Abstract

Shale oil/gas is one of the most rapidly growing types of unconventional fossil fuel development and the abundance of this resource has postponed peak oil and gas. Physical scarcity of hydrocarbons is now less likely to occur in the near future; however, the likelihood of social scarcity is increasing. Despite the clear economic benefits of production in terms of jobs, tax revenue, and the provision of energy resources and industrial feedstocks, there is hostility toward shale oil/gas extraction in many parts of the world. This is due to concerns about how environmental, social, and economic impacts are managed and mitigated,and how risks and benefits are distributed among industry, governments and civil society.The application of sustainable development principles and sustainable operating practices is recommended as a partial remedy for this situation. Sustainability accounting frameworks based on criteria and indicators of sustainability and best practice codes of conduct represent two possible approaches for tracking how sustainable a firm’s practices are. These also provide a foundation for corporate social responsibility and can assist firms in gaining social license to operate. Also needed are estimates of a given operation’s net contribution to sustainable development. Possible methods include benchmarking against industry standards,achieving mature business conduct, gaining sustainability certification, demonstrated use of both design for environment and shared value creation methodologies, and integrated sustainability assessment. Conceptual progress has been made in applying sustainability to shale oil/gas; however, significant progress in applying these tools and methods in the field is needed because the sector tends to be judged by the behavior of the least responsible firm. Moreover, if best practices and shared value creation are set aside during the current or a future downturn, public cynicism about the sector will increase, and social license may be lost and even more difficult to regain.