photo: NASA/Goddard Space Flight Center/Reto Stöckli

Deepwater Horizon has spelled out in no uncertain terms the risks that extractive companies take with the environment and people's lives on a daily basis, and the impunity with which they are used to doing so.  It is long overdue that this recipe for disaster gets the degree of attention that Deepwater has, and Deepwater is a catastrophe worthy of attention.  But now we need to see the bigger picture.

Systems, not just individuals

The degree of emphasis placed in the senate committee hearings and US press on Tony Hayward's personal responsibility is interesting, and understandable, but I think also cause for concern.  We cannot deny that an individual's actions and choices within a company are key, and need to be examined – we cannot allow individual responsibility to be avoided when things go as badly wrong as they have with Deepwater.  But it is important that we have a broader perspective, and understand that this is bigger than Tony Hayward or the actions of any one person.

US legislators need to understand that Deepwater and BP are only one part of a picture that goes way beyond one man or one company.  US legislators, and their equivalents around the world, need to look at what companies are, and understand that events like Deepwater Horizon are the result of systemic forces and not just individual negligence.  Inadequate regulation of environmental and social risks; regulators that are unwilling or unable to maintain independence from industry; short-termism in markets; disengaged and deferential shareholders; inadequate company law resulting in low quality company reporting; and a legal system that defines the role of company management as purely to secure value for shareholders – all these factors and more lead almost inevitably to events like Deepwater Horizon, where the minimisation of costs has resulted in massive risks being taken with the environment and society’s welfare (and in turn BP's business).

Where we currently stand, a CEO or director must go against the grain of a range of systemic forces in order to take the positive steps that can ensure due regard for environmental protection or societal welfare and rights.  We need to change that picture – and we can't allow a tendency to focus on a single man's faults when something goes wrong to let us lose sight of that.

This is not just about a single 'bad apple', whether BP or Tony Hayward.  While there is strong agreement that BP is now among the least progressive of the major extractive companies, it is far from alone in the damage inflicted by the industry worldwide.

A global perspective

photo: Sosialistisk Ungdom

In the case of Deepwater Horizon, disaster struck a country where the government is strong, the voices of the people are relatively powerful, and the media glare is intense.  But all over the world, governments are not so strong or so willing to challenge the multinationals that provide so much of their revenue streams.

The Niger Delta has been devastated by oil for half a century.  The New York Times reported last week on how the attention and outrage around Deepwater sits with the ongoing situation in the Delta. It is no surprise that the people of the Delta are confused by the western world's response to Deepwater Horizon.  As local official Emman Mbong puts it:

 it’s what’s been happening to us for 50 years

You can read more about the situation in the Niger Delta here, among other places.

The Niger Delta is one of the clearest examples globally of the injustices that accompany a great deal of multinational natural resource extraction.  It is one of many – a few further examples of countless others can be found in Ecuador, West Papua or Orissa, India.  To look beyond these, it's worth exploring the Business & Human Rights website, or Mines and Communities.

People’s lives and environments have been damaged by the extractive industries the world over for many decades, and that will continue unless we see change in the systems that determine companies' actions.

Masters of the universe?

Naomi Klein offered an interesting big picture perspective on Deepwater and what we should draw from it in the UK Guardian newspaper last week:

 If Katrina pulled back the curtain on the reality of racism in America, the BP disaster pulls back the curtain on something far more hidden: how little control even the most ingenious among us have over the awesome, intricately interconnected natural forces with which we so casually meddle...
This Gulf coast crisis is about many things – corruption, deregulation, the addiction to fossil fuels. But underneath it all, it's about this: our culture's excruciatingly dangerous claim to have such complete understanding and command over nature that we can radically manipulate and re-engineer it with minimal risk to the natural systems that sustain us.”

The financial crisis exposed the risks that were taken by the financial sector with instruments in a system that few if any fully understood, and the incredible implications for all when those risks were manifested.  The crisis exposed the very real limits of the financial sector’s supposed omnicompetence, and a systemic failure in the incorporation of risk into decision-making.  Can Deepwater catalyse an understanding that the ‘real economy’ similarly fails to adequately understand and respect the risks in technology and natural systems that few understand, and that as a culture it exhibits a similar absence of humility as to the limits of our understanding and competence?  The scale and interconnectedness of the risks that are being taken with our environment, the lives of many, and indeed the money of company shareholders should at least now be slightly clearer to more people.  But what could lie ahead unless we change the way that we all, including companies, interact with the Earth’s natural systems would dwarf the impacts of Deepwater.

Rethinking the big pictures

We need companies, and particularly extractive companies, to change the way that they think – the way that they think about environmental and social issues, and the way that they think about risk.  This is a cultural change.  But it is one that must be enabled by the law.  Companies are legal constructions – the law creates them and shapes their thought-processes by defining the rights and relationships within and around them.  The law can and must develop those processes in a way that makes the right choice for the environment and society the natural choice for a CEO, director or manager.

One way that this has to happen is a greater understanding that environmental and social issues are business issues - that it is in the self interest of companies and shareholders to ensure strong environmental and social practices that avoid damage to the environment or people’s lives.  Shareholders need to understand that if their company takes risks with the environment or people's lives, they are taking risks with shareholder returns.  You can find out more about what ClientEarth is doing to develop this understanding here.  This is one of many changes that we need to see.

Because we do need change, and change that is real.  The irresponsibility and impunity with which multinationals operate across the globe is a grave and deeply set challenge.  There are many ways in which we can seek to address this.  One of the most fundamental first steps is an understanding among legislators, regulators, investors and the public that Deepwater Horizon is not a one-off - it is one of many, and it is bigger than one man's irresponsibility.  I hope that these events can catalyse the broader consciousness and the subsequent actions in law and practice that are so desperately needed.