dating back to the 1980s (examining the Dutch disease, and the costs of mineral-based boom-and-bust cycles) garnered attention and strength through the work of distinguished economists Richard Auty, Terry Karl, Jeffrey Sachs, Paul Collier and others which linked resource dependency to not only poor economic performance but governance, transparency and accountability failures and the increased likelihood of costly civil war and political violence.

As the resource curse model rapidly entered the world of policy prescription, it met up with two other trends that together comprise the second aspect of the conjuncture. One was a deepening interest among aid agencies in governance as seen through the lens of dominant neoliberal prescriptions in which poor governance and corruption were fetters on market operations. And the other was the mainstreaming of corporate social responsibility (CSR) as a response to the increased scrutiny of corporate activity in which Western consumers (and shareholders) and NGOs were able to pry open the black box of off-shoring, poor working conditions and human rights violations within the global value chains of manufacturing and resourced-based industries. For example, in the United States the National Labor Committee brought sweatshops into the mainstream media in the early 1990s when it exposed the use of sweatshop and child labor to sew clothing for Wal-Mart and the United Students Against Sweatshops became active on college campuses. CSR became a means by which increasingly contested social licenses to operate were to be secured.

In the extractive sector, resources (and oil and gas in particular) have characteristics which brought these issues into the bright light of day: many resources are seen as national assets for development, a priority area for foreign direct investment (FDI), a significant source of state revenues, and carry a large ecological, social and economic footprint. These developments were not unrelated to two other sorts of global norms that gathered steam during the 1990s: one was the link between human rights and development that had been triggered both by growing indigenous rights movements and by the horrors of a number of brut...

Table of contents

• Cover
• Title
• Copyright
• Dedication
• Contents
• List of illustrations
• Contributor biographies
• 1 Introduction: engaging with industry and governing the environment from the grassroots
• PART I Strategies
• PART II Relationships
• PART III Internal dynamics
• PART IV Politics
• Index