Profits matter in any industry but prioritizing short-term financial gains at the expense of longer-term considerations – which must also address social and environmental aspects – cannot be an enduring business model. Raising objectives in terms of social and environmental outcomes can contribute both to higher levels of social acceptance and approval, known as a “license to operate”, and to long-term profitability.
Mexico, a world leader in petroleum production, has just concluded a unique experiment to see whether improved social and environmental outcomes can be reconciled with long-term profitability, and surprising results have emerged. Mexico has assessed its petroleum resources using the integrated social, environmental and economic criteria set forth in the United Nations’ Framework Classification for Resources (UNFC), developed at UNECE. By applying UNFC to nineteen hydrocarbon exploration and production blocks in an unprecedented pilot project, Mexico has demonstrated that a comprehensive application of social and environmental criteria can deliver superior outcomes.
The pilot project identified key social risks related to planned projects, helping to address perspectives of local communities – with a particular focus on indigenous peoples – on issues including cultural heritage and land use in rural and urban areas. The social acceptance of hydraulic fracturing projects was another important issue identified.
The key environmental risks identified in the pilot included the loss of natural protected areas, water use, and reduction in biodiversity due to deforestation.
This holistic approach through the application of UNFC will support the more robust incorporation of sustainability criteria within decision making and will facilitate the interaction with other government institutions and stakeholders.
“Often, the current models of driving a cleaner petroleum production, supply and use are reactive to events and do not consider the whole life-cycle comprehensively,” said Alma America Porres Luna, Commissioner, National Hydrocarbons Commission, Mexico. “Because of this fragmented approach, even though social and environmental performance could be improved over short time periods to show immediate benefits, larger challenges including making the benefits more visible to the people remain elusive”.
Governments and facility operators around the world are putting significant effort into improving social acceptance and environmental performance of hydrocarbons projects.
“Using UNFC for petroleum management is not only advantageous for a country in accelerating its socio-economic progress. At a global level, the approach of integrating social, environmental, and economic considerations can significantly improve the overall sustainability of projects” said Scott Foster, Director, UNECE Sustainable Energy Division.
The results of Mexico’s pilot study on the sustainability of hydrocarbon projects in Mexico were presented at the UNECE Resource Management Week 2019, 29 April – 3 May, Palais des Nations, Geneva.
For more information on UNFC visit: https://www.unece.org/energy/se/reserves.html