Energy Trading, Ethics, and the Environment

Environmental issues are very deeply integrated into all types of the energy industry. This very much contributed to the fact that the industry was at the forefront of rais­ing public awareness of ethics in their business. Successively, this led to a number of positive initiatives, and more recently there has been a fast-growing interest in areas such as environmental protection, carbon trading, alternative energy sourcing, and corporate cooperation with local communities. Increased world-wide awareness of the need for good ethical behaviour and corporate social responsibility (CSR) was even generated through negative examples such as the high-profile corporate scan­dals in the early 2000s. The crises that overwhelmed Enron, WorldCom, and Tyco helped changed the world of business. The interpretation of the focus of CSR var­ies greatly between companies and between different parts of the world. For some industrialists CSR is similar to a degree of social responsibility that is of benefit to the shareholders. Others claim that the CSR concepts encompass wider dimensions and have a value in themselves. Large and small companies should have a sincere concern for the society in which they operate.

CSR can be traced back to the foundation of the International Labour Organi­sation (ILO) in 1919. From that time, and continuing today, the ILO is still fight­ing for decent working conditions and against exploitation of labour, particularly against child labour and slave-like working contracts. These remain problem issues in most of the world’s fast-growing economies. However, market economy mecha­nisms require a high degree of openness, transparency, and fairness. Without these fundamentals in the free market there will be important impediments to real free­doms of the market. If, for example, from within their professional life, traders and brokers possess insights of a company or a market that are concealed from other participants in the market, a competitive advantage is created based on deceit. In the energy sector there has to be a careful balance between the more technologi­cally-orientated production and distribution flows of energy on the one side and the energy-traded issues on the other. As in other financial services, it is important to separate these two sides of the business and to ensure that they are allowed to operate independently of each other.