'The Green Dividend' – it pays to practice good HSE

However, while industry safety and environmental performance has improved dramatically in recent years, negative perceptions remain, and a strong safety culture is a marker of risk and risk management.

Stock markets are paying more attention to HSE, said Michael Urban, Deutsche Bank Securities.

In the context of safety, Mr Urban pointed out that the customer, not contractor, usually ends up in the news should there be an incident.

He said stock markets are paying more attention to HSE; indeed, it now cares about these issues, as do the clients of the supply chain, including drilling contractors.

“HSE is growing in importance in selecting service providers,” he said. “But HSE is as much about perception as performance.”

Focusing on oilfield services, he said every company covered by DBS devoted meaningful time to HSE issues and that, in addition to the “surprisingly high” correlation between HSE and stock performance, a “surprisingly relentless” focus on the part of many companies to address these issues was identified.

“While not all companies have dedicated green business lines, nearly all are working continuously to reduce emissions and drilling footprint and improve safety,” said Mr Urban.

Top scorers in the DBS survey turned out to be Baker Hughes and Smith. It was said that both scored particularly well in the green business and safety categories.

Both have focused strongly on HSE issues in recent years, with Smith going so far as to change its corporate logo and color (to green, of course) within the last few years.

Mr Urban said Rowan Companies and Pride International led the drilling pack, pointing out that this group merited a separate category as the comparison to service companies is not apples to apples.

According to their findings, most do not have dedicated green business lines, and with dozens of discrete locations/assets, safety violations are easier to rack up.

“The drillers’ role in driving safety and preventing accidents and minimizing environmental footprint cannot be overstated, though. As with the broader service group, we expect HSE to be a differentiator going forward.”

In his DBS paper, Mr Urban noted that there is little doubt that HSE will only become more important as governments and customers demand greater accountability. “Perhaps the best indication is the market itself, as evidenced by the strong outperformance of an index of ‘green’ ETFs since the election of President Barack Obama and, more recently, broader discussion of ‘cap and trade’ legislation.”