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Can Gasoline Be Held to a Fair Trade Standard?

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Remember how, after spending way too long mishandling the Deepwater Horizon oil spill, BP (BP) made everything better by sponsoring Gulf Shore tourism commercials? The $20 billion trust fund probably helped a little bit too.

Well, one man has taken on the rather quixotic mission of holding big oil companies accountable before they dump oil into the gulf/arctic/Amazon/wherever the next oil spill is. According to Fast Company, David Poritz founded Equitable Origin (formerly Gaia Certification) in 2009, with the idea of imposing fair trade-like standards on oil companies.

Poritz attended school with the son of one of the lead lawyers on the Amazon pollution case against Chevron (CVX) -- it’s fascinating story, more here -- and eventually worked on the case himself. He has said that this work led him to “develop a set of stakeholder-based standards” for the industry.

His standard, called EO100, rates oil companies on six different factors including: “corporate governance and accountability, human rights and social impact, fair labor, indigenous rights, climate change and environment, and project life-cycle management.” The standard was a joint effort between Poritz, indigenous federations and various Latin American countries.

That being said, Poritz’s company does not perform accountability audits, but rather outsources them to companies like PricewaterhouseCoopers. So far, they have given baseline audits on five companies, who have all been informed of the changes necessary for them to receive certification.

Ultimately, the use of an Equitable Oil Certificate for an actual company seems to lie somewhere between marketing and improved relationships with indigenous people. The only trouble is that, as of right now, the standard doesn’t really have the name recognition to have much of an effect on PR inside the US.

Regardless, Poritz is already looking to the future and has stated that he wants to take on the natural gas industry next. It should be interesting to see how the Equitable Origin standard works out over the next few years.

Of course, any positive PR for an industry with as many environmental and economic disasters as big oil is a blessing. Right now, with all the turmoil in China, I’d bet that tech companies like Apple (AAPL) and Microsoft (MSFT) wish their industry had a similar standard.
POSITION:  No positions in stocks mentioned.