Ensuring the proper extraction of resources in the Arctic Ocean requires more than new laws and regulations. It also needs companies to create and abide by their own codes of responsible conduct.
At last year’s Polar Law Symposium in Rovaniemi, Finland, former Yukon Premier Tony Penikett made an observation about governing that has important implications for how we proceed with the exploitation of hydrocarbons and minerals in the Arctic. Penikett said that the hardest thing he had to do as premier, when a problem was presented to him, was to determine the real nature of the problem.
The proper framing of a policy question is crucial if we are to get the answer right, yet when it comes to how we discuss the exploitation of nonrenewable resources in the Arctic, we seem to be influenced by stories and tales over what is problematic in their extraction. One such narrative formed when Russian submarines planted the country’s flag on the seabed of the North Pole in August 2007. News media and some parts of the research community asserted that the starter’s gun had fired for an international scramble for circumpolar resources. According to this storyline, climate change was melting Arctic Ocean sea ice, uncovering vast hydrocarbon riches and triggering competition among the Arctic coastal states to occupy the seabed.
Yet this seemingly logical scenario ignored the reality that all Arctic coastal states, including Russia, have engaged in extensive research over where the outermost boundaries of their continental shelves lie. They have done so on the basis of the Law of the Sea (in particular, the Law of the Sea Convention), which presents a reality that is different from widely held perception.
But surely, many people say, there is a commercial scramble for resources in the Arctic as companies seek to tap into those hydrocarbon riches. According to this line of thinking, the Arctic is the new Wild West, where risk takers are rewarded and there are neither rules nor sheriffs to apply law and secure order. The analogy is seductive. Even the prestigious Foreign Affairs magazine has published a couple of articles describing the Arctic as the Wild West of the 21st century.
But there are plenty of legal rules in the Arctic — perhaps, even, too many. Most of the Arctic and the estimated hydrocarbon deposits lie within the sovereign and maritime jurisdiction of the Arctic states. Their national rules regulate how natural resources can be prospected and exploited. An enormous body of international rules — such as those that protect the environment and human rights and advance the opening of trade — apply in the Arctic.
Furthermore, the Arctic Council, the region’s predominant intergovernmental forum, has grown stronger. It has sponsored two international agreements among the eight Arctic states, one on search and rescue (now in force) and the other on oil-spill preparedness and response (likely to be signed at the next ministerial meeting in May).
So if there is no Wild-West-style scramble for resources between states or companies, what, then, is the real problem?
A few corporate setbacks aside, resource extraction in the Arctic Ocean is proceeding. The plentiful nonrenewable resources of the Arctic are clearly being factored into the calculations of global markets, and campaigns by environmental organizations to prohibit oil exploration and exploitation in the Arctic waters have not found political support among the decision-makers in governments. All the Arctic states (including the Greenlandic Inuit, who have virtual self-government) are about to open their land and sea areas to mining and hydrocarbon exploitation.
Yet even if this prospecting and exploitation is being regulated, it does not mean that the rules in and of themselves will ensure that extractive industries operate responsibly. The real problem is the difficulty of putting these rules into practice in the Arctic due to lack of resources (personnel and equipment) and the vast distances involved.
Laws and treaties alone can wield only so much leverage over how companies operate in such remote regions. The companies themselves must comply with sustainable business practices that respect local communities and the physical environment. It is essential, therefore, that the legal regime be complemented by developing standards of corporate social responsibility (CSR) over Arctic resource exploitation.
Companies usually follow CSR standards in order to maintain a good reputation, now a vital element in running a profitable business. In some cases, CSR standards exceed the standards required by legal systems, as companies develop their own supervision mechanisms and nongovernmental organizations act as watchdogs, holding companies to their promises.
This is not to say that laws do not need to be updated and strengthened. Laws and regulations can be enforced only through judiciaries, and communities or individuals who lack the power and resources of multinationals and governments must have that recourse. But multistate diplomacy that leads to changes in international law takes time to negotiate. Meanwhile, CSR standards have the potential to at least minimize the harmful impacts of nonrenewable resource extraction in the Arctic, and encourage more sustainable development.
As we wrestle with decisions over whether to allow resource extraction in the Arctic and to what degree, we need to use all tools at our disposal to ensure we proceed in a sustainable way. In the coming years, opposition to hydrocarbon extraction in the Arctic will likely become more vocal and more organized. Extractive industries are powerful players in the region, and they are there to stay. Ensuring that development takes place in ways that respect these remote ecosystems and communities will require not just an emerging body of laws and regulations, but also a commitment by companies to a standard of social responsibility that is transparent, acceptable and accountable to all.