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Arctic Social and Environmental Responsibility

Challenges and opportunities for northern resource extraction.

The Arctic resource rush is on! Or so many are hoping, with plenty of others opposing.

Source: Ilan Kelman
The Melkøya liquefied natural gas (LNG) facility in Hammerfest, northern Norway.
Source: Ilan Kelman

Anticipating easier access to the northern latitudes due to human-caused climate change and technological advances, shipping and resource extraction companies are lining up to see where profits might be grabbed. They also have suppliers and service contractors, alongside local sectors seeking benefits from an influx of commercial activities.

What does all this mean for the peoples and environments of the Arctic? In a world pushing for “green recovery” from the COVID-19 pandemic, how responsible is it to be greedily eyeing even more from nature?

Ongoing initiatives seek to understand perceptions of and actions regarding social and environmental responsibility around the Arctic. They offer input into determining how to balance extractive human activity with the north’s social and environmental conditions.

On January 1, 2017, the “International Code for Ships Operating in Polar Waters,” known as the “Polar Code,” from the United Nations’ International Maritime Organization entered into force. It is law for ships in Arctic and Antarctic waters, covering design, building, operations, safety, dealing with the environment, and much more.

Banning heavy fuel oil (HFO) in the polar regions remains on track. Transporting and using it was prohibited in the Antarctic in 2011. A similar ban has moved forward for the Arctic, starting in 2024 with exceptions until 2029. HFO is already banned around the Norwegian Arctic territory of Svalbard.

Slow progress, but steady. Coupled with a continued desire for Arctic resources.

Battles over petroleum exploration and extraction have rarely paused for Alaska’s Arctic National Wildlife Refuge (ANWR), Norway’s Lofoten archipelago, or the Barents Sea. Earlier this month in Russia, Norilsk Nickel agreed to pay a $2 billion fine following an Arctic diesel oil spill in May 2020. Despite the size of the penalty, the company’s 2020 net profits reportedly dropped only 39%, showing how profitable resource extraction is.

To determine what more could be done, a consortium of researchers developed and just published an “Arctic Environmental Responsibility Index.” Ten authors from across three continents applied a novel method to investigate expert rankings of companies involved in Arctic resource extraction.

They identified 120 petroleum and mining companies working north of the Arctic Circle in the seven countries with territory in this area. 173 selected experts (40% women and 60% men) from 17 countries indicated their views of the companies’ Arctic environmental responsibility, the data from which were developed into an index. The respondents were dominated by academics, but covered many other sectors as well as residents of locations affected by extraction operations.

Four main patterns emerged. First, companies working in Alaska came out on top on average, while those operating in Russia were lowest. Second, larger companies did better than smaller companies, although the definition of size is not clear.

Third, private companies generally did not rank as high as those controlled by a state. Finally, companies focusing on oil and gas tended to be perceived as being more environmentally responsible than those involved in mining.

These rankings provide a baseline for perceptions of company performance, to help future tracking. Sudden shifts—such as a nearly catastrophic fire at Norway’s Melkøya liquefied natural gas (LNG) facility in September 2020 or oil’s brief dip into negative prices in April 2020—can alter the perceptions and performance of companies.

Social and environmental changes in the Arctic are swift, with no signs of slowdown for decades yet to come. Numerous unknowns and uncertainties remain, meaning that everyone in the Arctic must plan for many scenarios as part of being socially and environmentally responsible.

The storm and wave regimes across an ice-free Arctic Ocean remain to be fully understood. Melting permafrost is already destabilising existing infrastructure and creates challenges for building new facilities. If methane reservoirs release, what are local impacts on peoples, ecosystems, settlements, and commercial operations?

Rapid changes could trigger landslides underwater and on slopes. One of the largest underwater slides yet known around the world occurred around 8,000 years ago in the North Sea. The Storegga Slide destroyed coastlines around Scotland and Norway, with impacts likely being felt far into the Arctic.

One of the highest recorded tsunamis, likely over 100 metres tall near its landslide origin, hit Greenland in June 2017. Washing down the coast, several people were killed by much smaller waves.

Are companies ready and willing to deal with these types and levels of Arctic hazards? With the Antarctic currently off-limits for resource exploration and extraction, will Arctic problems discourage further polar endeavours or encourage a move south, due to the huge differences between the poles?

Arctic social and environmental responsibility is far from new. Many of the difficulties being considered—and, even worse, not being considered—show how so many perceptions and actions are far behind the reality. Especially the reality of Arctic residents who must live with the impacts of others rushing for the “gold” on their territory and with the consequences of any mistakes made.

References

Kelman, I. (ed.). 2017. Arcticness: Power and Voice from the North. UCL Press, London, U.K.

Kelman, I., J.S.P. Loe, E.W. Rowe, E. Wilson, N. Poussenkova, E. Nikitina, and D.B. Fjærtoft. 2016. “Local perceptions of corporate social responsibility for Arctic petroleum in the Barents region.” Arctic Review on Law and Politics, vol. 7, no. 2, pp. 152-178.

Overland, I., A. Bourmistrov, B. Dale, S. Irlbacher-Fox, J. Juraev, E. Podgaiskii, F. Stammler, S. Tsani, R. Vakulchuk, and E.C. Wilson. 2021. The Arctic Environmental Responsibility Index: A method to rank heterogenous extractive industry companies for governance purposes. Business Strategy and the Environment, forthcoming.

Sellheim, N., Y.V. Zaika, and I. Kelman (eds.). 2019. Arctic Triumph: Northern Innovation and Persistence. Springer, Basel, Switzerland.

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