The BTC Pipeline Case Study: Following through on Global Compact Commitments

Abstract

"This study focuses on the Baku-Tbilisi-Ceyhan (“BTC”) oil and gas pipeline project which, when completed, will carry up to a million barrels of oil a day over a thousand miles across the Caspian region and provide the first direct transportation link between the Caspian and Mediterranean Seas. In designing the BTC Project, BP p.l.c. (“BP”), the Project operator, on behalf of itself and the other shareholders (collectively, “BTC Co”), sought to establish a new benchmark for a major infrastructure project with respect to the promotion of internationally recognized human rights and environmental standards. To this effect, BP incorporated into core Project documents a commitment to respect applicable standards articulated in the U.N. Universal Declaration of Human Rights (“UDHR”), the Tripartite Declaration of Principles established by the International Labor Organization (“ILO”), and the Guidelines for Multinational Enterprises promulgated by the Organization for Economic Cooperation and Development (“OECD”). Early initiatives to implement such standards included efforts to avoid a significant environmental and safety hazard, adopt a precedent-setting level of transparency, and comprehensively engage local populations. Despite these commitments and BP's initial efforts to implement them, several non-governmental organizations (“NGOs”) raised environmental and human rights concerns about the Project. In particular, these organizations contended that the pipeline could undermine the human rights of local residents, endanger the environment, and spark further conflict in a region that suffers from ethnic tension. This case study is primarily relevant to concerns raised in conjunction with Principles 1, 2, and 7 of the U.N. Global Compact regarding broad human rights and environmental principles, including the overarching objective that businesses are expected to support and respect, within their spheres of influence, the protection of international human rights and adopt a precautionary approach in addressing environmental challenges. After these concerns were raised by the NGOs early in 2003, BP guided BTC Co in addressing the issues in several ways. In the most far-reaching response, the company drafted and orchestrated the signing of a “Joint Statement” on May 16, 2003 by the three host governments, guaranteeing adherence to internationally recognized human rights, labor rights, and environmental standards, including a commitment to the standards espoused in the Voluntary Principles on Security and Human Rights (“Voluntary Principles”). Additionally, BP engaged Amnesty International (“Amnesty”) in an open dialogue about Amnesty’s concerns regarding the Project. As a result of this dialogue, BTC Co took steps to address Amnesty’s chief concern by drafting and signing a Deed Poll, a legally binding contract designed to protect the rights of the three host governments to promote and regulate human rights and environmental issues. Although the BTC Project continues to face opposition from a group of NGOs that sought to halt funding for the Project from the International Finance Corporation (“IFC”) and the European Bank for Reconstruction and Development (“EBRD”), Amnesty, without endorsing the Project per se, has welcomed the company’s commitment to promote the highest human rights standards. BP may have been able to avert some of the NGOs’ concerns by undertaking a Human Rights Assessment and proactively engaging with these stakeholders at an earlier juncture. In light of the Project’s anticipated lifespan of forty years, the primary challenge facing BP at this juncture will be to effectively operationalize and implement the standards it has set."