Meet Pacific Rubiales
“Pacific is Colombia” reads a recent marketing campaign by Canadian multinational oil and gas giant, Pacific Rubiales Energy (1). Pacific Rubiales is one of the fastest growing crude oil producers in the world and, for the greater part of the decade, they have been aggressively expanding in Colombia. Their average annual growth rate is an impressive 8.4% and their current market value is estimated at US$6.23 billion as reported by Bloomberg analysts that follow Pacific (2). Their CEO, Ronald Pantin makes around 5 million dollars a year in compensation and benefits (3). As the average annual income in Colombia is approximately US$692, according to figures from the International Labour Organization (4), Pantin’s salary amounts to the income of roughly 7,225 Colombians.
Voluntary Corporate Social Responsibility (CSR) Standards
The extractive sector works tirelessly to assure Canadian citizens that they are sharing their profits with and protecting the rights of local communities. Pacific Rubiales has found that voluntary participation in CSR initiatives is one effective method in which to bolster their reputation for social responsibility. Pacific Rubiales has voluntarily completed a CSR and Sustainability report annually since 2009 and they claim to have invested approximately $37,787,801 in social causes in 2012 alone. Their most coveted accomplishment, as reported in their Sustainability report for 2012, was the creation of the Monitoring Committee for Investment Royalties (MCIR), a program the company initiated to support transparency of royalty spending in local governments in Colombia (5).
In addition, they have voluntarily joined and collaborated with hundreds of international committees and organizations such as, the Extractive Industries Transparency Initiative (EITI), the United Nations Millennium Development Goals and Global Compact Contract (UNGC); the CORDEPAZ in Colombia, the Humanitarian Committee, the Women’s UN, The World Bank, The IFC, Export Development Canada, and the list goes on.
If you're an investor, or interested in purchasing Pacific stock, and you pick up any financial magazine you will get the impression that Pacific is one of the most progressively responsible oil producers in the world. In 2012, Pacific Rubiales was honoured with an award for the Best Oil and Gas producer in CSR for 2012 from Capital Finance International, a London-based business and finance print journal. They also received an award for 'The Most Sustainable Oil and Gas Company in Latin America' from World Finance, another London-based financial magazine that is produced by World News Media. From both Corporación Calidad, a Colombian IT Firm, and RS Magazine, a magazine published by the Centro International de Responsabilidad Social y Sostenible, Pacific received the Colombian National Responsibility award. Finally, Pacific’s most prized accomplishment is the UN Global Compact Award (6).
As far as voluntary standards are concerned, Pacific’s documented social track record has not only helped the company's public image, it has also contributed to their ability to be approved for publicly-funded loans. In 2012, Pacific Rubiales was approved for a supply chain loan from Export Development Canada (EDC) (7). This raised questions and prompted some to ask for further review as a result of labour complaints and protests surrounding Pacific operations in the Meta department in Colombia. EDC commented on Pacific’s application for the loan saying, “... in terms of their social and environmental review directive or the OECD common approaches, corporate loans are generally not subject to review.”
However, as a result of external pressure, EDC elected to conduct a review of Pacific Rubiales regardless. Their preliminary research uncovered that there was in fact evidence supporting these complaints (8). The loan was issued anyway, as a result of Pacific’s voluntary participation in working towards improving the situation. The EDC commented on Pacific’s steps toward progress saying,“... the company added a direct stakeholder engagement model through round table discussions ... We engaged in an extensive dialogue with the company over its perspective on the labour issues, which included collaboration between EDC’s CSR group and internal country risk experts. Looking forward to 2013, one of PRE’s notable CSR goals is to formally adopt the Voluntary Principles on Security and Human Rights. We reached a favourable conclusion on the CSR front for this customer.” (9)
The EDC did not comment on whether Pacific was held accountable for its past actions or not. Given the apparent importance of voluntary principles and main stream evaluation within the industry itself, it is relevant to ask: Who decides these awards, specifically those issued to Pacific? World Finance states on their website that the awards they distribute are determined using a panel made up of “qualified” judges that oversee and decide on the votes presented to them by investors and members of the website (10). These votes weigh heavily on the judge’s decisions, as they are essentially feedback from their customers.
The UN Global Compact Award is another prestigious award that Pacific acquired and it is highlighted in their sustainability report. Yet, the award is not as difficult to obtain as one would think. The award is granted to any voluntary corporate participant that pays their annual commitment fee. In the case of Pacific, that amounted to US$15,000 last year (11). It is awarded in faith of voluntary implementation of international CSR standards and a voluntary commitment to accomplishing the Millennium Development Goals.
Civil Society's Evaluation of Pacific Rubiales
Civil society's opinion of Pacific Rubiales' CSR performance has been much less positive. For example, in July of this year, nine Canadian organizations travelled to Colombia to attend a people’s tribunal against Pacific Rubiales after learning about complaints of poor working conditions and abuses of worker and human rights at PRE's oil fields in Puerto Gaitan, Colombia (12). The company was accused of, “systematic violations of the union right to freedom of association, the militarisation of the oil fields, violation of constitutional rights and practices that go against ethics, collective rights and the environment, non-respect of environmental legislation, profiting off the lack of state control over the taxation of production and causing the deterioration of public resources.” The final verdict of the tribunal found Pacific Rubiales guilty on all counts (13). USO, the national oil workers union in Colombia, also filed an official suit in 2013 against PRE for violations of freedom of association, accusing the company of union-busting and oppressing independent labour organizing (14).
Despite this lack of approval from Colombian and international civil society, this August Pacific Rubiales announced the World Bank and the International Financial Corporation (IFC) as investing partners in their latest expansion project, Pacific Infrastructure. Pacific Rubiales bought 140 million common shares of the company and now owns 30% of the venture and a seat on the board of directors. Pacific Infrastructure is overseeing the development of a new crude oil port and pipe line in Puerto Bahia, Colombia. The IFC and World Bank have invested US$ 150 million towards their further expansion (15).
From Corporate Social Responsibility to Corporate Social Accountability
The case of Pacific Rubiales in Colombia demonstrates that voluntary corporate social responsibility standards are not an effective mechanism to evaluate the actions of extractive companies or to hold them accountable for rights violations. Civil society groups―from social organizations, to indigenous communities, to autonomous unions―are a far better source for understanding how socially-responsible a company is as they come from outside the industry and often experience the impacts of the extractive sector first hand. Institutions like Export Development Canada and World Bank would be wise to prioritize civil society's voice when making decisions involving the extractive sector. Until decision-makers and public institutions take civil society voices seriously, and a legal framework is developed to hold Canadian extractive companies accountable for their actions, voluntary CSR practises will continue to be mere smokes screens, concealing corporate crime instead of bringing it to light.
M'Lisa Colbert is a Political Science student at Concordia University and participant in Community-University Research Exchange (CURE). http://curemontreal.org
2.Bloomberg Business Week
3.Bloomberg Business Week
4.International Labour Organization
5.Pacific Rubiales Sustainability Report 2012, p.146
6.Pacific Rubiales Sustainability Report 2012 , p.146-147
7.Export Development Canada, Colombia Profile
8.Export Development Canada Company Review
9.Export Development Canada Company Review
11.UN Global Compact Award
13. PASC, Popular tribunal verdict
14. PASC, USO Law Suit
15. Your Oil and Gas News
“El País de Pacific Rubiales” El Espectador, accessed August 7 2013, http://www.elespectador.com/opinion/columna-377285-el-pais-de-pacific-ru...
“Pacific Rubiales Energy Corp (PRE: CN) Market Data” Bloomberg Business Week, accessed July 20 2013, http://www.bloomberg.com/quote/PRE:CN
“Executive Profile: Ronald Pantin” Bloomberg Business Week, accessed July 20 2013, http://investing.businessweek.com/research/stocks/people/person.asp?pers...
International Labour Organization, Global Wage Report 2012/13: Wages and Equitable Growth (Geneva: ILO Publications, 2013), accessed August 2 2013, http://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/--publ/doc...
“Pacific Rubiales Sustainability Report 2012” Pacific Rubiales, accessed July 2 2013, http://asp-es.secure-zone.net/v2/index.jsp?id=5663/8953/19045&lng=en
“Profile: Corporate Facility Review, Pacific Rubiales Energy” Export Development Canada, accessed July 12 2013, http://edccsr.lfc.pcomms.ca/publications/2012csr/english/10-4-1.shtml
“Colombia” Export Development Canada, accessed July 2013, http://www.edc.ca/EN/Country-Info/Pages/Colombia.aspx
“Have Your Say: Vote Now in the 2013 World Finance Awards” World Finance, accessed July 12 2013, http://www.worldfinance.com/awards
“How to Participate” United Nations Global Compact, accessed July 17 2013, http://www.unglobalcompact.org/HowToParticipate/Business_Participation/i...
“NGO’s Prepare Ethical Tribunal on Pacific Rubiales” Projet Accompagnement Solidarité Colombie (PASC), accessed August 2 2013, http://www.pasc.ca/en/article/ngos-prepare-ethical-tribunal-pacific-rubi...
“Verdict of the Popular Tribunal On the Extractive Industry Practises in Colombia” Projet Accompagnement Solidarité Colombie (PASC), accessed August 21 2013, http://www.pasc.ca/en/article/verdict-popular-tribunal-extractive-indust...