Corporate Governance

Exxon and the Environment

By J. Robert Brown

One of the most tone deaf companies when it came to the environment (specifically global warming) had to be Exxon.  Perhaps the most profitable company in the world (at least when gas prices were over $3 a gallon), the company almost managed to lose a shareholder revolt (spearheaded by the Rockefellers) over environmental practices and the need to separate the chairman and CEO. 

On this Blog, we asked about the role of the board.  It was clear that many of the positions were driven by the CEO, Rex Tillerson, and that a more effective board would have tried to bring his views and positions more in line with the mainstream.  We attributed the failure to a "mirror image" board, one that looked like the CEO and was likely to give the CEO only the advise he/she wanted to hear. 

It turns out that Exxon has seen the light and its CEO has now joined the call for a green house gas tax.  It is quite a change, as the article noted.

• The speech signals an evolution in the thinking of Mr. Tillerson, who became chief executive and chairman of Texas-based Exxon, the world's largest Western oil company, in 2006. Mr. Tillerson now calls the issue complex and challenging to understand, but -- in contrast to Exxon's previous party line -- he doesn't question whether fossil fuel use has contributed to rising global temperatures. In 2007, when he gave his last big speech on climate change, he said he didn't support any particular policy for curbing carbon-dioxide emissions.

We applaud Tillerson for coming around on the issue, although Exxon still needs to make a larger mark in the realm of alternative energy sources.  But we still can't help but wonder whether the conversion would have occurred much sooner and at much less cost had the board been a more active source of alternative views for the Exxon CEO.

Full post as published by The Race to the Bottom on January 14, 2009 (boomark / email).