What they did was nothing short of sick, nothing short of twisted, nothing short of unforgivable.
No wonder one of their executives couldn’t wait to serve the Trump agenda. As David Roberts observes, ExxonMobil’s behavior has been every bit as reckless, selfish and vile as the behavior of the 45th President:
The world’s largest oil company has been under some scrutiny lately. Back in 2015, Inside Climate News and the Los Angeles Times published a pair of matching exposes on Exxon, using internal documents to show that the company was well aware of the threat of climate change as far back as the 1970s, but consistently misled the public and investors about it.
Now ExxonMobil is under siege from even more directions. Seventeen state attorneys general have said they will begin cooperating on investigations into whether Exxon broke racketeering, consumer protection, or investor protection laws in its climate communications. New York AG Eric Schneiderman, Massachusetts AG Maura Healey, and US Virgin Islands AG Claude Walker are all leading separate investigations. And in 2016, the US Securities and Exchange Commission launched its own federal investigation. All these investigations have inspired class-action lawsuits.
Exxon, not surprisingly, has denied all charges. It claims that it has been open and honest about climate change and that journalists are using “deliberately cherry-picked statements” to build their case.
In response to the 2015 articles, the company issued a challenge: “Read all of these documents and make up your own mind.”
Here’s a good lesson for #brands everywhere: Don’t issue reading-based challenges to a community full of nerds.
A couple of researchers at Harvard decided to take them up on it. They gathered every document, read them, did a thorough content analysis, and have just published the results in a peer-reviewed academic journal, Environmental Research Letters.
Spoiler: Yes, Exxon misled the public.
Naomi Oreskes and Geoffrey Supran deserve tremendous praise for uncovering the smoking-gun evidence that the company tried to convince the public that the threat posed by human-caused climate change was exaggerated while internally acknowledging that carbon pollution was indeed an existential threat to humanity. The Attorneys General who have tried to hold ExxonMobil accountable for its actions also deserve tremendous praise, even if their efforts ultimately fail:
Whether any of this constitutes legal liability is a question neither the researchers nor I are equipped to adjudicate. But as to the basic question of whether Exxon has been trying to pull one over on the public, a full and fair assessment of its record suggests: Yes, it has.
Look for ExxonMobil’s defenders to promote the idea that the company was under no real legal or moral obligation to acknowledge in public what it knew in private. This argument served as the core of an infamous century-old Michigan Supreme Court ruling:
Publicly held corporations have a fiduciary responsibility to maximize profits for shareholders. However, as University of Chicago’s M. Todd Henderson observes, “Shareholder wealth maximization is a standard of conduct for officers and directors, not a legal mandate.”
Still, the core foundation of corporate responsibility to maximize profit for shareholders generally seems to go all the way back to 1916’s Dodge v. Ford Motor Co., a shareholder lawsuit resulting in the Michigan Supreme Court finding, as Wikipedia describes it, that “Henry Ford owed a duty to the shareholders of the Ford Motor Company to operate his business to profit his shareholders, rather than the community as a whole or employees.”
Ford had decided to stop paying special dividends to shareholders, choosing instead to lower prices on cars, hire more workers and expand production. “My ambition is to employ still more men, to spread the benefits of this industrial system to the greatest possible number, to help them build up their lives and their homes,” Ford said at the time. “To do this we are putting the greatest share of our profits back in the business.”
[For this, Ford] was sued by the Dodge brothers, who were minority shareholders in the company, for cutting off the special dividends.
Ford lost the case — at least on the main point. The court found:
A business corporation is organized and carried on primarily for the profit of the stockholders. The powers of the directors are to be employed for that end. The discretion of directors is to be exercised in the choice of means to attain that end…
The court, while ordering Ford to pay the special dividends to the Dodges and other shareholders, also held that Ford had the right to exercise his “business judgment” in expanding his operations and lower prices for customers as he saw fit. Had he more forcefully argued that the changes to his company were made in the cause of improving long-term profits, rather than for altruistic purposes, he might have been more successful in the case over all.
While “Dodge is often misread or mistaught as setting a legal rule of shareholder wealth maximization,” according to Henderson, “This was not and is not the law.” Still, the basic idea that corporate directors have a fiduciary duty to maximize profits for the corporation’s shareholders, if not a mandate, is still at the core of our capitalistic system. It also helps explain (if not excuse) both why efforts to do the right thing when it comes to clean energy and climate change are so rare among the corporate elite, and why government mandates are otherwise needed in order to force companies to take actions that might not otherwise immediately benefit shareholders.
Yes, ExxonMobil now acknowledges, publicly as well as privately, the reality of human-caused climate change, and for nearly a decade has expressed support for a federal revenue-neutral carbon tax. However, present-day decency doesn’t excuse past delinquency–especially as we bear witness to the consequences of that past delinquency in Texas. So much for relying on the tiger, eh?
