Énergir integrated the ESG (Environmental, Social and Governance) standards into its call for tender documents and it will monitor compliance through transparency requirements, which will apply to Seven. In return for Seven’s adherence to the standards and ongoing demonstration of same, Énergir has agreed to pay a premium above the natural gas market price.5 Having agreed to these conditions and following an audit of its energy development sites, Seven was granted EO100TM certification by Equitable Origin6 and will be required to adhere to a set of principles established through the certification process.
The EO100TMStandard is divided into the following five principles:
- Corporate Governance, Transparency & Business Ethics
- Human Rights,
Social Impacts & Community Development
- Indigenous Peoples’ Rights
Fair Labor& Working Conditions
- Climate Change, Biodiversity & Environment. 7
For all energy projects subject to the EO100TM Standard, the responsibility to meet applicable obligations lies with the project operator ̶ in this instance, Seven.
The Corporate Governance, Transparency & Business Ethics principle pertains to compliance with laws, regulations and legal obligations applicable in the host country.8Among other things, it requires the operator to implement a social and environmental risk management system that includes risk identification, assessment and mitigation.9It further requires that the operator provide stakeholders(suppliers and other interested parties) access to information obtained through the risk management and assessment system.10
Concerning human rights, the operator must implement the Guiding Principles on Business and Human Rights, which
As for the principle relating to Indigenous Peoples’ rights, the EO100TM Standard requires that prior to beginning the project, the operator must consult Indigenous Peoples to get their free and informed consent when the project affects their rights as set out in the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP).14
With respect to labour rights, the operator must abide by the
In respect of climate change, diversity and the environment, the operator must minimize the effects of project activities on the environment and abide by existing environmental obligations. The operator must also remediate prior orphan environmental liabilities related to the project site as well as plan for sufficient financial provisions to cover site remediation costs once the project is completed.16
The principles formulated in the EO100TM Standard are based on a legal corpus of foreign and international references presented in Annex II of the document.17 These references include a number of statutes as well as declaratory documents of a more general nature. An operator’s agreement through contractual incorporation of EO100TM standards to conform to foreign statutes (such as the
This broad incorporation of principles pertaining to corporate governance, social issues and environmental considerations in contractual agreements reflects a developing expectation and willingness by the energy sector to commit to a framework within which ESG principles can be articulated and enforced. We expect to see more of this as energy companies respond to social and political pressure for environmentally and socially responsible resource development and use, and as investors and consumers continue in their efforts to reconcile these principles with continued economic development and activity.
1 Read the article at: https://gowlingwlg.com/en/insights-resources/articles/2020/environmental-social-governance-policies-in-energy/
Read the original article on GowlingWLG.com.
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