It is widely recognised that reputation and the perception of a company's ability to operate in a responsible manner is one of the most valuable assets to a business. Hazardous industries, such as oil & gas drilling and nuclear power share numerous examples of how a company's reputation can be tarnished if the company is responsible for an accident or incident which puts human safety and/or the environment at risk.

Indeed, over one year on from the major spill in the Gulf of Mexico, BP’s reputation has not managed to recover in spite of the company’s efforts to improve its credibility. Alva’s reputation analysis sees BP continue to perform poorly with it placed last in the Alva Reputation Index for the Oil & Gas sector with a score of 5.87, -0.38 below the industry average. Furthermore, PRWeek’s latest survey of more than 2,000 respondents revealed that BP’s reputation shows no sign of recovering with 50% of the public still holding a negative opinion of the oil major, the same number as at the time of the spill.

The Fukushima nuclear accident has exposed Tokyo Electric Power Company to global public opposition similar to the one BP faced, resulting in significant reputational damage. These two incidents have put deepwater drilling and nuclear power in the spotlight, with the result that companies engaged in these types of operations face an inherent reputation risk, specifically with regard to employee safety and environmental standards, defined as Corporate Culture and Social Performance in Alva’s reputation driver classification.

In the wake of the Fukushima disaster and with Tepco experiencing difficulties in finding workers willing to clean up damaged reactors due to radiation overexposure risk, British and French trade unions are pushing for improved terms for European nuclear workers. A conference in Paris next month is likely to see the big nuclear companies, such as EDF and RWE, inform unions of details of the "stress tests" on their nuclear plants to ensure the safety of their workers, from construction phase through generation and decommissioning of sites.

BP meanwhile, claims that it is a "changed company" in part due to the creation of a safety and operation risk organisation with over 500 specialists. These are both part of the reputation rebuilding process that nuclear power and deepwater drilling companies are having to go through to demonstrate that they have learned the lessons of Fukushima and the Macondo disaster. This will be crucial to restore their credentials with governments, the public, regulators and the media, but also with the next generation of engineers who may be put off the sectors if safety issues are not addressed.

Employee safety is a crucial driver of corporate reputation and must be among companies’ top priorities. Poor safety records indicate management deficiencies and an inadequate risk mitigation capacity that negatively impacts recruitment and production with an ability to deeply damage public perception, which, in the current examples of BP and Tepco, is proving to be unforgiving and very costly to restore.

Alva’s methodology

Alva calculates its reputation scores on a 1 to 10 fractional value basis, which represents the perception of various stakeholders and market segments at any given point in time. The scores are based on the daily analysis of over half a million news and financial announcements, trading and analyst reports and social media comments.

—- Nicholas Chrysanthou, energy consultant analyst at Alva