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Capturing climate : Tracking nascent transnational business governance interactions around the Oil &… Bach, Matthew 2018-08

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     Transnational Business Governance Interactions Project  Working Paper No. 33 August 2018   Capturing climate:  Tracking nascent transnational business governance interactions around the Oil & Gas Climate Initiative  Matthew Bach  ICLEI  This paper is available free of charge from The TBGI Project: Transnational initiatives to regulate business activities interact increasingly with each other and with official regulation, generating complex governance ensembles. Heterogeneous actors and institutions interact at multiple levels and in various ways, from mimicry and cooperation to competition and conflict. The TBGI Project investigates the forms, drivers, mechanisms, dynamics, outputs and impacts of transnational business governance interactions (TBGI) from diverse theoretical and methodological perspectives. It is led by Stepan Wood, Professor and Canada Research Chair in Law, Society and Sustainability at the Peter A. Allard School of Law, University of British Columbia.  Bach Capturing Climate (2018) TBGI Project Working Paper No. 33  Page 1 TBGI Project Working Paper No. 33  Capturing climate:  Tracking nascent transnational business governance interactions around the Oil & Gas Climate Initiative  Matthew Bach1  Abstract Studies of transnational business governance interactions (TBGI) have tended to focus on sectors with well-established schemes, often taking a retrospective approach. While this affords great possibilities for longitudinal studies, expanding the analytical timeline can also obfuscate the influence of governance schemes’ initial design and interactions on their ability to perform desired regulatory functions and, more widely, ratchet up standards. This chapter explores an attempt by the oil & gas industry to involve itself in climate governance – the Oil & Gas Climate Initiative (OGCI). Composed of ten major companies, its stated goal is to develop strategies consistent with a two-degree future. By pairing the TBGI analytical framework with insights from Braithwaite and Drahos’ (2000) theory of global business regulation, the chapter considers how emergent interactions may shape the ability of the OGCI to influence the governance of climate change. Keywords climate change; governance; TBGI; non-state; oil and gas   “Our shared ambition is for a 2°C future. It is a challenge for the whole of society.  We are committed to playing our part.” OGCI CEO Declaration (OGCI 2015c) 1. A shifting landscape The oil and gas sector has traditionally been reluctant to involve itself in global efforts to address climate change, treating climate change as a risk and hesitating to accept its share of responsibility. Yet over the past several years, this strategy has slowly given way to more active involvement as firms recognize the value of assuming a constructive role in climate governance. Senior managers describe the industry as gradually adopting a more strategic outlook in which climate change is seen as an opportunity – whether in terms of portfolio optimization, neutral or negative emissions technologies, or carbon pricing instruments (Interviews IND-1, IND-2, IND-4).1 This shift can be traced to a number of macro-level changes occurring both within and outside the climate regime (Bach 2017).                                                             1 ICLEI. A revised version of this paper is forthcoming in Stepan Wood et al., eds. Transnational Business Governance Interactions: Empowering Marginalized Actors and Enhancing Regulatory Quality. Cheltenham, UK: Edward Elgar. Bach Capturing Climate (2018) TBGI Project Working Paper No. 33  Page 2 At the international level, states are taking on growing levels of commitment, for instance by agreeing to a two-degree Celsius pathway in Paris. This has effectively created a normative boundary beyond which actors could expose themselves to sanctions. The importance of states has, however, declined as other actors have taken up calls for climate action.  Nor have firms been absent from this bottom-up movement. Some have committed to ambitious emissions reduction strategies, while others have banded together in support of climate change mitigation and adaptation (Chan et al. 2015; GGCA 2015; Pattberg & Widerberg 2016; UNEP 2015). Another development has been increasing support for a low-carbon future, in which energy is primarily generated from renewable sources such as wind, solar and hydro. The mainstreaming of renewable energy technologies as part of what has been called an energy transition makes a low-carbon future a distinct possibility (Verbong & Loorbach 2012; Cherp et al. 2011; DDPP 2015).   The scale of this transition has already prompted an overhaul of corporate strategies. In 2016, German energy firm E.ON finished splitting off its fossil assets (Timperley 2016), French energy utility Engie announced that it would aim to derive 90% of its earnings from low-carbon sources within three years (Froley 2016), and Danish oil and gas firm DONG Energy announced that it would follow suit (Skydsgaard et al. 2016). Discursive changes are also afoot that place climate change at the centre of decision-making. Concepts such as the carbon bubble and stranded assets have pushed large institutional investors to divest their fossil energy holdings (Mathieu 2015). Symbolically, the 2016 decision by the Rockefeller Foundation to divest from fossil fuel made waves (RFF 2016). In this context, the potential costs of inaction by the oil and gas industry increasingly speak against avoidance as a strategy. There is a very real possibility that oil and gas need no longer play a central role in energy systems. Industry is having to reverse its position in order to avoid being locked out of a low-carbon future. The Oil and Gas Climate Initiative (OGCI) exemplifies the intersection of these developments and the response of industry actors to them. It gathers ten of the largest producers, accounting for nearly a fifth of global oil and gas. The majority of these firms are ‘carbon majors’, the 90 entities responsible for 63% of historical carbon dioxide and methane emissions (Heede 2014). OGCI members have committed to a 2C pathway, endorsed current climate policy and science, and begun to reimagine themselves within a new energy landscape. The initiative was founded only in 2014, but governance interactions are emerging around it that will reveal much about the role that it and its members might play in global climate governance and, by extension, the future of the sector. Any study of nascent governance efforts by the oil and gas industry in the context of climate change necessarily inscribes itself within the broader landscape of non-state governance. As states increasingly govern in conjunction with other actors, governance configurations have taken more varied, experimental, bottom-up and polycentric forms (Pattberg 2016; Hoffmann 2011). This growth in institutional and organizational diversity has opened a Pandora’s box of interactions, connecting, shaping and fueling global governance. Much has been written about transnational business governance (TBG) schemes in sectors, such as forestry and fisheries, that have seen a high degree of uptake for forms of governance crossing both actor categories and state borders (Auld 2014; Auld et al. 2008; Bartley 2007; Gulbrandsen 2010). More recently, there has been a rise in TBG initiatives in extractive industries (Mori et al. 2015; Bach 2016). Though proponents of TBG initially had doubts about the value of such efforts in relation to non-renewable resources, even meta-standard-setters such as ISEAL Alliance have come to adopt a “content-neutral” approach (ISEAL 2016). The vast majority of TBG initiatives in this area target mining and metals, though some work with coal (e.g., Better Coal) or oil and gas (e.g., Equitable Origin). The OGCI fits well with Eberlein et al.’s (2014) definition of a TBG: it features the exercise of substantial authority by non-state actors in the performance of regulatory governance; it seeks to address Bach Capturing Climate (2018) TBGI Project Working Paper No. 33  Page 3 the climate impacts of the oil and gas sector; and it exists within a transnational space, beholden to no single nation-state. Yet its nascent institutions and lack of track record mean that research into it must rely in large part on statements made by its members and other stakeholders. This reliance raises the ubiquitous question of whether such schemes may in the end amount to anything more than greenwashing. Taken from another perspective, the study of an early-stage TBG initiative poses a challenge to the transnational business governance interactions (TBGI) analytical framework (Eberlein et al 2014; Wood et al 2015), as the interactions in question are limited largely to agenda-setting. To address these limitations, I link the TBGI framework to mid-level theoretical propositions from Braithwaite & Drahos (2000) concerning global business regulation. Their mid-range theory seeks to understand how principles, norms, standards and rules emerge, diffuse and interact in a globalized world. By examining a broad range of economic sectors, they identify mechanisms and pathways through which actors generate changes in the regulation of business on a global scale. This theory provides some indications of how the OGCI’s agenda-setting efforts might achieve wider influence and, perhaps, alter the ways in which the oil and gas sector at large engages with climate change and its governance. Little research has been done on the involvement of the oil and gas industry in climate governance and none has examined the OGCI. This is therefore a preliminary, exploratory study. I begin with an overview of TBG in the oil and gas sector, before examining the OGCI and its interactions (Section 2). I then turn to the theory of global business regulation put forward by Braithwaite & Drahos (2000) to tease out broader implications of this study (Section 3). In the conclusion (Section 4), I turn my attention to normative considerations and question the motivations underlying the initiative.  2. A Study in Nascent Interactions 2.1 TBG in the oil and gas sector The oil and gas sector has been particularly challenging to regulate since extraction is conducted under many circumstances and by few and powerful actors. These are public (national oil companies or NOCs) and private (international oil companies or IOCs). At times they compete, at others they join forces. The sector as a whole has tended to resist oversight, instead advocating self-regulation. For the most part, oil and gas companies have not subscribed to TBG schemes.  Some initiatives, such as Equitable Origin, have modeled themselves after TBG schemes in other sectors by embracing a multi-stakeholder ethos in targeting the social and environmental costs of extraction. However, these efforts have mostly failed to enroll major oil and gas actors. The Extractive Industries Transparency Initiative (EITI), which seeks to foster a higher degree of transparency in dealings between extractive companies and governments, is a striking exception in this regard. Other initiatives, including the World Bank’s Global Gas Flaring Reduction (GGFR) partnership, have taken a more technical approach and enjoyed a higher degree of industry uptake. This pattern of weak involvement from the oil and gas sector extends to wider non-state climate governance efforts (e.g. UN 2018). The UN’s NAZCA portal gathers data on climate commitments from non-state actors, including 77 TBG or ‘cooperative’ initiatives. Of the 1,270 commitments made by companies to them, oil and gas firms account for barely four percent (Author’s own calculation, 2018). Though the oil and gas industry lags behind its peers in terms of TBG and climate governance, it has recently multiplied the number of initiatives to which it subscribes. These include the Zero Routing Flaring by 2030 initiative; the Oil & Gas Methane Partnership; the Low Carbon Technology Partnership initiative (LCTPi); the Energy Transitions Commission (ETC); and the OGCI. All have been established since 2014, corroborating interviewees’ claims that a real shift is occurring in the oil and gas sector (Interviews IND 1-5).2 Bach Capturing Climate (2018) TBGI Project Working Paper No. 33  Page 4 I focus exclusively on the OGCI in this chapter for two reasons: First, it is the only initiative both ‘by’ and ‘for’ industry, and second, its members account for nearly a quarter of the world’s oil and gas and almost 12% of all historical greenhouse gas (GHG) emissions. As such, the OGCI should provide a clear picture of early attempts by the industry to engage in climate governance.  2.2 A Brief History of the OGCI In January 2014, the chief executives of some of the world’s largest oil and gas firms gathered on the sidelines of the World Economic Forum in Davos, Switzerland. They were increasingly concerned about the risks posed by climate change and wanted to position themselves as ‘recognized and ambitious provider[s] of practical solutions for climate change mitigation’ (OGCI 2015a). In short, they wanted to be on the right side of a carbon-constrained future. Led by the Chairman of Saudi Aramco and the CEOs of Total and Eni, the conversation grew into a set of commitments from major national and international oil companies3, most notably to support a two-degree target. In September 2014, the OGCI was officially announced at the UN Climate Summit in New York as an example of how a ‘diverse group of national and international oil companies, which compose a significant share of global oil and gas production, [are] committed to be “part of the climate solution” ’ (UN 2014). The veil was first lifted on the inner workings of the OGCI at a technical workshop in Paris in May 2015. Led by Gerard Moutet, chair of the OGCI executive committee and vice-president of Total for climate and energy, the event gathered views from member companies and invited stakeholders in support of the initiative’s development. It also solicited feedback on a draft report detailing its agenda. Further, three work streams were initiated at this meeting: long-term solutions, the role of natural gas, and instruments and tools for carbon reduction. The workshop sought to link the OGCI to more established actors in climate governance, notably by securing attendance by two of the UN’s highest climate change officials: the Executive Secretary of the UN Framework Convention on Climate Change (UNFCCC) and the Assistant UN Secretary General on Climate Change. The head of the OECD’s International Energy Agency (IEA) also attended (Interview INT-6). Other policymakers and civil society representatives were reportedly present, though I was unable to uncover any details since the meeting was held under the Chatham House Rule.4 The OGCI emerged into the public eye in October 2015, when the CEOs of its member companies gathered in Paris ahead of the UNFCCC’s 21st Conference of the Parties (COP) to present the initiative and a first report setting out its ambitions (OGCI 2015b). This was an occasion for strong and optimistic statements on behalf of some of the world’s largest GHG emitters, as shown by some quotes taken from the days’ press conference (Politiques énergétiques 2015; my transcription):  “What is the most important today […] is that you have here in Paris 8 CEOs recognizing that trying to stay below 2C is the right track […]. We are committing our companies by making these statements. I think it is quite an important step. Patrick Pouyanné (CEO, Total)  “Well, we’ve done a lot in just a year and a half getting 10 big companies together, I think we’ll get more, but I think the first thing for us is we all recognize the problem, we all have a sense of commitment, a sense of urgency about it.” Bob Dudley (CEO, BP) The OGCI is intended as a ‘bottom-up, voluntary, industry-driven initiative’ that will serve as a ‘platform to address climate change concerns, to share industry best practices, advance technological solutions, and to catalyze meaningful action and coordination on climate change’ (OGCI 2014). Member companies must Bach Capturing Climate (2018) TBGI Project Working Paper No. 33  Page 5 make five commitments: to : ‘Share best practices to enhance overall standards and environmental performance’; ‘Develop common methodologies to measure climate-related impacts and contributions to solutions’; ‘Design a reporting process that enables the voluntary pooling of efforts and the communication of progress as a group to external stakeholders’; ‘Facilitate and deepen engagement in international multi-stakeholder specific solutions and initiatives as well as the design of shared roadmaps’; and ‘Engage with other industries to identify and build climate related synergies’ (OGCI 2015d). It remains too early to judge whether these commitments are being implemented. For the moment, there is evidence of work on the first three, and the last two remain somewhat more on the sidelines. Much of the work done by the OGCI in 2016 focused on internal coordination between the member companies. The major announcement of the year came ahead of the UNFCCC COP in Marrakech, in the form of a commitment by OGCI members to invest USD 1 billion in low-emissions technologies. The majority of this fund will be used to accelerate the deployment of carbon capture, use and storage (CCUS) in gas-fired power plants, while also tackling the issue of methane leakage, which contributes significantly to climate change (Solsvik & Fouche 2016). A spokesperson for the group noted that the initiative would consider increasing its investment upon review (Sampathkumar 2016). Responses from outside the sector have been muted. One specialist climate and energy website highlighted a lack of outreach (Interview CSO-1). Neutral or positive stories dominated news coverage of the OGCI, possibly due to access to primary material (Blas 2015; Scott 2015; Stothard & Clark 2015); others mostly used OGCI press releases (Willsher 2015; King 2016). In general, responses followed the standard pattern of business-friendly groups lauding the initiative and environmentalists depicting it as pure talk. On Twitter, the ‘We Mean Business’ industry coalition for a low-carbon transition asked non-committally if the OGCI goes far enough, while Greenpeace tweeted that ‘OGCI = Oil Generates Climate Instability’, and digital advocacy consultant Alice Stollmeyer dismissed it as ‘empty words’ with the warning, ‘Arsonists don’t make good firefighters’. More recently, the OGCI has begun to collaborate with additional stakeholders, including the Environmental Defense Fund (EDF), a leading US-based environmental NGO, and MIT’s Joint Program on the Science and Policy of Global Change. The former is supporting the OGCI’s efforts to identify gaps in methane monitoring. The latter was enlisted to ‘bring academic rigor to the discussion of how to help reduce greenhouse gas emissions in alignment with the 2 C goal’ (Dwortzan 2016). In spite of skepticism surrounding its launch, the OGCI has moved rapidly over little more than three years to establish itself as an alternative model for oil and gas involvement in climate governance. Drawing on this brief history of the initiative, I now turn to the TBGI framework, which I will use to map the governance interactions emerging around the OGCI.  2.3 Applying the TBGI Framework The TBGI analytical framework proposes a six-by-six matrix of the components of regulatory governance and the dimensions of interaction (Eberlein et al., 2014). Given that the OGCI is a nascent initiative that has undertaken little beyond goal and agenda setting, I focus exclusively on the first component of regulatory governance, agenda-setting. While this might be considered a thin application of the TBGI framework, it allows for a greater unpacking of this portion of the matrix. As for the dimensions of the interactions, I limit myself to the first four questions posed by Eberlein et al. (2014: 7): ‘(i) who or what is interacting; (ii) what drives and shapes the interactions; (iii) what are the mechanisms and pathways of interaction; [and] (iv) what is the character of the interactions,’ since it remains too early to draw longitudinal conclusions. Table 1 provides an overview of the interactions that will be described below.   Bach Capturing Climate (2018) TBGI Project Working Paper No. 33  Page 6 Table 1. The TBGI Matrix applied to the OGCI  Goal/ Agenda setting Who/what interacts? Micro: firms, CEOs, managers, shareholders (for IOCs), states (for NOCs) Micro-meso: trade organizations (IPIECA, API, Fuels Europe), WEF Meso: states (directly through NOCs; indirectly through IOCs); international organizations (World Bank, UN, OECD/IEA) Meso: other TBGs (GGFR/Zero Routine Flaring, SE4ALL, UNGC/C4C, CCAC OGMP, GMI, CSLF, LCTPi) Meso: civil society (WRI, Shift Project) Drivers & shapers UNFCCC process; growth of renewables; discourses (carbon bubble, stranded assets); climate action social movements; scientific consensus from IPCC Mechanisms Modelling Interaction character Cooperation inside OGCI and with other TBGs Competition with IPIECA Hybrid with non-member firms  I do not approach each question separately, however, as the drivers and shapers of interaction have already been briefly discussed in the previous sections, and I integrate the remaining three questions into a discussion of interactive mechanisms. Mechanisms serve as instruments through which actors can enact the regulatory principles they support (see section 3). One of the mechanisms identified by Braithwaite & Drahos (2000) is particularly relevant here, modelling, although I take some liberties in its interpretation. Other mechanisms are also at play, such as reciprocal adjustment where regulatory actors modify practices in response to one another’s changes, although these remain beyond the scope of this chapter.  Modelling Modelling is a process of observational learning in which actors display, symbolically interpret and emulate regulatory models (ibid.: 580-81). It can be an important mechanism of governance interaction because busy decision-makers who have limited time and resources to develop their own regulatory solutions can be led by regulatory entrepreneurs to adopt pre-packaged models from elsewhere (ibid.: 30, 589) The OGCI makes use of this mechanism in three ways: modelling from others, modelling for others and hybrid modelling. Braithwaite & Drahos understand modelling from others as mimicry in relation regulatory models. I argue here for a broader understanding of this mechanism, as we are dealing with an early-stage initiative, rather than a mature instance of TBG. Thus, the OGCI has, as yet, drawn on the work of other initiatives, aligning itself with their goals. In this sense, the OGCI adopts ‘models from the center for reasons of legitimacy, in order to harness the identitive power of being perceived as modern, civilized and progressive’ (Ibid.: 585). While Braithwaite & Drahos imply a geographical distinction, I view this in terms of distance to the climate regime, within which the oil and gas sector has been a peripheral actor. The OGCI has been remarkably candid in detailing the TBG initiatives that it seeks to interact with, learn from and model itself after (OGCI 2015c) (see Figure 1 and Table 2). Several motivations underpin this selection of initiatives. First, there is an effort to ‘build on, rather than duplicate, the work of others’ (Moutet 2015). In practice, the OGCI has made use of materials from the GGFR on flaring, from the C CAC OGMP on methane, and IPIECA for GHG methodologies (Interview IND-6). Then, there seems to be a desire to tap into and replicate the broader networks and legitimacy of existing initiatives. Third, the OGCI wishes to do business with those open to a future for oil and gas; the targeted initiatives have taken neutral or positive stances towards industry. Bach Capturing Climate (2018) TBGI Project Working Paper No. 33  Page 7 Modelling for others implies taking on a more innovative role within the oil and gas sector by spearheading a progressive agenda and experimenting with models for a low-carbon industry. By altering the frame of reference from the broader climate regime to the oil and gas sector, the OGCI then positions itself as a progressive element, as a model for others. In particular, it pursues this through its interactions with trade organizations, which themselves could be characterized as TBG initiatives.  Table 2. “Modelling from”: Examples of initiatives the OGCI draws from Initiative Modelling The International Petroleum Industry Environmental Conservation Association (IPIECA) is the global oil and gas trade association for social and environmental issue. It has functioned as the main link between industry and the UN system. IPIECA has developed a methodology for GHG reporting, which the OGCI draws on. The Global Gas Flaring Reduction partnership (GGFR) is led by the World Bank and operates as a partnership between states, firms, international organizations and the EU. The focus has been on concrete measures to limit flaring. ‘Zero Routine Flaring’ was set up in 2015 to broaden stakeholder engagement. The Oil & Gas Methane Partnership (OGMP) of the UN’s Climate and Clean Air Coalition (CCAC) seeks to enroll industry in efforts to reduce methane emissions throughout the oil & gas value chain. While the CCAC functions as a multi-stakeholder forum, including states, international organizations and NGOs, the OGMP focuses entirely on firms. The OGCI is collaborating with these established TBG initiatives to adopt their approaches to methane management and develop joint standards.  Figure 1. Linkages between the OGCI and other TBG Schemes (governance triangle adapted from Abbott 2012)5  Bach Capturing Climate (2018) TBGI Project Working Paper No. 33  Page 8 Although numerous trade organizations exist in the oil and gas sector, the OGCI firms are especially linked to three of the most prominent ones. As shown in Figure 2 below, nearly all companies involved in the OGCI have long-standing links with IPIECA, API and Fuels Europe.6 These are key industry forums – each targeting specific polities, gathering diverse memberships, and pursuing different issues. The lines drawn between the associations and the firms indicate membership ties, whereas the arrowed lines between trade associations indicate unilateral membership.  IPIECA, the industry’s global trade association for social and environmental issue, has until now acted as the main link between industry and the UN system, having been founded two years after the UN Environment Program (UNEP), in 1974. On climate, it works in four areas: understanding the latest policy and science; acting as a forum for industry at the UN; developing good practices; and facilitating industry-internal communications and strategy (Interview IND-3). The American Petroleum Institute, or API, represents the interests of the oil & gas industry in the US. It also acts as a standard setter, publishing technical standards and guidance for its members. This role has helped it achieve influence beyond its members, in some cases setting de facto industry-wide standards. In relation to climate change, it has mostly established itself as a skeptic. Fuels Europe is the trade association of producers and refiners in the EU, which seeks to influence EU policymaking in their favor. It has adopted a more proactive position on climate change, recognizing the problem and the need for solutions. During the press conference of the October 2015 OGCI event, the CEO of Total stated in response to a question concerning lobbying and his firms’ membership in Fuels Europe and API that “it is better for climate change that we can advocate inside [these associations], being around the table” (Politiques énergétiques 2015). And speaking purely on behalf of Total: “Today I’m committed and I’m committing the full company [to the goals of the OGCI] – all lobbyists from Total in all organizations have the same position” (Ibid.). It therefore seems that the OGCI, or at its very least its member Total, intend to use their membership in oil and gas trade associations to lobby for the initiative’s goals.  Figure 2. OGCI Firm – Trade Association Links  In spite of the OGCI’s apparent desire to become a foster climate action within the oil and gas sector, as evidenced by the above statements, the situation is somewhat more nuanced. This leads me to Bach Capturing Climate (2018) TBGI Project Working Paper No. 33  Page 9 introduce a third type of modelling, which had not been included in the original theory of Braithwaite and Drahos, in spite of their claim that global business regulation involves “many kinds of actors which regulate while being regulated themselves” (Ibid. 10). Hybrid modelling captures the fact that actors can simultaneously fashion themselves after others and present themselves as a model for others to follow.  The OGCI draws on the work of IPIECA regarding climate reporting and advocates the use of its guidelines, while also seeking to influence this organization’s positions towards climate change (Interview IND-6). Historically, IPIECA has been the sector’s primary mandate holder for climate issues, linking member firms and the UNFCCC process. In practice, however, IPIECA has been limited in its ability to play a proactive part in climate governance, as its diverse membership and consensus decision-making rule prevent it from engaging with more contentious issues (Interviews IND 1-3). This has given rise to this dual relationship, in which IPIECA is at once a model for the OGCI and a target for its ambitions.  3. Theorizing Futures Though the flexibility of the TBGI framework makes it particularly apt at capturing a broad range of phenomena and interactions, it is less successful in sharpening analytical efforts. When it comes to the OGCI, only the agenda-setting portion of the matrix. Agenda-setting is an amorphous element compared to other components of regulatory governance such as sanctioning or monitoring, which imply relatively well delineated sets of activities. Agenda-setting might be evidenced by a CEO’s statement, a report, a meeting between key stakeholders or even the launch of a new governance initiative. The diversity of actions that can be entered under this category is a double-edged sword: integrating broad-ranging material at an early stage strengthens the analysis, yet also dilutes its clarity and focus. Such pitfalls might be avoided by asking who is seeking to influence whose or which agenda? OGCI member firms sought to influence the agenda of the UN-led climate process and those of national governments by inviting key representatives to events, their peers’ agendas through their pre-existing ties to industry associations, and their own agendas by seeking to recast themselves as pro-climate actors. At the same time, there have been some indications that other actors, including governments and civil society organizations, are keen to influence the agendas of the OGCI and its member companies. Agenda-setting may very well be characterized as a two-way street. New initiatives may not provide the wealth of empirical details found in more mature cases, but they have the advantage of providing an early glimpse into governance innovations that might come to define how a problem is addressed. Analysis of the OGCI’s interactions reveals how it has positioned itself within the climate change regime, how it has formed a vision of the oil and gas sector in a low-carbon world, and how it is attempting to influence climate policy in ways compatible with this vision. The TBGI framework is somewhat more limited in understanding the significance of these nascent interactions, especially since we are not able to track their evolution and outcomes over time. Turning to theory therefore offers greater interpretative possibilities, as it allows us to go beyond inductive methods and tease out how emerging phenomena might develop based on existing knowledge of similar cases and conditions (Wood et al., 2015). This is particularly important given that path dependencies accrue with time and gradually constrain the types and range of actions open to an initiative. Braithwaite and Drahos’ (2000) mid-range theory of global business regulation is helpful in situating the OGCI within contests of regulatory principles, webs of influence and micro-macro sequences and, in so doing, making visible some wider implications. There are clear commonalities between this theory and the TBGI framework. Not only do they share similar concepts (e.g., mechanisms) and understanding of regulatory governance, they also examine how transnational actors initiate and effect changes in the norms and rules that govern our lives, as well as the production and consumption on which they depend. Bach Capturing Climate (2018) TBGI Project Working Paper No. 33  Page 10 I consider two specific aspects of the theory in this section. The first is the role of principles in non-state governance and how actors deploy them in attempts to enact regulatory change. The second concerns potential pathways for actors to influence global business governance, including how dialogic webs can accelerate norm diffusion and spur voluntary compliance, and how micro-macro sequences can act as pathways for far-reaching regulatory change.  3.1 Contesting Principles For Braithwaite and Drahos, principles and rules form a two-tiered structure with rules at the lower level and principles above. Principles are “abstract prescriptions that guide conduct” (Ibid.:9) and that “evolve from the values and practices of a given community of actors” (Ibid.:18) who employ them to incorporate changes into regulatory and social systems. Principles “set the direction for regulatory change” (Ibid.:522) and are the elements through which regulatory contests operate. Of the many principles identified by Braithwaite & Drahos, the pro-innovation principles of world’s best practice and continuous improvement appear most relevant here. The former concerns economic activity that operates based on rules that exceed requirements from current practice and regulation. The latter relates to efforts to post better (environmental) performance year on year, regardless of whether minimum standards have been exceeded. The OGCI draws strongly on the world’s best practice, in seeking to take on industry leadership and establish new technologies and practices for climate-compatible oil and gas production. Following the announcement of the $1 billion fund for low-carbon technologies, the OGCI stated that their ambition is to help “develop and demonstrate innovative technologies” (OGCI 2017). This marks an apparent shift from away from the respective competing principles of deregulation and rule compliance, which industry has traditionally pursued, and in some cases continue to. A shadow of doubt nevertheless lingers, as a rhetoric based on principles might in fact cloak opposing practices (Ibid.:517), amounting to what is more commonly known as greenwashing (Wood 2003). It is nonetheless significant that the OGCI firms are putting their weight behind progressive principles. Though they are by no means strangers to the language of innovation, they had generally called for the preservation of the status quo in relation to climate change and its governance – advocating for industry self-regulation and against greenhouse gas emissions limits and carbon pricing. This new embrace of pro-innovation principles also carries with it broader implications, as such principles are not only markers of regulatory change, but can create upward or downward dynamics across regulatory systems. In particular, what is known as a ratchet can emerge from such situations. Ratchets are dynamics that can either increase or decrease standards across the board. For this to happen, Braithwaite and Drahos theorize that three conditions need to be fulfilled: (i) the entrenchment of a minimum standard; (ii) the use of principles encouraging innovation; and (iii) the presence of a feedback loop between (i) and (ii) so that with each new innovation the minimum standard goes up or down (Ibid. 519). So far, it would appear that the OGCI has laid the groundwork for a ratchet by setting a minimum standard – staying below a two-degree increase – and adopting proactive principles. Should a feedback loop arise between its minimum standards and the outcomes of its innovation, a ratchet could be set in motion. This could alter the direction taken by industry and, more generally, responses to climate change. Allowing for some speculation, one could imagine that through its interactions with trade associations and other firms, the OGCI could effectively push the diffusion of its commitments across the industry and that then, through its interactions with states and international organizations, it could support their adoption as a new, higher minimum standard. Examining the principles that actors draw on and contest provides us with insights into the dynamics underpinning the governance interactions identified in the previous section. In this sense, Bach Capturing Climate (2018) TBGI Project Working Paper No. 33  Page 11 attention to conflicting principles can enrich the TBGI framework by bringing into focus the driving forces behind interactions and thereby enhance our understanding of why they take on specific characteristics.  3.2 Pathways to Influence The value of Braithwaite & Drahos’ theory of global business regulation in relation to the OGCI lies largely in its ability to consider the effects of TBGI on macro-level regulatory change, which unfolds in two ways: by developing dialogic webs, through which agendas can be moved forward; and by initiating sequences.  Weaving Webs of Dialogue Building on Latour’s (1986) concept of enrolment, Braithwaite & Drahos (op. cit.:556) argue that the globalization of business regulation takes place through webs of influence. Webs may be of dialogue, coercion or reward. Dialogic webs, they argue, are particularly effective in fostering norm diffusion and voluntary compliance by (i) defining problems; (ii) fostering issue linkages and interdependencies; (iii) leading to normative commitments; (iv) institutionalizing compliance; and (v) institutionalizing praise and shame. Moreover, the mechanisms discussed in section 2.3 form an integral part of these webs; dialogue enables actors to (re-) define their interests and thereby creates opportunities for mechanisms to be set in motion (Ibid.:553).This approach seems helpful in two ways. First, as the OGCI has rapidly tied itself into webs of dialogue with a multitude of powerful actors, there seems to be a very real possibility that it could influence the direction of climate policies by enrolling others in its vision of a low-carbon future. This can be seen in its involvement of leading figures from international organizations (see Figure 3 below). Second, webs of dialogue are more effective in delivering compliance than webs of reward or coercion and are available to all actors. Though the absence of the latter could be taken as a weakness of the OGCI, it may well be that networks are sufficient for members to make good on their commitments.  Initiating Sequences Braithwaite & Drahos also lay out potential pathways through which the OGCI would be able to impact global regulation. Though largely speculative at this stage, it is helpful to think of the OGCI and its governance interactions as part of wider-reaching processes, including proactive and reactive chains and forum shifting. Proactive and reactive sequences (Ibid.:562) illustrate how actors tend to act or react in relation to major events such as disasters. The oil & gas industry has tended to take a more reactive approach to regulatory issues, adopting higher operating standards in response to disasters and the ensuing mass public criticism. Events such as the Deepwater Horizon oil spill or the Brent Spar (Grabosky 2013) are textbook examples in this regard. The OGCI reveals what might be a more progressive approach, in which regulatory change is no longer reactive or disaster-driven. Though speculative, this hypothesis is supported by the efforts of the OGCI to enroll key actors from the climate regime in its vision of a role for the oil and gas sector in a warming world, as well as by a push for higher standards in methane management or carbon pricing, which would effectively contribute to spreading the costs while giving them a first mover advantage. This could also be seen as a cooperative effort aimed at stemming long-term damage, whether financial or reputational, as generally results from reactive sequences.   Bach Capturing Climate (2018) TBGI Project Working Paper No. 33  Page 12 Figure 3. The web of dialogue around the OGCI7  Forum shifting could also be at work here. It takes place when actors consider that they cannot achieve their goals within a given setting. Such strategies are primarily given to the powerful, whose withdrawal of support can generate significant costs – financial or symbolic – for those sidelined. The emergence of the OGCI could be seen as an instance of forum shifting, in which its members are dissatisfied with climate governance in other organizations, but are unable to sway them in their favor. In this instance, the move is primarily away from IPIECA, which has traditionally held the industry’s mandate for climate change. A senior manager from a major international oil & gas firm indicated that IPIECA carries too much “baggage” in terms of its membership to allow it to play a progressive role in this area (Interview IND-1). Considering the OGCI as an element of a forum-shifting sequence could therefore help to better understand the reasons for its emergence, as well as its relationship to other initiatives and, ultimately, its potential significance.  3.3 Theorizing nascent TBGI At the time of writing this chapter, the OGCI remains very much in a nascent state, having restricted its activities to agenda-setting. Though this provides for a somewhat limited use of the framework, there are plenty of signs that the OGCI and its member firms have made a concerted effort to Bach Capturing Climate (2018) TBGI Project Working Paper No. 33  Page 13 promote their vision of a climate-compatible oil and gas sector and link themselves to already established and legitimate actors across the climate regime. Interesting as this is as a standalone finding, I have used Braithwaite and Drahos’ theory of global business regulation to point to potential pathways via which the OGCI and the governance interactions surrounding it could take on greater significance and lead to larger-scale regulatory change. Three elements of the theory have been particularly helpful in this regard, the first being that the OGCI is deploying pro-innovation principles, which have the potential to set in motion regulatory ratchets – feedback loops that can either raise or lower standards across the board. Then, it became apparent that the OGCI was weaving what Braithwaite & Drahos term dialogic webs, as a means of enrolling diverse actors from across the climate regime. The last element of immediate relevance is a set of micro-macro sequences, through which the actions of individual actors can be placed within a broader context of regulatory change. Bringing these theory-driven insights back to the TBGI framework offers a new vantage point from which to reflect on its value for the analysis of nascent governance interactions. An initial observation is that systematically mapping the interactions surrounding the OGCI via the framework – not only in terms of the actors involved, but also in terms of the mechanisms through which they take place – provides a solid analytical foundation from which to consider the potential effects of these interactions. Another observation is that Braithwaite & Drahos’ theory actually strengthens the TBGI framework by offering interpretative possibilities. Indeed, the framework on its own says little regarding what the various governance interactions might mean; a well-matched and well-developed theoretical lens becomes necessary for meaningful results. A further thought on the relevance of the theory for the framework – and vice versa – returns to this chapter’s central question, which is how the relevance of nascent TBG initiatives and their interactions can better be understood. By pointing to specific dynamics and pathways through which the OGCI is enrolling actors in both the climate and oil and gas regimes, and highlighting the initiative’s potential to set in motion path-breaking regulatory change, the theory sounds a cautionary note regarding the potential for capture.  4. Reflecting responsibilities Though the OGCI is nascent and has undertaken little beyond goal and agenda setting over the first three years of its existence, we would be remiss to neglect the potential impact of such an initiative in the longer term. This is very much the underlying message from this chapter’s analysis of the OGCI through the TBGI framework and the global business regulation theory of Braithwaite and Drahos (2000). Whether the initiative’s attempts to enroll actors from across the climate regime for its vision of a climate compatible oil and gas industry or its efforts to speed up the development and adoption of low-carbon technologies and practices amount to leadership or capture remains a matter of perspective. This uncertainty is linked to the elephant in the room, the question of motivations: What are the true motives of the OGCI and its member firms in engaging with climate governance? Should their statements and actions be taken at face value or should more opaque strategies be uncovered? While it is rarely possible to fully shed light on the motivations of actors in any context, this becomes all the more difficult here, as so many of the discussions are held behind closed doors. It is also unlikely that a fundamental truth might be exposed, because this assumes unitary and coherent actors; the reality is far messier with a range of positions and motivations taking hold within and across organizations. It is unlikely that Total and Saudi Aramco fully share the same motivations in joining the OGCI and in placing their weight behind it. Some contextual hints can nevertheless be found that might offer a rough answer to these questions. As noted in the introduction, the oil and gas industry is no longer the only show in town. While Bach Capturing Climate (2018) TBGI Project Working Paper No. 33  Page 14 this does not mean that the end of the road is around the corner, it nevertheless signals a significant modification of the landscape within which the OGCI and its member firms operate. This sense has been reinforced by the adoption of the Paris Agreement, which can be seen as defining a politically acceptable degree of warming, as well as a rise in efforts to phase out fossil fuels, whether from cities, investors or civil society groups. Taking this situation into account, the main motivation underlying the formation of the OGCI is to put forward a renewed vision for the oil and gas industry, one that can continue to operate within a carbon-constrained world. However, it is fundamentally unclear whether this is driven by a desire to head off potential reputational and regulatory risks, to seize emerging opportunities, to simply ‘do the right thing’, or a combination thereof.1 I conducted key informant interviews with seven individuals who were employed by firms directly involved in the Oil & Gas Climate Initiative (four interviews), engaged in the oil and gas sector (two interviews), or reflecting on it critically (one interview). The interviews were intended to supplement the limited publicly available materials on the Oil & Gas Climate Initiative. 2 See Box 2 for further details concerning these initiatives. 3 National oil companies (NOCs) are state-led and include Saudi Aramco from Saudi Arabia, CNPC from China, Pemex from Mexico and Statoil from Norway. By contrast, international oil companies (IOCs), such as BP, Shell and Total, are private businesses. Though both face similar challenges, their agendas and relationship to regulation can differ significantly.  4 The Chatham House rule states that ‘participants are free to use the information received, but neither the identity nor the affiliation of the speaker(s), nor that of any other participant, may be revealed’ (Chatham House 2017). 5The left-hand triangle represents links pre-dating the formation of the OGCI, whereas the right hand one displays those forged by the OGCI. The dotted lines in the former represent pre-existing links between OGCI members and specific TBGs; those in the latter represent links established directly between the OGCI and these TBGs. Whereas solid lines refer to formal links between international organizations and TBGs (e.g. membership, ownership), dotted ones include broader relationships (e.g. cooperation, adoption of similar norms, etc.). 6 CNPC and Reliance Industries are the main exceptions. 7 This figure shows the range of actors enrolled within the OGCI’s web of dialogue. The states listed are either the hosts of the OGCI members’ headquarters or their owner. The links between the TBG schemes listed within the triangle have been discussed in relation to Figure 1.                                                            Bach Capturing Climate (2018) TBGI Project Working Paper No. 33  Page 15 References Abbott, K. W. (2012). The transnational regime complex for climate change. 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