On October 10, three members of PESA’s ESG Committee joined PESA President Leslie Beyer for a panel discussion on the push for adoption of formal programs about environmental, social and governance (ESG) within the oilfield services space during the 2019 LAGCOE Conference in New Orleans.
Panelists Melissa Cougle, Senior Vice President, Chief Financial Officer, Frank’s International; Yvonne Fletcher, Senior Vice President, Finance and Investor Relations, Solaris Oilfield Infrastructure; and Jock Pool, Chief Compliance Officer, Oceaneering, discussed the importance of ESG programs that are increasingly used by stakeholders of organizations including investors, customers and employees.
Fletcher commented that companies would benefit from including ESG in business plans.
“Profitability and ESG need to be aligned,” she said. “A quarter of all money management is focused on ESG, and that number will likely be 100% soon. To be successful, companies must integrate ESG into investment decisions.”
Pool sees ESG as an emerging risk to the success of a company not just with investors, but with private equity and even employee recruitment.
[su_quote cite=”Jock Pool, Chief Compliance Officer, Oceaneering”]“Investors are looking at it, so companies need to look at it too. Young people want to know what you’re doing in ESG. It’s important to them and prospective employees are asking those questions.” [/su_quote]
ESG can create value according to Cougle.
“A company can embrace diversity, as part of ESG, in terms of bringing new and innovative ideas towards efficient drilling operations … these ideas can bring about new economic opportunities and also reduce the carbon footprint bringing a true benefit in multiple respects to the company,” Cougle said. “Investors are incorporating ESG criteria into their screening process for making investments and looking for organizations that place a focus on ensuring value is captured beyond just EBITDA.”
While discussing best practices, Fletcher recommended that companies have an ESG statement that is widely accessible not only to the investment community, but also for customers.
“Companies also need a sustainability report,” Fletcher said. “And have all of this information readily available on your company’s website.”
Oceaneering looked at what was already in place within the company and consolidated that information into one location. Pool recommended companies review each area from supply chain to HSE to Board activity, gather all of this information and package it together. He commented that one part of addressing ESG is ensuring information is publicly available for efforts already underway in most organizations.
All panelists agreed that encouraging vendors to address ESG is key.
“Look at all of your vendors,” Cougle said. “In many instances, companies working for the bigger operators, such as BP or Exxon who already have these processes in place because they have long been required by the operators.”
[su_quote cite=”Melissa Cougle, Senior Vice President, Chief Financial Officer, Frank’s International”]“Vendors are typically held to the same standards and ensuring the vendor requirements are publicly available goes a long way toward clarifying the position of an organization. If no vendor standards exist beyond standard terms and conditions, adding language to your master services agreements and contracts and hold vendors can be helpful.”[/su_quote]
“Just last week, we had our first human rights audit in Scotland,” Pool said. “The auditors wanted to know what we’re doing with our vendors.”
With increasing pressure on oil prices, Fletcher believes service companies need to think outside the box to help make themselves and their customers more profitable.
“For instance, e-fracs are diesel and emissions free,” she said. “That switch is a money saver.”
COMMUNICATION IS KEY
All three panelists encouraged attendees to just look around their organizations, and they will find great examples to include in an ESG report. Compiling this information isn’t difficult, it just takes communication between all aspects of a business.
“Industry innovations have created a safer wellsite,” Cougle said. “What we are doing now, we weren’t doing five or ten years ago. It’s improved safety and efficiency. This is ESG, affecting the world in a positive way. We are more efficient and with a smaller footprint.”
Pool also suggested that executives should be encouraged to change the way they are speaking about the industry in public. Addressing ESG concerns must be part of the conversation.
[su_quote cite=”Yvonne Fletcher, Senior Vice President, Finance and Investor Relations, Solaris Oilfield Infrastructure”]“We tend to let the operator take all of the credit for innovations we are using at the well site. ESG gives OFS companies the chance to brag a little bit, and we should embrace that.” [/su_quote]
Pool discussed PESA’s ESG Committee and shared that it is developing a tool kit to help companies get started. He also explained that the goal of the group is to educate and bring awareness to stakeholders as well as investors.
Beyer acknowledged that some executives are still hesitant to embrace the ESG function. “I know folks are uncertain about this,” she said. “PESA wants to help develop a process that is easy and efficient.”