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A New Standard May Have Been Set For Future Infrastructure Approvals

What’s happening? The discovery of Aboriginal relics near the Pilbara region in Western Australia may prevent Woodside Energy’s planned construction of a 434 km pipeline. The pipeline would link up Woodside's Scarborough field with its Burrup Peninsula processing facility. Although the discoveries are not located in the proposed site of the pipeline, scientists are concerned that there could be undiscovered relics in the area. Western Australia’s Environmental Protection Agency advised Woodside to work with the Murujuga Aboriginal Corporation, which the company has agreed to do. Woodside’s decision for the final investment on the pipeline will be made next year.

Why does this matter? Oil and gas companies pursuing certain projects that knowingly – or even unknowingly – cause the destruction of Indigenous heritage sites, are at risk of litigation and reputational damage. Considering the social consequences of actions is increasingly becoming a necessity for firms in order to preserve reputations.

Recently, Rio Tinto faced backlash from investors after it blew up a 46,000-year-old Australian aboriginal heritage site. Another high-profile case from North America has been the controversy surrounding the Dakota Access pipeline, which was heavily opposed from 2016 due to the threat it posed to the water supply and sacred burial grounds of the Standing Rock Indian Reservation.

Typically, companies are able to gain approval for such projects due to loopholes in heritage and environmental protection laws written prior to widespread awareness for both issues. 

Woodside’s willingness to cooperate with Western Australia’s Environmental Protection Agency and collaborate with Aboriginal consultants on the matter is a stark change from the exploitative behaviour sometimes associated with fossil fuel companies in regard to environmental and social issues. It’s possible this action signals an improved standard for oil companies in regard to the disruption their work poses to heritage land and the communities that live on it.

Woodside is, however, facing pressure elsewhere. Recently, company executives have come under scrutiny for comments about climate change, refusing to honour investor climate resolutions, creating unsafe working conditions for employees and offering thin promises on carbon offset schemes.

A concern for the company may be that, now it has established a precedent in pausing to survey and address risks such as these, it will be expected to do so even in the future.

Further thought from Curation – Given Woodside is involved in the assessment of the project, questions might be raised about how seriously it took this survey if the green light is given to continue. This could potentially be a PR exercise gone wrong.

We previously addressed the risk of companies being involved in assessments of their own business interests, due to the influence they can have on the strategy of assessments and the outcome of results. This seems to be another case that shows a need for independent auditors to assess ESG compliance so that no doubt can remain around whether Woodside is taking appropriate measures.

Nick Finegold is Founder & CEO of Curation Corp, an emerging and peripheral risks monitoring service.

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