St Comp Int Dev (2007) 42:233–255 DOI 10.1007/s12116-007-9010-8
Importing Environmentalism: Explaining Petroleos Mexicanos’ Cooperative Climate Policy Simone Pulver
Published online: 29 November 2007 # Springer Science + Business Media, LLC 2007
Abstract Theories of environment and development tend to preemptively strip developing-country firms of environmental agency, depicting them as passive targets of market, regulatory, and ideational influences originating elsewhere. This research examines the processes by and conditions under which developing-country firms actively “import” environmental norms, programs, and practices, drawing on a case study of Petroleos Mexicanos (Pemex)—one of the world’s largest oil companies and the only nationally-owned, developing-country oil company that has adopted a cooperative corporate climate policy. The article demonstrates that the company’s decision to support action on climate change resulted from efforts by climate policy entrepreneurs within Pemex’s environment division. They showed agency in choosing to prioritize the climate issue, in scanning their institutional environment for a climate policy template, in adjusting the template to suit Pemex’s particular circumstances, and in promoting the climate policy to internal and external constituencies. The research also highlights the prominent role of private sector channels in processes of environmental norm diffusion. Keywords Environmental norms . Petroleos Mexicanos . Oil industry . Climate change
Introduction In the late 1990s, Petroleos Mexicanos (Pemex), Mexico’s national oil company and the world’s tenth largest oil company, faced a strategic choice regarding its corporate climate policy. At that time, climate change had become a politically salient issue around the globe. In particular, the 1997 negotiation of the Kyoto Protocol to the 1992 UN Framework Convention on Climate Change had occasioned widespread S. Pulver (*) International Studies and Environmental Studies, Brown University, Providence, RI, USA e-mail:
[email protected]
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mobilization on climate change by state, nongovernmental, and private sector actors. The oil sector was especially drawn into the climate debates because of the link between fossil fuels and climate change. The combustion of fossil fuels—coal, oil, and natural gas—is directly linked to increases both in atmospheric greenhouse gas concentrations and in global average temperatures. As an oil company, Pemex faced the choice of viewing global attempts to regulate greenhouse gases (GHGs) as a threat to its operations or as a business opportunity. The international oil industry presented Pemex with models of both strategies. The U.S.-based oil majors—ExxonMobil, Chevron, and Texaco—had adopted an adversarial approach to international GHG regulation. These companies had been questioning climate science, lobbying against any international climate treaty, and downplaying the viability of alternative technologies since the early 1990s. In contrast, in 1997 and 1998 respectively, the CEOs of British Petroleum and Shell had both made international headlines by indicating that their companies were taking precautionary action in the face of climate change and supported the negotiation of an international climate treaty. Pemex sided with the cooperative faction of the oil industry. In December 1999, the company publicly announced its support for international action on climate change. In April 2000, Pemex formulated and published its first official climate policy statement. A year later, in June 2001, Pemex took the additional step of taking on a greenhouse gas reduction target. Pemex pledged to reduce greenhouse gas emissions from its operations by 1% by the end of the year. Since 2001, the company has also acted as a domestic and regional leader on climate policy. Given the recent upsurge in corporate interest in climate change across sectors and countries, the actions of one company may not seem significant. Yet Pemex is a crucial case because it is the only nationally-owned, developing-country oil company that has adopted a cooperative corporate policy on climate change, and as such presents both a theoretical puzzle and a policy opening. From a theoretical perspective, the company’s precautionary approach to climate change challenges two standard assumptions regarding the environmental practices and agency of developing-country firms. The first assumption is that developing-country firms are egregious polluters, operating in regulatory and social environments that do not foster environmental responsibility. Their comparative advantage is seen as their ability to exploit resources and pollute the environment. The Pemex case undermines such general characterizations. The case also challenges a second common assumption. Theories of environment and development tend to strip developingcountry firms of agency. They are portrayed as targets and passive recipients of environmental initiatives originating outside the firm. The pivotal role of Pemex managers in initiating and promoting a cooperative climate policy suggests that there are conditions under which developing-country firms are active nodes in the transnational diffusion of environmental norms, practices, and resources. In addition to the article’s theoretical contribution, understanding the Pemex case also has direct policy relevance to those interested in strengthening the current global climate regime. During the next decades, continued international cooperation on climate change will be predicated on engagement by developing countries. As has been the case in industrialized countries, the fossil fuel industry is likely to be a key political actor influencing a developing country’s decision to support or oppose
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international action on climate change. Therefore, understanding the processes and conditions that led a developing-country oil company to support action on climate change can inform policymaking in other oil-rich developing countries. In this article, I examine the climate policy decision-making processes in Pemex, as well as the domestic and international market, regulatory, and social contexts in which they occurred. I demonstrate that Pemex’s decision to support action on climate change was the result of entrepreneurial efforts by managers within the company’s environment division. Pemex managers played an active role in “importing” a proactive climate policy. They identified climate change as a key corporate strategy issue, scanned the international arena for global best practices in corporate climate policy, tailored them to national circumstances, and promoted them to constituencies within and outside Pemex. Moreover, I argue that the success of their entrepreneurial efforts depended on three facilitating conditions: (1) a supportive national domestic policy environment; (2) early and close links between Pemex and the climate science community in Mexico; and (3) correspondence between elements of the climate policy and preexisting Pemex business objectives. I base the arguments made in this article on research conducted in Mexico City from June to September 2002. Data collected include 40 taped interviews with Pemex executives, bureaucrats in Mexico’s ministries of environment, energy, and foreign affairs, climate scientists and policy experts at three Mexican academic institutions, staff at three Mexican environmental nongovernmental organizations (NGOs) and three Mexican industry associations, and staff at the United States and Canadian embassies in Mexico. In addition, I analyzed of a range of archival sources including Pemex annual environmental reports (1999–2005), the Pemex in-house environmental magazine (Gaceta Ecológica), Pemex’s annual accounting of its activities (Memoria de Labores), the energy ministry’s annual accounting of its activities (Informe de Labores), government agency workshop reports, and NGO campaign materials. In what follows, I first review the environment-development and transnational environmental advocacy literatures, which provide a starting point for my analysis but have largely ignored the agency of developing-country firms in promoting environmental sustainability. I then shift focus to the details of the Pemex case, providing an overview of Pemex’s engagement with the climate issue. I lay the groundwork for my argument by showing that the company’s climate policy is a case of firm agency rather than a functional response to external pressures. I then document the multiple steps by which Pemex managers imported the company’s climate policy.
Environmental Agency in the Developing-Country Private Sector Characterizations of the environmental practices of firms headquartered in the global North and those based in the global South differ in two ways. First, analyses of firm greening in industrialized countries tend to emphasize domestic market, regulatory, and stakeholder drivers (Petulla 1987). While there is some recognition that domestic firms are embedded in transnational regulatory fields (Selin and VanDeveer 2006), domestic drivers are paramount. In contrast, research on drivers of the
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environmental practices of developing-country firms emphasizes both domestic and international dynamics (Jenkins 2000). The latter are often assumed to outweigh domestic pressures. In particular, drivers of developing-country firm improvements in environmental performance are generally assumed to have international origins. The second distinction between the literatures on firm environmental behavior in industrialized versus developing-country settings centers on firm environmental agency, i.e. the capacity of firms both to make choices about environmental practices and to impose those choices on the world. Developed-country firms are ascribed agency in two ways. First, research suggests that industrialized-country firms have agency in how they respond to external pressures. Such pressures do not automatically translate into changes in firm behavior. Rather firms process and interpret external information in dialogue with other actors in their organizational fields (Hoffman and Ventresca 2002; Bansal and Roth 2000; Andrews 1998). Second, when describing the drivers of firm greening in developed-country settings, explanations do not focus solely on external pressures. Transformational leadership, i.e. green initiatives pioneered by chief executive officers (CEOs) and senior management, is a widely-cited, key driver of improvements in firm environmental behavior (Gladwin 1993; Weinberg 1998). An equivalent analysis of the environmental agency of developing-country firms is lacking. In contrast to their industrialized-country counterparts, developing-country firms are generally portrayed as more or less receptive, agency-less targets of external market, regulatory, or ideational influences and not as sites of autonomous environmental decision making. In this article, I present a framework for analyzing the environmental agency of developing-country firms. Such a framework recognizes the importance of transnational influences on developing country firm greening, but avoids portraying developing-country firms as passive puppets, galvanized by dynamics originating elsewhere. It depicts developing-country firm managers as agents, embedded in fields of transnational influence. The literature on transnational environmental advocacy provides a useful starting point for conceptualizing developing-country firm environmental agency. Transnational advocacy is a well-studied topic in political science and sociology (Tarrow 2001). In particular, the literature maps out how developing-country actors position themselves within transnational flows of resources, practices, and ideas. Central to the process of transnational environmental advocacy are norm and policy entrepreneurs or activists linked together in networks (Finnemore and Sikkink 1998; Keck and Sikkink 1998). Those portions of a network centered in developed countries provide financial resources, scientific expertise, and innovative policy experience (Steinberg 2001). Yet network actors in developing-country communities are not passive recipients of this largesse. Successful transnational advocacy initiatives rely on the insider knowledge, local expertise, social ties, communication skills, and legitimating function of network nodes in developing-country settings (Keck and Sikkink 1998; Steinberg 2001). Moreover, research documents that in many developing-country communities, environmental advocacy predates international linkages. Local activists simply seek out transnational connections to access resources or to influence global dynamics, but all with the goal of furthering their
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preexisting, particular local agendas (Khagram 2004). Finally, scholarship on transnational advocacy shows that intra network interactions are terrains of contestation and struggle over power and meaning (Batliwala 2002; Fisher 1997; Thayer 2001; Hudson 2001). The private sector is strikingly absent from research on transnational environmental advocacy. For example, in the global environmental arena, scientific communities and nongovernmental organizations (NGOs) are identified as the primary transnational environmental advocates and norm diffusers. Meyer et al. (1997) credit the rise of a world environmental regime both to a global scientific community and to growth in international environmental nongovernmental organizations. In Haas’ (1992a, b) epistemic communities model of international environmental regime formation, groups of like-minded scientists act as norm entrepreneurs in the international arena. Numerous scholars have documented the cross-border advocacy activities of environmental NGOs (Betsill and Corell 2001; Arts 1998; Princen and Finger 1994). If mentioned at all, firms are usually depicted as targets of NGO activism (Keck and Sikkink 1998; Wapner 1995). Garcia-Johnson’s (2000) detailed examination of North–South environmental norm diffusion in the chemical industry stands as the exception to this general trend. She documents the export of environmental values through the transfer of an environmental management code, the Chemical Manufacturing Association’s Responsible Care® program, from US multinationals to their subsidiaries in Mexico and Brazil and then to domestic chemical manufacturers in both countries; a process she labels “exporting environmentalism.” Her work, and that of a few others (Kollman and Prakash 2001; Delmas 2002; Sonnenfeld 2002), begins to address the normative and advocacy dimensions of transnational corporate environmental practices. Yet, even these accounts that recognize the private sector as a channel of environmental norm diffusion depict developing-country firms solely as recipient sites of global exports. My research inverts the idea of exporting environmentalism and examines the transnational transfer of environmental policies and practices from the perspective of a developing-country firm. I emphasize the agency of such firms, theorizing the process by and conditions under which developing-country firms actively “import” environmentalism. Issue entrepreneurs within developing country firms show agency at multiple stages of the diffusion process. First, importing environmental policies and practices entails a decision to prioritize environmental issues. Second, firms show agency in the process of scanning their domestic and international institutional environments for potential environmental templates. Third, such templates need to be adjusted to suit the firm’s particular circumstances. Finally, the process of importing environmentalism involves promoting environmental norms, practices and programs to a range of domestic constituencies. This framework for analyzing diffusion processes recognizes developing-country firms as active nodes in transnational flows of ideas, practices, and resources. The Pemex case is ideally suited to showcasing the environmental agency of a developing-country firm. As I will demonstrate, Pemex’s decision to adopt a cooperative climate policy was not a passive response to external market, regulatory, and civil society pressures. Rather, the entrepreneurial policy and norm promotion activities of its managers are central to an account of the Pemex case.
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Pemex’s Cooperative Climate Policy As outlined in the introduction, Pemex stands out in the oil industry as the only nationally-owned, developing-country oil company to have taken a proactive approach to the climate issue. Compared to the Western oil majors, which began to engage with the climate issue in the late 1980s, the firm was a late entry into the climate change field. Its first climate change activities date back to 1995, when it contributed information to a national greenhouse gas inventory and report of activities under the UN Framework Convention on Climate Change (UNFCCC). Relating to inventory activities, Pemex started tracking its carbon dioxide emissions in 1997. October 1997 also marked the first time that the firm’s in-house environmental magazine, Gaceta Ecológica, included an article on climate change. The short piece focused on the drivers and ecological consequences of global warming. Despite these preliminary activities, the company did not begin seriously engaging with climate change until 1999. That December, Pemex organized a workshop on climate change, in collaboration with Mexico’s environmental protection agency (Secretaria de Medio Ambiente y Recursos Naturales, SEMARNAT) and the United Nations Development Program (UNDP). The purpose of the workshop was to brief Pemex senior staff on climate change and to foster contacts between its executives and key domestic and international climate policy experts. The December workshop marked the beginning of a 3-year period of significant activity by Pemex on the climate issue. Four months after the December workshop, in April 2000, the company launched its 1999 “Annual Report on Safety, Health and Environment”—the first of its kind for Pemex (Pemex 2000). The report laid out its policy on greenhouse gas emissions, stating: At Petroleos Mexicanos, we are aware of the climate change problem and of the overwhelming role that human activity, especially the consumption of fossil fuels seems to play. Although some scientific uncertainty about the matter is still recognized, we believe that it is essential to participate in and to foster a responsible debate on the origin and extent of this phenomenon. Only the integral understanding of the problem will make it possible to reach lasting solutions (emphasis in original). (Pemex 2000) Pemex has maintained the policy of publishing an annual safety, health, and environment report since the first report published in 2000. The next major step in Pemex’s climate program came in 2001. In June of that year, it initiated an internal emissions trading system, with the pledge to reduce carbon dioxide emissions from its facilities by 1% by the end of the year (Pemex 2002a, b). While a 1% reduction may appear small, Pemex’s greenhouse gas emissions are significant. Carbon dioxide emissions from its facilities account for over 5% of Mexico’s national emissions. Estimated carbon dioxide emissions for 2005 summed to almost 40 million tons of carbon dioxide (Pemex 2006)— approximately equivalent to the annual greenhouse gas emissions of Ireland (WRI 2003). Between 2001 and 2005, Pemex continued to reduce its operational greenhouse gas emissions by an average of 1.7% annually (Pemex 2006), while modestly expanding output of both oil and natural gas (Pemex 2007).
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Pemex took on the carbon dioxide emissions reductions target and launched the trading system with the support of Environmental Defense (ED), a Washington, DCbased environmental NGO. It also became a member of the ED Partnership for Climate Action (PCA), a collaboration among large firms like British Petroleum, Shell, DuPont, and Alcan, which are committed to reducing their greenhouse gas emissions. Pemex’s decision to take on a target and engage with the PCA was profiled in an article in The Washington Post (Pianin 2001). Joining the PCA marked the beginning of a period of regional climate leadership by Pemex. In October 2001, the oil and gas industry association of Latin America and the Caribbean (ARPEL) organized a workshop on the Clean Development Mechanism (CDM), the legal mechanism under the Kyoto Protocol that allows for transfers of greenhouse gas emissions reductions between developing and developed countries. The workshop was held in Mexico City and Pemex acted as host. The pattern of organizing and hosting climate related workshops continued in 2002. In May, Pemex once again played host to an ARPEL workshop, this one focusing on greenhouse gas emissions trading. A month later, Pemex, along with the Canadian Petroleum Institute, held a second workshop on the CDM. The workshop was scheduled to coincide with Pemex Environment Week and the release of its third annual Pemex Safety, Health and Environment Report. The concept of climate leadership by an oil company merits a short digression (see Pulver 2007 for a full discussion). Pemex’s decision to adopt a cooperative climate policy does not mean that the company has abandoned or even scaled back its oil exploration and production activities in favor of renewable energy investments. Like all international oil companies, including recognized climate leaders British Petroleum and Shell, Pemex’s primary business remains the production, distribution, and sale of oil and natural gas. Nevertheless, the company is adopting a leadership role. Unlike most of its peer oil companies, Pemex is constructively engaged in a national climate policy dialogue and is cutting greenhouse gas emissions from its own facilities.
Drivers of Pemex’s Cooperative Climate Policy: Alternative Explanations To explain the puzzle of Pemex’s cooperative climate policy, I make a two-stage argument. First, I consider market, regulatory, and stakeholder explanations and show that not one fully explains why Pemex chose to adopt a cooperative climate policy. I then elaborate on an explanation that emphasizes the environmental agency of Pemex managers in importing a particular climate policy approach and identifies the conditions that facilitated this process. Market Forces Most models of firms focus on market forces as the primary determinant of firm behavior, including a firm’s environmental decisions. While market forces are generally assumed to push firms to exploit environmental resources, there are cases where market forces can drive improvements in firm environmental behavior. Firms may seek to enhance profitability via efficiency improvements, which tend to benefit the environment (Lovins and Lovins 1997). Improved environmental performance
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can also be a source of competitive advantage via green-marketing and reputational rents (Russo and Fouts 1997; Bansal and Roth 2000; Andrews 1998). Finally, environmentally efficient firms may favor environmental regulation as a barrier to market entry by other firms (Porter and van der Linde 1995). But do such market drivers of firm greening offer an explanation for Pemex’s climate policy choice? I argue no. Pemex’s climate policy was and is tangential to the domestic and international market forces shaping the company’s operational context. Like other oil companies, Pemex’s primary operating goals are increasing oil and natural gas reserves, production, and refining capacity. This in turn determines the company’s ability to meet national demand for petroleum products and thus minimize imports and maximize exports. Because increased production of oil and natural gas are at the heart of its operations, we would expect Pemex and the rest of the international oil industry to oppose any form of regulation that would reduce demand for fossil fuels. Most oil companies followed this predictable logic until 1997 when first BP and then Shell broke ranks and spoke out in favor of international greenhouse regulation. Several market drivers were proposed as an explanation for their decision. First, it was argued that both BP and Shell used climate change as a way of enhancing corporate reputation, building brand value, and building market share (Kolk and Levy 2001). Second, some suggested their large research and development budgets made them less vulnerable to oil demand and price effects because they could transition away from the production of fossil fuels towards the provision of alternative energy services. Third, it was hypothesized that the split in the oil industry was due to differences in the companies’ operational characteristics, such as the balance between oil and gas in their reserves portfolios (Austin and Sauer 2002; Rowlands 2000). None of these explanations applies to Pemex. First, Pemex holds a monopoly on all oil-related activities in Mexico and does not have to build brand value or market share. Pemex is the only company that has the right to extract oil and natural gas off Mexico’s coastline in the Gulf of Mexico and is the sole retailer in Mexico of gasoline and other petroleum-related products. Second, as a state-owned company, Pemex operates under severe capital constraints. Pemex plays a crucial role in the Mexican economy. Approximately 60% of Pemex revenues are paid to the Mexican government in the form of taxes and royalties. These payments constitute approximately 30% of government tax revenue. Because of this drain on its revenues, Pemex is permanently cash-strapped, unable to reinvest in its own operations (Halpern 2001). For example, the company’s net revenue in 2003 was a net loss of US$3.6 billion (because of the tax burden), whereas ExxonMobil, BP, and Shell all had net incomes between US$6 and 11 billion (PIW 2004). Moreover, Pemex is prohibited constitutionally from gaining investment capital from outside Mexico and faces extensive political opposition to privatization as a means to attract foreign capital and expertise (Smith 2004). This means the company is tied to fossil fuels and has no resources to invest in alternative energy sources. Third, the balance of oil to natural gas in Pemex’s reserves portfolio is approximately one to one meaning the company will not benefit from a GHG regulation driven shift to natural gas. In sum, market pressures to extract oil and natural gas and to expand reserves are a defining feature of Pemex’s operating reality. These pressures did not push the
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company to adopt a proactive climate policy. In fact, since resources are constrained, it is doubly surprising that Pemex invested scarce resources in a climate change program. Government Regulation A second commonly cited driver of improvement in firm environmental performance is current or pending regulation. For example, it has been argued that the two major oil companies based in Europe—BP and Shell—adopted a cooperative climate strategy because they recognized the inevitability of mandatory greenhouse gas emissions reductions in the European Union and preferred to participate in shaping the particular content of the regulation (Kolk and Levy 2001). A parallel scenario does not apply to Mexico. While the Mexican government has been generally supportive of forward progress in the international climate arena, Mexico was decades away from mandating greenhouse gas reductions when Pemex announced its cooperative climate policy. Moreover, a detailed juxtaposition of national climate policy developments against the unfolding of Pemex’s corporate climate policy clearly shows that the firm was driving rather than reacting to national regulation (Table 1). The first flowering of climate change activity in Mexico dates back to the mid1990s. In this early period, Mexico’s climate policy position was determined by a small group of actors, mainly from the scientific and environmental communities. In particular, key individuals housed in the environmental ministry (SEMARNAT), SEMARNAT’s environmental research branch (Instituto Nacional de Ecología, INE) and at the national university (Universidad Nacional Autónoma de México, UNAM) drove national-level policy on climate change. At this early stage, Pemex had little interest in the climate issue. As mentioned above, the company cooperated with INE by providing information for Mexico’s first National Communication under the UNFCCC, but did not initiate internal dialogue on climate change. The second period in Mexican climate politics was initiated by the jump in the political profile of the climate issue in 1997. In the build-up to the December 1997 Kyoto Protocol negotiations, the UN climate negotiations process gained much higher political salience in international and domestic arenas. In Mexico, this led to a formalization of the process by which various government agencies contributed to Mexico’s climate policy strategy. In 1997, an ad hoc interministerial consultation process was transformed into the formal Comite Intersecretarial de Cambio Climatico, with a wider membership. The widening of ministerial interest in climate change also brought to the table more opposing viewpoints. Climate change had become a priority issue for not only SEMARNAT, but also for the ministry of energy (Secretaria de Energia, SENER), among others. The Kyoto Protocol negotiations in December 1997 were the first time a representative from SENER was included in the Mexican delegation to the UN climate change negotiations. By 1998, several internal documents had been generated by SENER addressing energy and climate change issues (SENER 1998a, b). SENER voiced a policy position that was critical of the international climate negotiations and opposed a global treaty mandating binding greenhouse gas reductions. The debates in 2000 in the Mexican Senate over ratification of the Kyoto Protocol unfolded as a battle between SEMARNAT and SENER, with the former supporting and the latter opposing ratification.
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Table 1 Key events in Mexican climate politics and Pemex climate policy Date
Events
1989 1993, October
Mexico creates a National Energy Savings Commission (CONAE) U.S. launches the Country Studies Program (CSP) which supports climate change studies, plans, and technology assessment in developing countries. Mexico is among first round of countries to receive CSP funds Workshop on “Mexico and Climate Change,” sponsored by INE, CSP, and UNAM Ernesto Zedillo assumes Mexican Presidency Carlos Gay at UNAM establishes an “Ad Hoc Group” to coordinate inter-ministerial dialogue on climate change INE publishes the Preliminary National Inventory of Greenhouse Gases Pemex establishes a Committee on Industrial Safety and Environmental Protection Mexico publishes its First National Communication under UNFCCC “Ad-Hoc Group” is reorganized into a formal Inter-ministerial Committee for Climate Change Kyoto Protocol negotiated SENER begins to engage with climate change issue Implementation of Pemex’s Comprehensive Administration System of Safety and Environmental Protection (SIASPA) Pemex launches SIASPA Campaign for Energy Savings and Environmental Protection Pemex hosts climate change workshop with SEMARNAT, UNAM, and UNDP to build familiarity with the issue among Pemex executives and to start a training program that will enable Pemex to participate in the CDM Pemex publishes an official climate policy in its 1999 Safety, Health and Environment Annual Report Mexican Senate votes to ratify the Kyoto Protocol Pemex representatives attend USAID workshop on “Market Approaches to Environmental Protection”; meet representatives from Environmental Defense President Fox assumes office President Bush withdraws the U.S. from the Kyoto Protocol Pemex publishes its 2000 Safety, Health and Environment Annual Report Pemex announces GHG reduction target and trading program Mexico publishes its Second National Communication under the UNFCCC Pemex hosts an ARPEL workshop on CDM President Fox appoints Victor Lichtinger Secretary of the Environment Pemex publishes its 2001 Safety, Health and Environment Annual Report EU ratifies the Kyoto Protocol Pemex hosts an ARPEL workshop on emissions trading SENER hosts a workshop on “Energy, Environment, and Sustainable Development”
1994, April 1994, December 1995 1995, September 1997 1997 1997 1997, December 1998 1998 1999, August 1999, December
2000, April 2000, April 29 2000, May 2000, 2001, 2001, 2001, 2001, 2001, 2002, 2002, 2002, 2002, 2002,
December March April June July October Spring April May May August
SENER’s involvement in national climate policy debates is of particular relevance to the Pemex case. Formally, Pemex is a very large and independent subgroup within SENER. Despite the close relationship between SENER and Pemex, the two organizations developed their climate policies relatively independently. From 1997 to 2000, when SENER developed and voiced its oppositional stance, Pemex was formulating its cooperative climate policy. In 2000, Pemex sided with SEMARNAT and against SENER in the debate over Kyoto ratification. SEMARNAT won the battle. On April 29, 2000, the Mexican Senate voted to ratify the Kyoto Protocol, with President Zedillo casting the deciding vote. Unfortunately, Mexico’s decision to ratify the Kyoto Protocol did not build significant momentum for action on climate change. First, Mexico ratifying the Kyoto Protocol did not mean that the country accepted a binding greenhouse gas
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reduction target. The Kyoto Protocol mandates such targets only for industrialized countries. Second, the decision to ratify was made towards the end of Zedillo’s 6-year term. The election to the Mexican presidency of Vicente Fox in August 2000, a position he assumed in December of that year, marked the advent of the third phase in the history of Mexican climate politics. The Fox administration did not carry forward the previous administration’s national climate strategy. Among environmental issues, climate change was of low priority to Fox’s environmental staff, as the issue had suffered several political setbacks in the international arena. Not only had the November 2000 round of the Kyoto Protocol negotiations collapsed because of U.S.–EU disagreement, but climate change advocates in Mexico also received a further blow in March 2001 when President George W. Bush withdrew the United States completely from the Kyoto Protocol negotiations. Without US support, the international prospects of the Kyoto Protocol were very uncertain. However, the waning of international and domestic political interest in climate change did not impede progress within Pemex. From June 2000 to June 2001, Pemex improved its greenhouse gas accounting methodologies and developed its internal emissions trading system. In June 2001, just two months after the US withdrawal, Pemex’s GHG target and emissions trading program were publicly launched. A fourth turnaround in Mexican climate politics occurred in spring of 2002. Fox’s Secretary of the Environment, Victor Lichtinger, started raising the profile of the climate issue in Mexico after a diplomatic visit to Europe in the spring of 2002. During the visit, Lichtinger met with European environment ministers who were pushing for EU ratification of the Kyoto Protocol. The EU’s decision to ratify was announced in May 2002. With EU ratification, an international climate regime based on the Kyoto Protocol once again became viable. There was special interest in Mexico in the Kyoto Protocol’s flexibility mechanisms, including the Clean Development Mechanism and emissions trading. Climate discussions within Mexico’s federal government ministries in 2002 focused on the creation of a national climate change office. In these discussions, Pemex’s experience with the CDM and emissions trading—in October 2001 and again in May 2002, Pemex had hosted workshops on designing projects to meet CDM criteria—were seen as a resource that could inform policy developments at the federal level. The chronology of climate policy development in Mexico highlights that Pemex did not develop its corporate strategy in response to pending greenhouse gas regulation. Binding greenhouse gas regulation for a developing country like Mexico has yet to be considered seriously at the international level and has never been proposed domestically. Moreover, while certain government agencies, like SEMARNAT, supported international regulation of greenhouse gases, SENER, the ministry structurally closest to Pemex, opposed action on climate change. Stakeholder Pressure Alongside market forces and government regulation, the third commonly identified driver of change in firm environmental behavior is stakeholder pressure. International and domestic NGO campaigns, pressure from local community groups, consumer boycotts, and shareholder advocacy are all mechanisms through which stakeholders can influence firm behavior. The Pemex case is again anomalous with
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respect to the general model. Pemex developed its climate program in the absence of any targeted international or domestic stakeholder climate activism. Like its Western counterparts, Pemex faces significant pressure from local community groups over land and water contamination from oil exploration and production related activities. The oil industry has a long and poor environmental history in Mexico. Oil exploration in Mexico began at the turn of the twentieth century and continued unfettered until 1979, when the Ixtoc I well blowout focused international attention on the environmental problems of Mexico’s oil industry (Grayson 1980). Pemex today is dealing with this legacy of pollution, while continuing to make its own contribution to the contamination of water and land resources in the Gulf of Mexico oil regions. However, community groups are not linking the climate issue to local environmental pollution concerns. Their aims are to force clean-up of the contaminated areas, to improve the ongoing environmental performance of Pemex facilities and to force the company to pay damages (Town and Hanson 2001). The most obvious constituency in Mexico that might initiate a climate change campaign is the environmental NGO community. The NGO community in Mexico is vibrant, although still in the early stages of its development. Delgado (2001) identifies the 1980s and particularly the battle against the Laguna Verde nuclear power plant as the beginning of a self-identified environmental movement in Mexico. This community continued to thrive and expand in preparation for the first Earth Summit in Rio in 1992 and beyond. Nevertheless, the Mexican environmental NGO community has not launched a climate campaign. Several factors account for this. Climate change is an issue that extends beyond the scope and capacity of most Mexican environmental NGOs. Most Mexican NGOs work on either “green” biodiversity and conservation issues or “brown” contamination and pollution concerns. As an environmental issue, climate change straddles the brown and green distinction. Therefore, an effective climate campaign must bring together expertise in both brown and green issues. In addition, the causes of climate change are systemic and intertwined with national and international economies and political systems. Consequently, a climate campaign cannot only be a local effort, but must operate internationally. These requirements overburden most Mexican NGOs. Those that do have the necessary resources, such as Greenpeace Mexico, Centro Mexicano de Derecho Ambiental (CEMDA), or the Union de Grupos Ambientalistas (UGA), do not view climate change as a priority issue. During interviews, policy directors and campaigners from Greenpeace Mexico, CEMDA, and UGA argued that climate change is not an issue of concern to the general public. Also, they stated that since the Mexican government and Pemex have generally been forward thinking on the climate issue, they are not vulnerable targets.
Importing Environmentalism Since standard market, regulatory and stakeholder drivers of firm environmental behavior fail to explain Pemex’s proactive greenhouse gas strategy, why then did the company adopt a cooperative climate policy? I show that the process by which Pemex decided on its climate policy was a norm-driven one of acting as a “close follower” to the climate policy strategies of the leading oil multinationals. My
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explanation describes a form of norm diffusion and organizational mimesis that emphasizes the agency of Pemex managers throughout the process. I begin my discussion by analyzing the organizational and institutional structures within which Pemex managers operate. I then describe the process by which managers identified, chose, and promoted a proactive, cooperative climate policy, and the enabling conditions that allowed for Pemex’s importing environmentalism.
Closely Following the Leaders The organizational groundwork for Pemex’s proactive climate policy choice was laid in 1992. While the firm has a long history of engaging with environmental issues, dating back to the 1970s (Pemex 1972), the focus historically had been on fuel efficiency and fuel quality motivated by local air pollution concerns and on environmental impacts at the point of production (Quintanilla and Bauer 1995; Bauer and Quintanilla 2000). As a result of this local focus, responsibility for environmental issues tended to be dispersed in the company’s various subdivisions. This changed in 1992 when a general process of centralization of Pemex’s operating structure also lead to a centralization of environmental management. That year, a corporate center was created to oversee the four operating companies: Pemex Exploration and Production (PEP), Pemex Refining (PR), Pemex Gas and Basic Petrochemicals (PGPB), and Pemex Petrochemicals (PPC) (Pemex 2006). At the same time, an auditor was assigned the responsibility of reporting directly to the corporate center on industrial safety and environmental issues (Pemex 1993). Building on this, in 1996, a director for Industrial Safety was appointed at the corporate level (Pemex 1997). Finally, in 1999, environmental “aspects were elevated to the highest level within the organization, with the creation of the Corporate Direction for Industrial Safety and Environmental Protection” (Pemex 2000:6). Simultaneous to the organizational restructuring was a growth in internal interest in environmental issues, driven in part by a series of industrial accidents (Gomez Avila et al. 2001). In 1996, the PGPB operating company implemented an environmental management system called PROSSPA (Programa de Seguridad Salud y Proteccion Ambiental). A year and a half later, the rest of Pemex followed suit. In 1998, the company published an official policy on industrial safety and environmental protection, which outlines 11 principles and is operationalized via an environmental management system (SIASPA–Sistema Integral de Adminstración de la Seguridad y la Protección Ambiental) that superseded PROSSPA (Pemex 1998a, b; Gomez Avila et al. 2001). The SIASPA program is unique to Pemex and was first piloted in Pemex Refining. It is now operational in all the divisions except PGPB, which continues to use the preexisting PROSSPA system. Finally, Pemex also has implemented an environmental reporting system (SISPA–Subsistema de Informacion de Seguridad y Proteccion Ambiental). Pemex’s implementation of environmental management and reporting systems provides general evidence of the global diffusion of environmental practices and norms. Studies have documented the spread of environmental management system approaches from chemical and oil multinationals headquartered in industrialized
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countries to firms in developing countries (Garcia-Johnson 2000; van de Wateringen 2005). Yet these studies reveal little about the dynamics of diffusion. The details of the process by which Pemex designed and implemented both the PROSSPA and SIASPA systems showcase the active role played by the company in the diffusion process. First, Pemex managers observed a global trend in the oil industry. As described in an article on SIASPA in the Gaceta Ecológica, “at the close of the century, we [Pemex] observed that leading oil companies were placing significant value on all actions relating to safety and environment and developing environmental management systems” (Pemex 1998a, b, my translation). Pemex managers then scanned the policies of the oil majors, seeking a template for their environmental management system. In the case of the PROSSPA system, they identified DuPont as the industry leader. A Pemex manager described the process: The general strategy was we wanted a system, not theoretical, because you could contract some consultative bureau and they design exactly what you desire; this is the tailor made system. But they don’t have any proof that operationally it works. And we were thinking and thinking about this, and we selected some consultant who has experience with the same system in their own facilities. That is why we choose DuPont. Because DuPont provides service for system administration for environment, health, and safety, but they use this system in their own facilities and this a guarantee that your system works practically.1 A similar scan of international practices preceded the adoption of the SIASPA system. An executive in Pemex’s environment department remembered, “So we went and looked at a lot of systems. What BP was doing, what Shell was doing. And we liked a lot of what Conoco was doing. So we took the Conoco idea. The red book they have, we expanded. We changed it in order to meet Pemex requirements.”2 The process of scanning the practices and policies of the international oil majors for innovative ideas is consistent with Pemex’s identity and self-perception. Pemex is proud of its position among the top ten global oil companies and, despite state ownership and other constraints, strives to mimic the management techniques of the global oil majors, distancing itself from the state-owned companies forming the Organization of Petroleum Exporting Countries (OPEC). Interviewees repeatedly described Pemex’s striving to be world class, a goal embraced by its Director Generals (DG). One executive described Adrian Lajous, Pemex’s DG from 1995 to 1998, “He was reading the trends in the world and he wanted Pemex to be as similar as possible to the other oil companies.” In the same interview, he stated, “We would like to be much more like a first world company than a third world company. This is a type of approach very well-defined by Lajous.”3 Another executive described the tone set by Lajous’ replacement, Raul Muñoz Leos, as, “They want to be considered one of, if not the best oil company in the world. They are not joking. They are convinced. The top brass in Pemex. If that signal is shared by company, I don’t see why not.”4 Others offered a slightly less optimistic view that recognized Pemex as 1
Interview Interview 3 Interview 4 Interview 2
with with with with
Pemex executive [OIL 7], 17 September 2002. Pemex executive [OIL 3], 14 August 2002. former Pemex executive [OIL 1], 12 September 2002. oil industry expert [OIL 4], 25 July 2002.
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being second tier. A Pemex manager described the company as a “close follower” of the leading oil multinationals.5 Another Pemex executive described Mexico “in the habit to follow the European countries....We have the custom to follow the leader.”6 Choosing British Petroleum as the Climate Strategy Leader The dynamic of monitoring global trends and then custom-designing an environmental policy suitable to Pemex’s operational circumstances served as the general organizational template that its managers used in developing the company’s climate policy. The company’s executives identified climate policy as a priority issue, looked to the international arena for climate leadership, and then formulated a Pemex climate policy. Pemex especially drew heavily from British Petroleum (BP), the oil major that its managers identified as the industry leader in the climate arena. After the implementation of SIASPA in 1998, the newly established corporate level environmental health and safety (EHS) team at Pemex turned its attention to climate change issues. The 2 years from 1997 to 1998 were marked by important international developments in climate policy, both in the state and private sectors. In December 1997, the international community agreed on a final text for the Kyoto Protocol. In May, BP’s CEO had broken ranks with the rest of the oil industry and announced his company’s new corporate climate strategy. Shell followed suit a year later. In late 1998, BP and Shell also both pledged to reduce greenhouse gas emissions from their operations by 10% from 1990 levels by 2010 and 2002, respectively (Browne 1998; Shell 1998). Following these international developments, key managers in Pemex’s EHS group, including Rafael Fernandez de la Garza, the head of Pemex EHS, and Salvador Gomez Avila and Enrique Garcia Perena, leaders of Pemex’s climate initiatives, began internal discussions on climate change. The first product of these discussions was the December 1999 Pemex climate change workshop. The overarching goal of the workshop was “to introduce the Pemex high-level and medium-level executives in this issue. And as a result of this workshop we intensified the relationship with the specialists and the experts in the issue here in Mexico and some other parts.”7 The workshop agenda was wide-ranging and showcases the level of Pemex’s early interest in climate issue. General workshop topics included climate change and international agreements, the climate policy position of the Mexican government, Costa Rica’s and Argentina’s experiences with greenhouse gas reductions, and international sources of technical and financial support for climate projects. In addition, the workshop included several presentations specific to Pemex and climate change. One focused on a greenhouse gas emissions reductions project in Pemex Refining and the other on a prototype Pemex internal emissions trading system (Pemex, SEMARNAT, and UNDP 1999). The company’s interest in emissions trading was a direct result of what Gomez Avila described as a “bibliographic search” on the climate policy positions of leading state-owned and publicly traded oil companies (Pemex 2001). When beginning to 5
Interview with oil industry expert [OIL 4], 25 July 2002. Interview with Pemex executive [OIL 7], 17 September 2002. 7 Interview with Pemex executive [OIL 2], 14 August 2002. 6
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Table 2 Climate policies of the world’s 10 largest oil companies in 1999 Rank
Company
Country
State-ownership
Climate policy approach
1 2 3 4 5 6 7 8 9 10
Saudi Aramco Petroleos de Venezuela ExxonMobil NIOC RD/Shell Pemex BP TotalFinaElf PetroChina Pertamina
Saudi Arabia Venezuela USA Iran UK and Netherlands Mexico UK France China Indonesia
100 100 – 100 – 100 – – 90 100
Adversarial Adversarial Adversarial Adversarial Cooperative Cooperative Cooperative Wait-and-See Adversarial Adversarial
Ranking based on 1999 operational data. Source: PIW 2004
develop its climate policy in early 1999, the international arena presented Pemex with three potential strategy directions (see Table 2). Of the world’s 10 largest oil companies, six were pursuing adversarial strategies on climate change, two had opted for a cooperative approach (van der Woerd et al. 2000), and one company was following a wait-and-see strategy (van den Hove et al. 2002). Among the top 10, Pemex EHS staff identified BP and Shell as climate leaders. In the words of a Pemex manager, “British Petroleum is doing it. Shell is doing it. So we should also do it. We want to be a world class company.”8 While Pemex executives publicly acknowledged their copying of BP, they also expressed the challenge of accessing the details of the BP climate program. For example, a draft version of the 1999 Pemex climate workshop agenda included a presentation on the BP-Amoco emissions trading system. The workshop organizers were not able to find a speaker to present on this topic. A key promoter of emissions trading with Pemex described the company’s interest in the topic, “We were looking before this workshop for the information about these mechanisms in order to develop it in Pemex. We were trying to look for some literature, to discuss these issues with people, but it was not very easy. At that moment, this issue was very strange in this setting.”9 The connections between Pemex and BP were ultimately facilitated by Environmental Defense (ED) and the U.S. Agency for International Development (USAID). In May 2000, six months after hosting its December 1999 climate conference, two Pemex representatives (Javier Bocanegra and Enrique Garcia Perena) attended a workshop in Washington, DC, titled “Market Approaches to Environmental Protection.” The workshop was organized by the USAID Center for the Environment and included a presentation by ED’s Joseph Goffman on the U.S. sulfur dioxide emissions trading program. The USAID Mexico representative used the workshop as an opportunity to arrange a meeting between the Pemex representatives and the emissions trading team from Environmental Defense. They met repeatedly during the workshop, and Bocanegra describes drawing on the workshop for the “theoretical part” of the emissions trading system.10 The practical 8
Interview with former Pemex executive [OIL 1], 12 September 2002.
9
Interview with Pemex executive [OIL 2], 14 August 2002. Interview with Pemex executive [OIL 2], 14 August 2002.
10
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experience came from conversations with BP staff. Bocanegra attended an ARPEL meeting in New York where representatives from BP Argentina described BP’s internal emissions trading system. In addition, Garcia, through an Environmental Defense connection, visited the BP office in Houston and had the opportunity to observe how BP’s internal emissions trading system functioned in practice. Based on this information, Pemex then started to build its own system. Developing an internal emissions trading system turned into a year-long process in which Pemex’s EHS team had minimal interactions with BP but maintained frequent contact with ED, initiating an official Pemex-ED collaboration in January 2001. Creating a trading system entailed determining the structure of the trading system, establishing the computer platform that would allow for trading, and, most important, training staff on the concept of emissions trading and the Pemex trading system. Pemex’s EHS team developed the software platform through which to track and trade greenhouse gas emissions reductions and held training workshops with staff in the various business streams. Pemex’s Mercado Interno de Permisos de Emisiones de Carbono was officially launched by Director General Muñoz on June 4, 2001. The target tied to the trading system was a 1% reduction of carbon dioxide emissions from the 1999 levels to be met by December of 2001 (Pemex 2002a, b). Pemex met that target and has continued to reduce its GHG emissions although it did not adopt a second, post-2001 target. In choosing to follow BP, Pemex rejected the adversarial climate policy approach advocated by ExxonMobil. Although ExxonMobil was the industry leader for both worker safety and operational efficiency, the negative attention from environmental NGOs generated by ExxonMobil's climate strategy swamped these positive aspects of the company’s operations. Therefore, ExxonMobil was never one of the group of companies considered climate leaders. Moreover, prior contact facilitated Pemex-BP links. The two companies had co-operated in an executive exchange program in the mid-1980s.11 In contrast, Pemex had had little contact with either Exxon or Mobil. Policy Promotion within Pemex In importing their climate policy, Pemex managers were not passive recipients of ideas handed to them, but active agents. Its EHS team chose to prioritize the climate issue and sought the information they needed to design a climate policy strategy and commitments suited to their particular national circumstances. Pemex environmental executives also showed agency in their promotion of their climate policy agenda within the firm. The success of the climate policy initiative was neither automatic nor guaranteed. Given the overall situation of capital constraint, investment in environmental programs needed to be justified. There was skepticism regarding the focus on climate change. A former executive described the “belief that Pemex has to have a world presence. That is very stupid. They are trying to play in the major leagues for the sake of it, without any real reason. People in Mexico don’t know what climate change is. This is not a social issue.”12 Some Pemex staff were also skeptical of the
11 12
Interview with oil industry expert [OIL 4], 25 July 2002. Interview with former Pemex executive [OIL 1], 12 September 2002.
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emissions trading system. In describing the response to the training workshops, an EHS executive categorized most Pemex employees as interested in the program, but acknowledged that there were some doubters, “who had different opinions on this issue or simply did not believe in these types of programs.”13 Another executive pointed out that the trading system is virtual and not linked to the actual transfer of funds between business units. He went on to argue that the system would remain virtual because the responsibility for trading was assigned to low-level employees who do not have the authority or expertise to approve the financial investments in emissions reduction projects.14 Finally, several interviewees highlighted that the market approach of an emissions trading system was antithetical to Pemex’s hierarchical culture. Pemex’s EHS team presented several arguments to overcome such skepticism and opposition. The team consistently reiterated three themes in describing the expected benefits of company’s proactive climate policy. The first motivation related to the company’s position in the international oil industry. As described above, the climate policy supported its image as an environmentally responsible company, on par with the leading oil multinationals. The team also pitched the climate program as an investment in the future, and argued that if and when greenhouse gas regulation becomes a reality, Pemex would be prepared and “ready to operate well.”15 However, the primary selling point of climate program was that it created two business opportunities, based on preexisting business objectives within Pemex. The most direct anticipated benefit of tracking and inducing new greenhouse gas emissions reductions projects was that the credits from reductions could be sold via the Kyoto Protocol’s Clean Development Mechanism. By 1999, the firm had already been approached by both Canadian and Norwegian companies interested in investing in Pemex to create CDM emissions reduction projects.16 Pemex’s EHS team promoted CDM projects as a means to channel foreign investment into Pemex. CDM projects were defined as the “the sale of environmental services” and framed as bypassing the constitutional restriction on foreign investment in the oil sector. At the time, the CDM was estimated to be a US$2-4 billion market (Quadri 2000). Emissions reductions projects also contributed to Pemex’s ongoing efficiency and conservation efforts. The firm has long been recognized as one of the most inefficient companies in the oil industry, even among state-owned oil companies. For example, based on 2001 operating statistics, Pemex earns US$200,000 in revenue per employee, compared to US$600,000 for Petroleos de Venezuela, and US $1,600,000 for ExxonMobil (PIW 2004). Moreover, the petroleum industry is very energy intensive, and Pemex facilities are among the largest energy consumers in Mexico. Finally, poor efficiency weakens Pemex’s reserves to production ratio, which is currently just under 10 years (BP 2007). The federal agency for energy conservation (Comisión Nacional Para El Ahorro de Energía, CONAE), has as one of its goals improving the efficiency of Pemex operations (OECD 1998). Pemex had 13
Interview with Pemex executive [OIL 2], 14 August 2002.
14
Interview with Pemex executive [OIL 7], 17 September 2002.
15
Interview with Pemex executive [OIL 2], 14 August 2002.
16
Interview with Pemex executive [OIL 2], 14 August 2002.
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also launched internal initiatives. In 1999, the company started a Programa de Ahorra de Energía, which focused on energy savings (Gomez Avila et al. 2001). The EHS team argued that Pemex’s internal emissions trading program would help meet these preexisting efficiency and conservation goals. Many of the emissions trading projects were projected to improve efficiency. One Pemex executive described the climate change initiative as follows: “There are enough people in Pemex who know and understand that this can be an opportunity. Before all the climate change, we were trying to promote energy efficiency. This is a much older project. Not always very successful. But it never disappeared. So both combined very well. This is the real part of it.”17 Another Pemex manager highlighted the strength of the program in changing the way employees think. In the past, Pemex’s primary goal was to maximize production, regardless of cost. Now the emphasis is shifting to efficiency and emissions trading serves as a tool to reorient employees’ priorities.18 Enabling Conditions As mentioned in the introduction, the Pemex case is unique. Why is Pemex the only nationally owned, developing-country oil company to date to adopt a proactive climate policy? A full-scale comparative analysis, beyond the scope of this article, would be necessary to address this question. Yet the detailed process-tracing of the development of its climate policy suggests that three conditions enabled Pemex’s “importing” of its climate policy. First, it is unlikely that Pemex would have pursued a climate-friendly policy if the Mexican government had been adamantly opposed to action on climate change. Despite the stop-and-go character of the unfolding of Mexico’s national climate policy, on the whole, the country has been an advocate internationally for action on climate change. This created some policy space for the firm to pursue a proactive climate strategy. Second, during the agenda setting phase, Pemex’s initial engagement with the climate issue was mediated via SEMARNAT, the environmental ministry, rather than SENER, the energy ministry. The initial seeds of Pemex’s climate policy originated in the company’s early collaboration with environmental scientists at SEMARNAT, INE and UNAM. Had this contact not been initiated, the most likely outcome is that Pemex would have adopted SENER’s more adversarial approach to GHG regulation. The third precondition for Pemex’s climate friendly policy was the ability of the EHS team to make the business case for the cooperative climate policy. The business opportunities of selling emission reduction credits through the CDM and of fostering efficiency improvements via the emissions trading system were recognized and accepted by the wider Pemex management team. The nature of the three enabling conditions suggests that the adoption of a proactive climate policy among state-owned, developing-country oil companies should not be limited to Pemex. Similar business opportunities should exist for other developing-country oil companies. Moreover, early contact between oil companies
17
Interview with former Pemex executive [OIL 1], 12 September 2002.
18
Interview with Pemex executive [OIL 2], 14 August 2002.
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and developing-country scientific and environmental research communities is likely. Developing country delegations to the UN climate negotiations in the early 1990s generally included representatives from the national meteorological office or the environmental ministry rather than officials from the energy ministry. The biggest stumbling block may be that most developing country oil companies are members of OPEC. Internationally, OPEC has been a staunch opponent of greenhouse gas regulation and has limited the scope for discussions of proactive climate policy engagement (Newell 2000).
Conclusion This article has examined Pemex’s choice to pursue a cooperative climate strategy through an in-depth case study of the evolution of the company’s climate policy decision-making process. I argue that standard models of firm environmental behavior as a functional response to external market, government, civil society pressures do not explain the Pemex case. Rather, the choice to make climate change a priority issue and to set a greenhouse gas reduction target was the product of Pemex managers’ participation in transnational oil industry policy networks, which facilitated their active importing of climate protection norms and practices. In unraveling the puzzle of the Pemex case, I make two theoretical contributions. First, I highlight and theorize the environmental agency of developing-country firms. The general consensus in the environment and development literature is that environmental considerations have little influence on processes of industrialization in developing countries. There are also arguments about a “global race-to-the bottom,” where companies seek out countries with the weakest environmental standards. According to the logic of this argument, companies based in those countries already operate at the bottom. Pemex’s climate policy choice offers an alternative possibility, a “high road” in terms of the environmental practices of firms in developing countries. The second theoretical contribution of this article is to showcase the prominent role of private sector channels in processes of transnational environmental norm diffusion. While Environmental Defense collaborated with Pemex to develop the internal emissions trading system, the company was guided by the actions of British Petroleum. This research suggests that industry peers and industry leaders play a more important role in shaping firm environmental values and decisions than external stakeholder pressures. The history of Pemex as an industry pioneer has a cautionary epilogue. Even though it remains the only state-owned, developing-country oil company to have committed to a GHG emissions target, since 2002, the firm has backed away somewhat from its active engagement with climate change. The company did not follow up its 1% reduction target with a more stringent 10% reduction target, as was discussed in 2002. Pemex also has not been a highly active participant in the CDM. Yet, despite this decline in momentum, Pemex’s climate policy initiatives have not been undone and the company has laid the institutional groundwork for active engagement in the carbon market, if and when Mexico takes on a national greenhouse gas target.
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Acknowledgments I thank Adrian Fernandez Bremauntz, the staff at the Instituto Nacional de Ecologia, Kate O’Neill, Brett Heeger, Stacy VanDeveer, and the two anonymous reviewers for their helpful comments, and all the individuals that agreed to be interviewed for this project. An earlier version of this research was presented at the 2006 International Studies Association Annual meeting. Direct correspondence to Simone Pulver, Watson Institute for International Studies, Brown University, 111 Thayer Street, Providence, RI 02912.
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Simone Pulver is a Joukowsky Family Assistant Professor (Research) of International Studies and Environmental Studies at Brown University. She has a Ph.D. in Sociology and an M.A. in Energy and Resources from the University of California, Berkeley. Her current research examines climate-friendly business initiatives by developing-country firms in India and Brazil. Pulver has published on the climate policies of leading transnational oil companies, firm environmental decisionmaking, multilateral environmental governance, and the emerging solar energy market in rural Kenya.
