From safety to reputation: Oil and gas industry embraces ESG for trust, sustainability
Health & Safety ASSP ESG Oil and gas
For Patrick Garland, the issue of ESG (environmental, social and governance) in the oil and gas industry comes down to one word: Trust.
“There’s pressure on the oil and gas industry. We have to demonstrate that we really are part of the community,” Garland told the audience at the American Society of Safety Professionals (ASSP) Conference + Expo this week in San Antonio, Texas. “There’s a lot of people who are instinctually against (us), but we have a really good story to tell. We don’t just fly in, put a hole in the ground, and fly out.”
The sector has done a “remarkable” job of improving its safety record over the last 20 or 30 years, he said.
“We have a lower TRIR (total recordable incident rate) than a lot of industries,” said Garland, the U.S. West Region safety manager and U.S. Water Practice safety manager at WSP. “Unfortunately, we have a severity rate that’s a little higher than other industries. Because when things go wrong, they truly do go wrong.”
Jeff Gosney, supervisor, safety operations, U.S. liquid pipelines at Enbridge, said it seems “unimaginable that anyone would argue against the importance or necessity of protecting workers.” Employees are, by far, the most precious commodity in oil and gas, he said.
“By protecting them, we also protect the environment and our other investments,” said Gosney.
Breaking down ESG
The environmental part of the acronym is a big one, because when incidents happen, they can be serious.
“Occasionally things get spilled, and most of those things catch fire and go boom,” said Garland. “We have to be really careful about that.”
The social realm is the one that impacts health and safety professionals the most, said Garland.
“Yeah, we like to take care of the equipment. But we mostly want to take care of our people, that’s our most important asset,” he said. It also covers areas like diversity, human rights and community relations.
The last part of the acronym, governance, is where the “rubber meets the road,” he said. It’s all about reporting and is how companies are ultimately judged on both Wall Street and Main Street.
“They want to see what we do as companies and how we manage our business,” said Garland.
Importance of audits
Garland said that, sometimes, ESG and safety audits can feel mundane and pointless — “like we’re doing it mostly to entertain ourselves.”
“But the honest to god truth is these numbers matter,” he said. “We have to be in compliance. More and more people are looking at us. Honesty is really important.”
Mistakes can be costly, not just in fines but also in reputational damage to the company, he said.
“People want to know that you’re taking care of their best friend that works on the line next to them, or who’s been drilling with them or working on the pipe,” said Garland.
“It’s important that they feel confident and that they know they’re going to go home safe every single day.”
Workers in the industry, at all levels, also want to take care of the environment.
“The people who work in the oil and gas industry, we work outside — we work in the dirt,” said Garland. “We’re not out there to destroy the planet, despite what the public perception might be. We care about the places that we’re working, and we want to make sure they’re taken care of.”
While there is a lot of focus on keeping workers safe from internal risk factors, there are some external factors that can come into play, said Garland.
“We have a lot of people who don’t like what we do, and are out there protesting,” he said. “We’ve had protesters at refineries. We’ve had protesters on the pipelines, and we have to be aware of that, make sure we’re doing things correctly and be ready to deal with it.”
Major oil and gas firms tackle ESG
Gosney pointed out some of the commitments and work done by some of the major firms in the industry.
For example, in November 2020, Occidental Petroleum became the first large producer in the U.S. to set a net zero emissions target by 2040 and a commitment to reduce greenhouse gas emissions associated with their products by 2050.
Shell Oil recently held a shareholder vote to approve its sustainability strategy — and it was met with 89% approval, he said. The goal is to reduce 100% of their carbon intensity by 2050.
Exxon Mobil has a four-prong sustainability framework that includes the investment of $3 billion in carbon and capture and storage projects, said Gosney.
At his own company, Enbridge, the goal is reducing emissions by 35% by 2030 and net zero emissions by 2050, he said.
Working with stakeholders
Oil and gas professionals need to take note of where, and how, they’re doing their work, said Garland.
Plenty of people live near operations, and pipelines cross through tribal lands and Indigenous communities in both Canada and the U.S., he said.
“We need to make sure that people understand, wherever they are, that we’re there to operate in compliance with you,” said Garland. “We’re there to work with the community because we’re a part of the community. We’re not making noises at 3 a.m. to wake up the chickens, and we’re keeping on track with all the rules and regulations.”
Getting what he called a “social license” to work is critical in keeping all the stakeholders all board.
Selling safety to the C-suite
Garland said it’s critical to get senior leaders involved and for them to understand the safety department isn’t a black hole where money disappears.
“It’s keeping people safe. And if you don’t hear from me for a few days, that means I’m doing my job very well,” he said.
But it’s a two-way street, and safety needs to understand the goals of the C-suite as well, he said. Garland talked about a former boss who pushed to come up with a mission statement.
“I was like, ‘Why are we doing this? Can we just go out and do the work?’ And she said, ‘Yah, we can go out and get work, and so can a lot of other people,’” he said. “Make sure that we sell our business. Make sure that we sell what the health and safety professional is doing for the corporation.”
Don’t dismiss ESG
Professionals in oil and gas need to fully embrace ESG and not dismiss it as greenwashing, he said, because it’s here to stay.
“Truthfully, we’ve done this — all of us in this room have done (ESG) for a long time. I don’t want to destroy the planet. I live here. I’ve got kids,” he said. “I have faith that they’re going to have a good place to live. I want to keep this place clean.”
Garland is a firm believe that the industry is better, and continually improving, and that story needs to be told.
“We’re good at this, and tell people how good we are,” he said. “At the end of the day, your portfolio is only as good as your reputation. Make sure that we’re doing things the right way, that we are protecting our staff, that we’re looking out for the community. It’s not just feel good stuff, it’s what we do.”
Best practices for social ESG strategies
- Involve C-suite leaders in the safety commitment and practices goals for the company
- Develop a socially responsible mission statement with positive actions including a proven history of addressing safety and environmental concerns
- Describe diversity and inclusion: Inclusive policies that prevent discrimination and promote a positive working culture
- Dismiss the process as feel-good greenwashing – ESG in some form or other is here to stay
- Don’t forget to tout your efforts and success through local conferences and events, social media and public policy participation
- Don’t forget that at the end of the day, a company or portfolio is only as good as its reputation.