Robertson 1

Exxon Mobil Corporate Social Audit

Company Overview:

Beginning from the descendents of John D. Rockefeller's Standard Oil Company,

ExxonMobil is the world’s largest publicly traded oil and gas supplier. It’s top competitors are

Royal Dutch Shell, BP, and Chevron, respectively.1 It specializes in ​gas exploration, production,

supply, transportation, and marketing, with it’s primary industry in petroleum refining,​ which

entails taking crude oil and turning it into products such as gasoline. In its financials, it is clear

that gas produces the most revenue for the company (50%), followed by Diesel (25%), other

(17%), and lastly Jet (8%). It imports most oil from Canada, Russia India, UK and Algeria, while

its exports mostly go to Mexico, Canada, Netherlands, Brazil, and Chile. Its largest expenditures

are on refineries as they require much capital and upkeep by investing in new technology. The

company has relatively seasonal cash flow depending on the temperature and use of oil. Between

2016 and 2020, revenue is expected to grow by 6% based on unit prices and volume.2

​ExxonMobil was produced as a product of the merger between Exxon and Mobil in

1999, making it into the mass producer it is today. Both of these companies histories have

involved the selling and purchasing of many smaller companies in order to monopolize their own

company and generate further profit. Each struggled to monopolize because of various antitrust

laws that hindered their efforts to become a global oil powerhouse. Originally named

Socony-Vacuum, Mobil Corporation was formed in 1976. Similarly, Exxon Corporation,

1
​A. Hampton, Stuart. "Company Overview.” ​Exxon Mobil Corporation​. Hoovers Online, n.d. Web. 19
Apr. 2016.
2
​ Hampton, Stuart. "Petroleum Refining." ​All Industries​. Hoovers Online, n.d. Web. 19 Apr. 2016.
 Robertson 2

originally named Standard Oil Company (New Jersey), was formed in 1972. In 1998, Exxon

merged with Mobil in an $83 billion merger, one of the largest in history. In doing so, the

companies would save about $2.8 billion each year, and would collectively become the largest

oil company in the world. It later decided to change its leadership in order to prepare to continue

to move forward in the future and maintain its global reputation.3 ​With a profit of $268.88 billion

in 2015, ExxonMobil continues to monopolize and make money without much difficulty,

annually.4

Human Rights Controversies:

Oil Spills in Nigeria:

ExxonMobil is the third largest oil producer in Nigeria. Because of their immense hold

on Nigerian oil supplies, many local communities have fallen victim to Exxon’s oil spills in the

area. In November 2012, an oil spill in Akwa Ibom spread down the Nigerian coastline used by

many fisherman for over 20 miles. The villagers claim that these spills are due to poor pipeline

maintenance, while the company continues to deny these allegations, and say that the spills are

due to theft and sabotage. The villagers requested $26.5 billion in compensation for their losses,

but Exxon never paid. Two years later, another Exxon plant in Akwa Ibom spilled 15,000 barrels

of oil into the Atlantic Ocean, demonstrating Exxon’s lack of cautiousness in the preserving the

environment. Because of these spills, many have been negatively impacted, and Exxon’s lack of

intervention to solve the issue has led villagers to take action against the firm themselves. These

protests have consisted of many angry fisherman speaking out against the company, and on

3
​Martin, Jonathan, et al. "Exxon Mobil Corporation." ​International Directory of Company Histories​. Ed.
Jay P. Pederson and Miranda H. Ferrara. Vol. 67. Detroit: St. James Press, 2005. 175-186. ​Gale Virtual
Reference Library​. Web. 19 Apr. 2016.
4
​A. Hampton.
 Robertson 3

March 2016, a group of young people barricaded Exxon’s gates in order to prove that they are

not going to be taken advantage of. In addition to spills in Nigeria, Exxon has faced many cases

regarding oil spills in particular areas both domestically and abroad.5 Exxon must be more

careful, and figure out a solution to prevent more oil spills from happening. Exxon either does

not realize, or does not care about how severely its carelessness affects both the environment and

those living near the affected area.

Aceh Natural Gas Project: Security Force Abuse Lawsuit:

Between 1999 and 2001, Exxon hired members of the Indonesian military to protect the

natural gas extraction pipeline and facility in which Exxon was operating on. In 2001, Indonesian

villagers sued Exxon for various human rights violations including murder, and torture. The

villagers filed suit on Exxon claiming that the company knew all along that these militants were

committing these heinous acts, as the Indonesian military has a reputation for being corrupt and

violent. 6 Although the case was filed in 2001, the federal appeals court did not legitimize the

villagers claim to sue until 2011. Of course, Exxon denied any knowledge of the violence

committed by their employees. In July 2015, the federal court finally agreed to allow the

villagers to proceed to court, and the issue has not since been resolved.7 Here, Exxon hired the

easiest possible employees in order to protect their product, event if it meant sacrificing the lives

of innocent people. Although initially it may not have known the violent consequences of hiring

these military men, it did not do anything to protect the innocent people, nor punish the abusers

once their crimes became public knowledge.

5
​A. MSCI ​ESG.
6
​A. MSCI ​ESG.
7
Ibid.
 Robertson 4

Environmental Controversies:

Exxon Valdez​ Oil Spill:

With such a large global position in the oil industry, it goes without saying that Exxon

has had environmental scandals in it’s past, as environmental pollution is nearly impossible to

prevent in the oil industry. In 1989, the ​Exxon Valdez, ​filled with crude oil, entered the Prince

Williams Sound off of the coast of Alaska. After about three hours afloat, the ship hit a reef, and

spilled about 11 million gallons of oil into the ocean. The company initially did nearly nothing to

halt the spread of the oil, and a few days later a storm came in, exponentially increasing the

devastating environmental effects of the spill. 1,000 miles of coastline was harmed, killing

millions of animals in the process. The company was forced into paying billions in fines, and still

continues to pay the price of this catastrophic spill. Although it has been twenty-five years since

the spill, Alaska is still facing the consequences of Exxon’s carelessness in navigating the ocean.

Many beaches remain extremely polluted, saturated with oil just below the surface.8 The boat

was later repaired, and now has been renamed the ​Exxon Mediterranean.​ 9 ExxonMobil made a

series of mistakes throughout the oil spill. It should not have initially been in an area where there

was potential for it to hit and destroy a reef, and should have done far more to combat the

devastations of the spill.

Labor Rights Controversies:

8
​Taylor, Alan. "The Exxon Valdez Oil Spill: 25 Years Today." ​The Atlantic​. Atlantic Media
Company, 24 Mar. 2014. Web. 05 May 2016.
9
​"After the Big Spill, What Happened to the Ship Exxon Valdez? |
Response.restoration.noaa.gov." ​After the Big Spill, What Happened to the Ship Exxon Valdez? |
Response.restoration.noaa.gov​. N.p., n.d. Web. 05 May 2016.
 Robertson 5

Exxon has relatively little controversies when it comes to labor rights. According to

MSCI ESG Research Inc’s Impact Monitor Report on Exxon, it has no controversies when it

comes to child labor, and work discrimination, which tend to be areas where most companies

have most problems.10 One thing that sets it apart from the other companies, fortunately, is that it

has superior management practices compared to it’s competitors.11

Torrance, California Explosion:

Exxon does, unfortunately have moderate health and safety controversies. Although these

controversies are severe, they remain equal with other companies in Exxon’s same industry. In

2015, an explosion in Torrance, California injured four workers, after which California’s

Occupational Safety and Health Authority issues Exxon with nineteen citations for health and

safety violations. ​Since then, the company has attempted to sell this Torrance factory, and has

failed to repair the equipment that proved harmful to these workers.12 It is inevitable for

accidents to occur in any industry, but Exxon’s lack of intervention to fix the problems that

caused this incident in the first place are unethical. It’s futile attempt of damage control was to

sell the firm, rather than to help those who were affected (aside from the fines they had to pay),

clearly demonstrating Exxon’s lack of regard for it’s workers health and safety.

Governance Controversies:

Exxon’s major controversies governance controversies are that of bribery and fraud.

Climate Change Scandal:

In 2015, Exxon was caught in the midst of a forty-year scandal in regards to climate

change. Exxon knew that its product was harming the environment, but spent millions of dollars

10
A. MSCI ESG. Impact Monitor Report.
11
​ . MSCI ​ESG. Intangible Value Assessment.
A
12
A. MSCI ESG. Impact Monitor Report.
 Robertson 6

in order to hide the severity of it’s products impact on climate change from the public. Exxon

scientists confirmed the reality of climate change, and its direct correlation with carbon

emissions, yet obfuscated these facts so that it looked more environmentally friendly than it truly

is.13 In response to the mass media surrounding the possible scandal, the New York Attorney

General issued a subpoena requesting all financial records, and other internal communications

from the 1970’s until the present. He found that from the 1990’s on, the company has been

funding uncertainty about the scientific claim of climate change through its scientists, public

reports, and disclosures.14 ​On October 21, 2015, the company ​issued​ ​a statement saying that

“media and environmental activists’ allegations about the company’s climate research are

inaccurate and deliberately misleading,” denying all allegations of knowledge regarding climate

change.15 In April 2016, the company attempted to block the Attorney General’s subpoena of

climate change documents.16

The company has no remorse for its negative impact on the environment, and does not

plan on changing its methodology in order to become more ethical, and not commit corporate

fraud, or become more environmentally friendly. ​Surprisingly, according to MSCI ESG Research

Inc, ​Exxon has overall moderate environmental controversies regarding biodiversity and land

use, energy and climate change, and toxic emissions and waste, despite its various scandals in the

13
​Phillips,
Ari. "Fixing Exxon's 40-year Climate Change Scandal Would Be a Great Reason to
Have a Time Machine." ​Fusion​. N.p., 23 Nov. 2015. Web. 05 May 2016.
14
A. MSCI ESG. Impact Monitor Report.
15
A. MSCI ESG. Impact Monitor Report.
16
Ibid.
 Robertson 7

past.17 Although it engages in various corrupt business practices, it remains at par with its

competitors in volume of controversies.18

Shareholder Concerns:

ExxonMobil has multiple concerns with its shareholders. These include, but are not

limited to, the number of women on the board, the CEO salary, and the shareholders desire for an

independent chairman with environmental expertise. These concerns were discussed by both the

board and ISS, and many of the opinions were not agreed on. All of the concerns discussed

above were voted against by the ExxonMobil board, while they were voted in favor by the ISS,

except for the concern that regards the number of females on the board. Many of the concerns

that shareholders had were disregarded by ExxonMobil as it refuted the allocations that pointed

out the wrongdoings of its company, and instead disclosed its own reasons for why it decided to

make certain decisions. There is a disconnect between the ethical standards of the ISS and

ExxonMobil.19 Exxon operates on its own basis, and does not, for the most part, act based on its

shareholders desires. This is not ethical, as shareholders are one of the prime reasons why it is so

successful. Shareholders must feel heard and valued in order for them to remain happy, and want

to continue investing in the company. It would seem as though the shareholder requests listed

above are relatively easy to compromise on, but Exxon disregards them, and selfishly acts in any

way it deems fit for the company, whether or not it is ethical.

Concluding Remarks:

17
​A. MSCI ​ESG.
18
​A. MSCI ​ESG. "Exxon Mobil Corporation." ​Intangible Value Assessment​. ESG Manager on
Campus/MSCI ESG Research Inc., 18 Apr. 2016. Web. 19 Apr. 2016.
19
​Castellino, Kim. "Exxon Mobil Corporation." ​ISS Proxy Advisory Services.​ ISS Link, 7 Apr. 2015.
Web. 19 Apr. 2016.
 Robertson 8

Overall, ExxonMobil may appear as though it is an extremely unethical company, but

after doing much research I have realized that although it has its downfalls, it is relatively

moderate. In comparison to the other companies in the oil market, it has just as many ethical

controversies. The oil industry is one that is complicated, as it is a dangerous market where

things like safety and environmental harm is nearly impossible to prevent. This is not to justify

and of Exxon’s actions listed above, as it is undeniably unethical in many aspects. Because of

this, I found it nearly impossible to find many positive aspects of the company's operating

principles, as negative impacts tend to overshadow positive ones, but there are many actions

Exxon can take in order to improve its company’s bleak reputation. Although some of the

controversies they engage in are inevitable, the company can do far more in accepting

responsibility for their actions. In all the controversies I have discussed, Exxon has either denied

all allegations to the scandal, or has done little to fix it. In order for it to be more ethical, it must

do more damage control, and accept more responsibility for its actions. If it does this, many

people will be more receptive to the scandals it is involved with, as they realize that the company

feels remorse for its wrongdoings, and wants to improve. Exxon must think more about the

damages it is causing to people and the environment, and less about how it will affect its net

worth; which it, and many other American companies fail to do.
 Robertson 9

Works Cited

"After the Big Spill, What Happened to the Ship Exxon Valdez? |

Response.restoration.noaa.gov." ​After the Big Spill, What Happened to the Ship Exxon

Valdez? | Response.restoration.noaa.gov.​ N.p., n.d. Web. 05 May 2016.

URL

<​http://response.restoration.noaa.gov/oil-and-chemical-spills/significant-incidents/exxon-

valdez-oil-spill/after-big-spill-what-happened-s​>.

A. Hampton, Stuart. "Company Overview.” ​Exxon Mobil Corporation.​ Hoovers Online, n.d.

Web. 19 Apr. 2016.

URL

<​http://subscriber.hoovers.com.libproxy.scu.edu/H/company360/overview.html?compan

yId=10537000000000​>.

A. MSCI ESG. "Exxon Mobil Corporation." ​Impact Monitor Report.​ ESG Manager on

Campus/MSCI ESG Research Inc., 18 Apr. 2016. Web. 19 Apr. 2016.

URL

<file:///Users/carleyrobertson/Downloads/EXXON%20MOBIL%20CORPORATION-im

.pdf>.

Castellino, Kim. "Exxon Mobil Corporation." ​ISS Proxy Advisory Services.​ ISS Link, 7 Apr.

2015. Web. 19 Apr. 2016.

URL

<https%3A%2F%2Flink.issgovernance.com%2Fresearch%2Findex.php%3Fc%3Dindex

%26a%3Dview%26f%3D8700141%26d%3DopenPdf>.
 Robertson 10

Hampton, Stuart. "Petroleum Refining." ​All Industries​. Hoovers Online, n.d. Web. 19 Apr. 2016.

URL

<​http://subscriber.hoovers.com.libproxy.scu.edu/H/industry360/overview.html?industryI

d=2038​>.

Martin, Jonathan, et al. "Exxon Mobil Corporation." ​International Directory of Company

Histories.​ Ed. Jay P. Pederson and Miranda H. Ferrara. Vol. 67. Detroit: St. James Press,

2005. 175-186. ​Gale Virtual Reference Library.​ Web. 19 Apr. 2016.

URL

<​http://go.galegroup.com.libproxy.scu.edu/ps/i.do?id=GALE%7CCX3429400056&v=2.1

&u=sant38536&it=r&p=GVRL&sw=w&asid=55127bc46a2c46ec6987cd4009718a09​>.

MSCI ESG. "Exxon Mobil Corporation." ​Industry Report: Oil and Gas.​ ESG Manager on

Campus/MSCI ESG Research Inc., n.d. Web. 19 Apr. 2016.

URL

<file:///Users/carleyrobertson/Downloads/Integrated%20Oil%20-industry.pdf>.

Phillips, Ari. "Fixing Exxon's 40-year Climate Change Scandal Would Be a Great Reason to

Have a Time Machine." ​Fusion​. N.p., 23 Nov. 2015. Web. 05 May 2016.

URL

<​http://fusion.net/story/219305/exxon-climate-change-cover-up-demands-justice/​>.

Taylor, Alan. "The Exxon Valdez Oil Spill: 25 Years Today." ​The Atlantic.​ Atlantic Media

Company, 24 Mar. 2014. Web. 05 May 2016.

URL
 Robertson 11

<http://www.theatlantic.com/photo/2014/03/the-exxon-valdez-oil-spill-25-years-ago-toda

y/100703/>.