Corporate Environmental Obligation: An Examination of the Performance of Exxonmobil

wqeeCorporate Environmental Obligation: An examination of the performance of ExxonMobil

Modern consumers are increasingly sensitive to the environmental performance of corporations (Arana and Leon 2009), and recognise that at all stages of business operations, there is the potential to generate a negative impact on ecological systems (Handfield et al., as cited in Setthasakko 2009). For a multi-national corporation like ExxonMobil, recognised as the largest privately owned oil company in the world, (Skjaerseth 2003), the potential for environmental harm as a result of their business practises both immediately and in the long term is of particular concern (Plender 1999). This paper examines how ExxonMobil has performed in relation to the environment. It examines their conduct in the Exxon Valdez Oil Spill (EVOS), and in their dealings with the Save the Tiger Fund (STF), showing both strengths and weaknesses in their operations and their impact on the environment and stakeholders.

The case against ExxonMobil

Most notable is ExxonMobil's environmental performance in relation to the Exxon Valdez Tanker Oil spill in Prince William Sound, Alaska (Hazardous Materials Response and Assessment Division 1992). This spill of approximately 11 million gallons of oil occurred in 1989 (Graham 2003). It impacted both the environment and human communities considerably. Effects on animal life have included the immediate death of thousands of animals and an overall reduction in the populations of various ocean animals (Graham 2003; Fry 1993). The spill impacted economically on numerous stakeholders, interestingly in both positive and negative ways (Hirsch 1996). On the positive side for business, there were strong, but short term, increases in spill related business in the major clean-up areas and in business sectors such as hotels/ motels, car/ RV rentals, air taxi and boat charters (McDowell Group, 1990). However on the negative side, there was the loss of recreational sports, fisheries and reduced tourism, plus a decrease in the "existence value" of the Prince William Sound region (Exxon Valdez Oil Spill Trustee Council 1990; Carson and Hanemann 1992). These losses are long term and the economic cost arguably inestimable.

While ExxonMobil admitted their culpability in the spill (Hirsch 1996), and in 1991 settled with state and federal governments for damages to the "public's natural resources" (McCammon 2003), their overall behaviour in dealing with compensation has been questionable. On the one hand, their dealings with the US Federal government indicate that they are complying with all governmental laws, rules and regulations applicable to its business (ExxonMobil n.d.) and have indeed met their legal obligations. Their settlement with the US Federal government included a civil settlement of $900 million to restore