The Oil and Gas Industry is particularly vulnerable to the market forces of consumer and public perception of oil & gas industry impacts. The impact of oil spills on company reputation, along with other events such as pipeline leaks, malfunctioning control equipment, transportation problems, or other emission events, can be severe, as they are more highly scrutinized by the media and by regulators, making reputation management in oil & gas a major challenge.
In fact, your reputation for being regulation-abiding and environmentally responsible is one of the key indicators that your stockholders and potential customers use when evaluating whether or not to hand over their money. This is especially true in today’s market, which is increasingly focused on sustainability and green practices: just look at the popularity of the Dow Jones Sustainability Index for investors.
Regulatory Uncertainty and Reputation Management in Oil & Gas
Why is reputation management important for oil and gas companies? Nearly any compliance issue can have much larger consequences than a violation penalty from the EPA – there’s a ripple effect that causes the entire industry to come under much more intense scrutiny.
For example, a pipeline malfunction experienced by another business several states over can mean that your own business is placed under the microscope. Industry regulators can suddenly take a higher interest in your operations.
Government regulators, encouraged by the media, often respond to these types of malfunctions by calling for stricter regulations, which in turn works to increase the regulatory uncertainty that plagues the Oil & Gas Industry. It can become a vicious game of catch-up in which Oil & Gas businesses constantly work full throttle to keep on top of - and in compliance with - the constant stream of regulatory updates.
For proof, examine the 2010 Deepwater Horizon catastrophe, the largest oil spill in U.S. history. A root cause analysis placed the blame primarily on BP and faulty concrete, but ultimately the entire petroleum industry has felt the effects of the aftermath. The public and the environmental hawks have become more suspicious of the entire oil and gas industry, driving increased regulatory expectations and making it more difficult for any oil & gas to explore and extract across North America.
Environmental Management: Your PR Team’s Secret Weapon
That’s why it is vital for Oil & Gas businesses to understand how environmental management is not just about permits and emissions accounting (even though those are essential elements of the job) but also an important aspect of their public relations and marketing.
How do oil and gas companies manage their reputation? The better your compliance record and reputation for sustainable practices in oil & gas, the more profitable you’ll be in today’s eco-conscious market.
Consider that businesses spend more each year on their marketing and public/consumer relations campaigns than on their environmental management. This mismatch between environmental impact and reputation management often leaves EHS teams without the resources they need. Marketing often gets all the resources it needs, while EH&S departments are expected to do more with less.
What are the environmental impacts of oil and gas operations? Industry-wide upheaval like the Deepwater Horizon incident has many companies racing to prove that your business isn’t the same as those other ones responsible for the mess. A race to prove that your business is protected against those types of accidents and that you’re taking all the necessary precautions.
But all that Public Relations work in the aftermath of incidents is a reactionary band-aid strategy regarding reputation management in oil & gas. What you really want is a system that helps prevent accidents and proves that your compliance record is pristine year-round.
You don’t have to look far to see an Oil & Gas company that has had its stock price fall, taking months to recover, from a completely avoidable incident.
Solid Environmental, Health & Safety management speaks for itself and does the work for your PR team instead of the other way around.
It’s far better to have proof that your compliance record is clean and that you have systems in place to prevent incidents. That way, your marketing isn’t about convincing anyone. It can instead focus on showing how great your business really is.
In order to switch up your own marketing strategy from reactive to proactive, you first need a few things in place: clear and traceable audit trails, real-time active compliance monitoring and alerts, and a way to chart training and performance.
These three key components present your business as responsible and compliant – essential for safeguarding yourself against malfunctions and their aftershocks. You can build a solid foundation with these EHS (Environmental, Health, and Safety) strategies for reputation management in oil & gas.
Earn Trust with Active Compliance Alerts
When it comes to actively managing your compliance record, it is far better to take a prevention approach rather than trying to fix problems after they occur. It is more impressive for stakeholders and prospective clients to see the many ways you ensure there won’t ever be a problem than to brag about how good you are at fixing your mistakes.
For that simple reason, one of the strongest sales tools you can have is an active system of monitoring your compliance performance that generates alerts about potential issues before they become a black mark on your reputation.
This rings especially true for the Oil & Gas industry, which also has to contend with having dozens of spread-out sites that often do not have environmental specialists present 24/7. It becomes essential to have an automated system to fill those gaps if you hope to stay on top of your compliance at those facilities.
One of the most powerful examples is having a system that can harness the power of continuous parametric monitoring to create a constant flow of data concerning your operations and individual processes and send that data directly to the EH&S professional in charge of making sure things run smoothly.
Imagine that the flare on one of your remote tank batteries pops off, and that installation is close to falling out of compliance. Now consider how useful it would be to get a notification to your email, tablet, or smartphone if that parameter ever began to get close to falling out of acceptable levels. You could actually prevent an issue rather than learning about the problem a week later.
Now imagine how much more secure, safe, and trusting your potential business partners and clients will be when they find out you have this type of safeguard in place.
Secure Trust with Training Tracking
To further prove just how committed you are to safer, more effective operations, consider the importance of a reliable system for tracking the training and education that your staff undertakes. It’s not just about knowing your product is in the right hands but also being able to show your target market that you are the go-to trained professionals.
It’s all about building trust and having the data to back it up.
For example, one sore spot in the Oil & Gas industry is finding trained transportation. Because turnover is high and many first-time transporters don’t fully understand the risks involved with oil & gas transportation, the transportation process can be high-risk and a minefield of potential regulatory violations.
And when a truck driver doesn’t transport your product safely, your company’s reputation is on the line, even if the risks aren’t your fault.
In those cases, you want to be 100% confident that you’ve provided all the training needed. And that level of confidence can only come from having clear records about the type of training your staff and contracted skilled workers have received.
By getting that data down in black and white, you can actually measure and manage one of your most important resources: the people working with you.
And if you have confidence that you have the right person for each job – and the records to back that up – it will be easy to demonstrate to clients and partners that they can trust you to deliver.
Safeguard Trust with Audit Trails
What strategies can oil and gas companies use to improve their reputation? The final piece of having both a prevention and training tracking system is to ensure that the records created for each contribute to a clear audit trail that demonstrates your commitment to corporate social responsibility (CSR) in oil & gas.
Audit trails are essential within any data management system to ensure accountability and provide the ability to do a root cause analysis for any issue, malfunction, or oversight. Whenever excess emissions occur or a piece of equipment functions incorrectly, your regulators, potential investors, and customers expect you to be able to pinpoint the cause and use that information to prevent further issues.
A system that creates good audit trails should be able to tell you the source of all data, when that data was entered or collected into the system, who is responsible for monitoring that data, and which follow-up actions were taken. It’s not enough to collect data. You want to be able to answer the who, what, where, when, and why of that data, and a good system will give you the power to do that.
Audit trails are the unsung heroes for public relations and increasing your sales. If anything should ever go wrong, the only way to win back regulator trust is to show you can figure out why and address the root of the problem. Nothing is more frustrating for a client than when someone they relied on can only shrug their shoulders and confess they have no clue what happened.
Even more importantly, by showing you take the time to create audit trails and analyze them as thoroughly as possible, you demonstrate how dedicated you are to doing your job correctly. In fact, we’ve worked with businesses that have actually improved their reputation with the EPA in the aftermath of an emission event by showing how much effort went into audit trails and good record keeping.
EH&S Management Is Reputation Management
Because the industry spends so much time in the spotlight, public image and reputation management in oil & gas is a part of nearly everything your business does.
Environmental, Health & Safety Management is no exception to this: more than ever, having a system in place that provides concrete proof that you are operating in a responsible manner is among the best ways to improve and protect how your potential buyers and investors view you.
If you want to invest in your reputation, focus on an EH&S system that provides:
- Compliance alerts and tracking
- Training tracking
- Audit trails
By having these three trust-winning EH&S management capabilities, better PR and sales will be added to the benefits your environmental performance yields. You can schedule a discovery call with one of our project analysts to find out more about how ERA’s software provides an effective solution for EHS in oil & gas.
Ask an ERA Expert:
Do you have any questions or concerns about the topic covered in this article? Want more insight? Now is your chance to ask one of ERA’s Environmental Specialists. Please leave your question or comment below, and we’ll make sure one of our expert scientists responds.
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