ExxonMobil and Climate Change

As referenced in internal memos as early as 1977, it is clear that Exxon knew that increasing CO2 emissions caused by burning fossil fuels would likely lead to increased effects of global warming. However, the company chose to adopt a strategy to deceive the public, which included: casting doubt on the scientific conclusions, greenwashing, creating confusion by presenting a two-sided approach, and manipulation of the media coverage to continue to foster public doubt (Cook, Supran, Lewandowsky, Oreskes, & Maibach, 2019, p. 7). After years of misleading the public about climate change, ExxonMobil then decided to mislead investors about its preparations for impending climate change regulations, exposing the company and its investors to higher risk.

After multiple offenses of deception against both its investors as well as the public at large, it seems that ExxonMobil is having a crisis of culture. “Anthropologists define culture as a body of learned beliefs, traditions, and guides for behavior shared among members of a group.” (Trevino & Nelson, 2017, p.

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159) Trevino and Nelson explain that “ethical culture is created and maintained through a complex interplay of formal and informal organizational systems” (Trevino & Nelson, 2017, p. 161). Some examples of formal systems include company policies, training, performance management, and decision processes, which are managed and communicated by executive leadership. Informal systems include company norms, rituals, myths/stories, and language and “indicate whether the formal ethics-related systems represent reality or are a façade” (Trevino & Nelson, 2017, p. 162). The text goes on to say that “to create a consistent ethical culture message, the formal and informal systems must be aligned (work together) to support ethical behavior” (Trevino & Nelson, 2017, p. 162).

As previously mentioned, ExxonMobil claims in its mission statement to be “fueling the world safely and responsibly” and mentions that they strive to “continuously achieve superior financial and operating results while adhering to high ethical standards” (“Who We Are: ExxonMobil,” n.d.). Their website includes both a letter from the Chairman and CEO Darren W. Woods, which speaks to their standards for business conduct as well as several attachments which outline compliance guides and the company’s standards of business conduct. This suggests that the company has some formal systems of ethics set forth by its executive leadership; however, if the informal systems such as daily norms and rituals are not consistent with the codes of ethics set forward by the company, the ethical culture will ultimately be compromised and therefore ineffective. If you combine a compromised ethical culture where consistency is lacking between what a company says and does with high standards for financial and operating results, it makes sense that some operators within the company might deviate from the formal systems to achieve desired financial outcomes.

In reading ExxonMobil’s Standards of Business Conduct, it is important to note the language that is used in its composition. Language is listed in our textbook as one of the informal organizational systems that a company can use to either build or destroy an ethical culture. Throughout their Standards of Business Conduct, ExxonMobil leans heavily on abiding by laws and regulations. The section devoted to environmental policy reads as such: “the Corporation’s policy is to: comply with all applicable environmental laws and regulations and apply reasonable standards where laws and regulations do not exist” (Woods, 2017, p. 16). The majority of the sections within this handbook begin similarly. However, as we know, ethics and law do not overlap completely, and laws change from location to location. If the company wishes to be ethical, they should not fully lean on the laws that apply at that time and location and should instead focus on developing a higher ethical standard of practice that supersedes local laws and regulations.

In that same vein, we would also like to suggest that oil companies like ExxonMobil remove themselves from political activities involved in the development of laws and regulations that are applicable to their business since this presents a conflict of interest. “A conflict of interest occurs when a person’s judgment or objectivity is compromised, typically because of financial or other gain” (Trevino & Nelson, 2017, p. 126). Our text goes on to explain that “generally, in conflict-of-interest situations, a person’s self-interest clashes with the interests of others such as the business, customers, or the public (if the decision maker is a government official)” (Trevino & Nelson, 2017, p. 126). ExxonMobil has chosen to intertwine its business practices with the development of laws and regulations. One way that the oil giant has done so is through climate lobbying. In 2019 Forbes reported that ExxonMobil spent an average of $41M a year on climate lobbying in an effort to “delay, control or block policies to tackle climate change” (McCarthy, 2019). This, coupled with the misinformation campaign they administered in the ’80s and ’90s lets us know that the company will go to great lengths to ensure that climate change is not addressed.

Lastly, we’d like to suggest a change in the company’s leadership. Our text explains that “senior leaders can create, maintain, or change formal and informal cultural systems by what they say, do, or support”; “formally, their communications send a powerful message about what’s important to the organization” and “they influence informal culture by role modeling, the language they use, and the norms their messages and actions appear to support.” (Trevino & Nelson, 2017, p. 163) Promoted in 2017, ExxonMobil’s current CEO and Chairman, Darren W. Woods, has been with the company since 1992. For 28 years, he has been a part of developing and continuing the status quo of unethical culture at ExxonMobil. Woods has publicly supported climate initiatives like the Paris climate accord and speaks about reducing greenhouse gas emissions; however, the actions that his company has taken toward downplaying climate change and attempting to block policies that would address it tells us that his priorities are not in line with what he preaches. Woods’ predecessor as CEO and Chairman was Rex Tillerson. He held this position between 2006 and 2017. He went on to serve under President Donald Trump between 2017 and 2018 as Secretary of State, where he served until being dismissed by Trump in March of 2018, likely due to unsatisfactory performance. Leading up to Tillerson’s dismissal, 60% of the State Department’s high-ranking officials resigned, and there was a 50% decrease in Foreign Service applications. This move further expresses how ExxonMobil’s leadership feels comfortable inserting themselves into the political climate. Anyone who’s worried about climate change should be concerned by this. In conclusion, ExxonMobil has made several choices over many decades, which have negatively impacted both its shareholders as well as the public. To stop the unethical climate that we believe exists: we recommend that the company revisit its policies outlined in its Standards of Business Conduct and language it uses to describe them, the company should remove itself from the political environment to eliminate the possibility of conflicts of interest, and it should look into options for new leadership that could change the status quo.