The Critical Role of HSEQ in PE Firms

Risks are visible but more so, invisible 

Since 2008, I’ve had a front-row seat working with the energy sector’s most dynamic leaders who operate across demanding and sometimes hazardous environments. From the windswept platforms of the North Sea to the sprawling refineries of Angola and from biomass plants in the American heartland to biogas facilities across Europe, I’ve seen firsthand how risk—often invisible—shapes every decision.  

In these settings, trust isn’t just a nice-to-have; it’s the foundation of everything. 

Think about it: would you strap your child into a roller coaster hurtling at 60 mph, looping twenty times, without absolute confidence that every bolt, every gear, and every safety check had been tested to perfection?  

Of course not.  

That same level of trust applies to the companies operating in high-stakes industries. One misstep, one oversight, and reputations—and lives—can be shattered in an instant. 

This is where Health, Safety, Environment and Quality (HSEQ) comes in.  

Recently, a private equity client shared something that stuck with me: after the CEO and CFO, they consider a dedicated HSEQ leader the most critical hire for their portfolio companies. It’s not just about compliance or ticking boxes; it’s about creating a culture where safety and operational excellence are non-negotiable. 

So why is HSEQ so vital to private equity firms?  

The many words that must fit with quality 

Proactive, measurable, integrated, accountable, robust... There is a myriad of qualities associated with gold standard HSEQ practice. They all combine to mitigate against risk. What follows is compliance, which feeds into everything from value enhancement to long-term sustainability. 

Two more words...  

Alan Smith has over 40 years of experience in criminal investigation and industry, and is Head of Investigations at COMET, where amongst his responsibilities he investigates offshore fatalities and major incidents in the North Sea Oil and Gas sector. His observation that jumps out time and time again are the words 'If Only', when a previous near miss is overlooked and can potentially become a major incident the next time around.  

If only we had done something earlier.  

If only we had acted on the feedback. 

If only we had invested in the best HSEQ leader that meets every aspect of our company 

He subscribes to the view that almost all incidents are preventable because the signs are there. Organisations who apply a ‘proactive’ approach, overlook no detail, no small failures, no near misses will identify any potential human error, creating an environment of safety rather than risk.   

Reducing the risk of costly litigation or operational shutdowns 

Delivering regulatory compliance is absolutely fundamental in any industry and that includes PE-backed assets.  

The chance of failure, however perceivably minor, can trigger cascading and compounding impacts.  

My advice on every occasion when working with PE’s is to; 

• Invest in top level talent.  

• Invest in the hiring process.  

Hire decisive, experienced and strong leaders who understand the complexities of effective HSEQ frameworks within national and international regulations. They require a backbone umbilically linked to an independent mind that navigates the minutiae, anticipating a host of minefields whilst blending a HSEQ culture across all parts of the organisation.  

Let’s talk operational efficiency and cost 

This part is pretty much a no-brainer.  

Enhanced operational efficiency and workplace safety measures reduce the likelihood of accidents, leading to lower insurance premiums and decreased downtime due to injuries.  

Environmental management practices—including waste reduction and energy efficiency initiatives— ensure compliance, drive cost savings, optimise resource use and cultivate long-term sustainability. 

It’s all about Value Creation and Competitive Advantage 

Private equity firms invest in businesses with the intention of improving performance and maximising returns. Companies that have a strong safety culture, environmental remit and consistent quality performance are often perceived as lower-risk investments. 

Furthermore, in industries where regulatory compliance and corporate responsibility are major considerations—such as manufacturing, energy and infrastructure—proactive HSEQ strategies can differentiate a company from its competitors, gaining a significant edge including market share. 

Reputation and Stakeholder Confidence 

Workplace incidents, environmental violations or substandard product quality erodes trust across all stakeholders. 

Conversely, the opposite injects goodwill and stakeholder confidence, enhancing public image and strengthening company culture. 

Safeguarding the longer term  

Exit strategies consider many things, from initial public offerings (IPOs), trade sales, secondary sales and management buyouts (MBOs). Demonstrating operational excellence, regulatory compliance and long-term sustainability is showcased by a highly effective HSEQ.  

Be a shining example  

First Reserve Corporation has an impressive portfolio with over 40 years investing in a wide range of energy assets, including oil and gas, renewables and energy transition technologies.  

Given the inherently high-risk nature of these industries, First Reserve has long recognised and implemented a comprehensive set of HSEQ practices to mitigate all manner of risks, this is not merely a regulatory checkbox but a strategic imperative.  

Today’s leading private equity firms are those that excel at uncovering hidden value others overlook, mitigating risks others can’t navigate and executing these strategies consistently and repeatably across their portfolios.  

Ultimately, HSEQ serves as the cornerstone of differentiation, ensuring every step of the private equity value chain not only generates market-beating returns but also sustains long-term success and resilience.  

Net Positive? Thriving by giving more to the world than taking out.  

Finally, HSEQ teams have the potential to be the conduit that quietly and consistently inject a Net Positive model into the greater organisational ecosystem, by building trust, taking responsibility for all company impacts and thus serving people, customers and communities.