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Of handrails and seat belts

Health and safety in the energy sector

Home / EOS Blog / Of handrails and seat belts – Health and safety in the energy sector

Leading our oil and gas work, I have met many oil and gas majors and related service companies in office settings and in the field, particularly in North America.

The industry loves to say that health, safety and the environment are its priorities. However, it is sometimes what companies do or not do rather than what they say that is revealing. To that extent, I have developed my handrail and seat belt test. This is based on interactions with companies that can give far greater qualitative insights than desk-based research companies and asset managers are capable of providing.

At one oil major, having had a lengthy meeting about its safety processes in the aftermath of the 2010 Macondo blowout disaster, I had to reproach the senior manager for not holding the handrail as he escorted me down the stairs at the end of the meeting. If senior management fail to do the basics in their headquarters, what conclusions can we draw from this to operations in the field?

On a recent trip to the US, the receptionist at another major exploration and production company confirmed that I had seen its head office safety video within the past year, so I did not have to see it again. My meeting host held the handrail – as did I – on the way upstairs to the meeting room and downstairs afterwards. It was the only handrail I have ever seen that had stickers on it requesting that it be used. At separate meetings during the trip, however, representatives of an oil major and a large oil services company did not use the handrails in front of me. Any health and safety representative will tell you that slips and trips are the most common cause of accidents in an office environment and these are companies that work in far more difficult environments than an office. Which company do you think may have the better safety record?

Seat belts
Which brings me onto seat belts. Oil and gas industry representatives tell me that one of the most difficult areas to reduce fatalities and accidents is in road traffic accidents. On an investor trip to fracking sites organised by an oil company a few years ago, the driver from its sub-contracted coach firm, who was taking us to the sites, would not start the engine until everyone on board had their seat belt fastened. Yet, on a recent trip to a downstream facility organised by a different firm, there was no such discipline and most passengers were happy not to wear their seat belts. What conclusions do we draw about the safety focus of these two companies? Do we believe what they say? Or what they do?

While impressionistic, seemingly superficial, unscientific and clearly not the only consideration, such insights can provide a window into the real conduct and culture of the company.

At another meeting with a company in a different industry, we learned how it put its drivers at the centre of the business and as a result has an industry-leading health and safety record. The company managed to achieve some of this by rewarding or punishing the drivers for good and bad practice via the telemetric data it records. Significantly, it also gives its drivers the possibility to veto jobs if they perceive them to be dangerous, unless the safety concerns are resolved.

Perhaps the oil and gas industry could learn from this company how to drive down accident rates. It also shows that maybe we should reserve judgement until we see for ourselves what actually happens on the ground instead of relying on the often beautiful picture painted in the head office.

Incidentally, my meeting was on the ground floor so I could not do my handrail test.

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Tim Goodman Tim Goodman is a director at Hermes EOS and sector lead for oil and gas. He is also responsible for Hermes EOS’ activities in North America. Previously, he worked in the insurance industry and held a number of senior operational management roles before acting as a company secretary at a UK-listed company. He is a member of the Institute of Chartered Secretaries and Administrators, having obtained the institute prize for the best overall performance when he qualified. Tim is a regular speaker on governance-related matters, a former member of the US Council of Institutional Investors’ corporate governance advisory council and a former chair of the UK Quoted Companies Alliance corporate governance committee. He is currently on the ESG advisory board of US law firm Grant & Eisenhofer.
Read all articles by Tim Goodman

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