15438649 Responding to Environmental Ethics Moving From Petroleum to Renewable Energy in the 21st Century

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Responding to Environmental Ethics:

Moving From Petroleum to Renewable

Energy for the 21st Century

A Report for ExxonMobil

Carlos Rymer

MPA-Environmental Science and Policy

School of International and Public Affairs

Columbia University

December 11, 2008



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ContentsIntroduction .................................................................................................................................. 3

The Petroleum Business and Ethics ......................................................................................... 4

ExxonMobil’s Activities ......................................................................................................... 4

Petroleum and Climate Climate ........................................................................................... 6

Climate Change Ethics ........................................................................................................... 7

ExxonMobil’s Stance............................................................................................................. 10

An Action Plan: Responding to Climate Change ................................................................ 11

The End of the Carbon Era .................................................................................................. 11

A New Business Path: Renewable Energy and Sustainable Transportation ............. 12

Diversification Strategies .................................................................................................... 14

Conclusions ................................................................................................................................ 15

References ................................................................................................................................... 16



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As the world’s largest oil and gas company, ExxonMobil has a significant

positive impact on the lives of millions of people all around the world. ExxonMobil’s

goal of providing reliable energy to the world has set it apart as a pillar of global

development. At the same time, ExxonMobil’s focus on petroleum and gas products,

especially those that are combusted to extract energy, has played a key role in

promoting climate change through an enhanced greenhouse effect. The combustion of

petroleum and gas has increased the concentration of carbon dioxide in the atmosphere

to levels that are rapidly warming the planet, leading to severe consequences for the

world economy and most of the Earth’s natural features.

The purpose of this report is to outline why the company’s main activities are

unethical and how its involvement in an effort to misinform the public about climate

change in the past have tarnished the company’s moral image. In addition, the report

uses the company’s unethical activities as justification for a strategic plan that will help

the company not only address its moral image, but also gain a global reputation of

corporate social responsibility and secure its financial viability in the 21st century

through new technologies that address climate change, create jobs, and spur economic

development.

1. Introduction



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ExxonMobil is the world’s largest oil and gas company,

with presence in all six continents. It considers its primary role

in society to be “safely [providing] reliable and affordable

supplies of energy to people around the world.” It is the largest

explorer and produce of oil and gas, as well as the largest

manufacturer, refiner, and transporter of petroleum and gas

products. ExxonMobil provides different products and services

under different brands, such as ExxonMobil, Exxon, Mobil, and

Esso. However, while it is the world’s largest producer of oil

and gas, ExxonMobil only provides 2% of the world’s energy

demand.1

ExxonMobil’s corporate citizenship is driven by its self-

performed materiality analysis. This analysis informs the

company on the social and environmental priorities important

1 ExxonMobil. 2008. 2007 Corporate Citizenship Report.

http://www.exxonmobil.com/Corporate/files/Corporate/community_ccr_2007.pdf. Pgs. 1-10.

2. The Petroleum Business

and Ethics

ExxonMobil’s Activities

Key Statistics

• 81,000 employees glob

• Exploration

production in 36 count

• 2.5 million individual2,000 institut

shareholders

• 10 million daily custom

• 170,000 suppliers

• $40.6 billion net incom

2007

• $21 billion in investm

in 2007

• 4.2 million barrels

liquids and gas per da


gasoline per day


petroleum products

day

• 27.5 metric tons chemical products



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to the world based on its own outlook of energy demand. In its analysis, the company

first identifies issues of concern based on its own projections for energy demand and

supply. In general, the company’s goal is to provide energy around the world to

improve quality of lives while minimizing environmental impact and supporting

communities. Second, the company assesses any issues identified in the first step

through information from various sectors, including non-governmental organizations,

academia, financial institutions, and employees. Then it develops a list of material areas

that the company will focus on based on its analysis. In 2007, these material areas were

1) Environmental Performance, 2) Workplace, 3) Corporate Governance, 4)

Transparency and Human Rights, and 5) Community Development.2

Based on its materiality analysis, ExxonMobil has worked in the last year to

address these key areas through its primary business activities. For example, the

company has reduced carbon dioxide emissions and oil spills from its own operations,

trained thousands of contractor supervisors and managers on safety leadership and

expectations, replaced over 100% of all its oil and gas reserves over the last five years

through multi-billion dollar investments, partnered with governments in making their

oil and gas operations more transparent, and invested millions of dollars in the last few

years in major initiatives on health and education.3

2 ExxonMobil. 2008.3 ExxonMobil. 2008.



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The main product delivered by ExxonMobil is petroleum. While the company

has a suite of other products, petroleum is the resource the company is most well-

known for. In particular, the refinement of petroleum into gasoline and other fuels for

combustion is well-associated with ExxonMobil. Petroleum combustion for the

transportation and electric sectors has been one of the main drivers of increasing

atmospheric carbon dioxide concentration. The combustion of petroleum products

emits carbon dioxide, the main greenhouse gas blamed for enhancing the Earth’s

greenhouse effect. Already, this has led to serious consequences for the world and,

given continued petroleum combustion, will lead to greater future consequences.4

The enhancement of the Earth’s greenhouse effect is rapidly warming the planet.

In the last century alone, the world experienced an average temperature rise of 0.8⁰C. It

is expected that under future scenarios, the global average temperature will rise

between 1.8⁰ - 4.0⁰C this century. This will lead to sea-level rise as glaciers and ice sheets

melt and seawater expands; more intense storms, floods, and droughts; the loss of

significant biodiversity and agricultural capacity; and infectious disease outbreaks,

among other consequences.5 It has been estimated these consequences may cost the

world up to 20% of its gross domestic product (GDP) by the end of the century.6 As a

result, ExxonMobil’s own future is threatened by its main product.

4 Intergovernmental Panel on Climate Change. 2007. Climate Change: Synthesis Report. UNFCCC.5 IPCC. 2007.6 Stern, Nicholas. 2006. The Stern Review on the Economics of Climate Change. UK Treasury.

Petroleum and Climate Change



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Anthropogenic climate change raises several ethical issues related to living

things and non-living objects. Living things include humans and all the species and

ecosystems being affected by climate change. Non-living objects include glaciers, ice

sheets, land, rivers and lakes, and the ocean, among other things. Since ethics concerns

primarily the diversity and abundance of life,7 living things are of more immediate

concern and the focus of this report. However, it is important to note that climate

change does impact “the way of being”8 of many objects shaped by the Earth’s

evolution, including melting glaciers, acidifying oceans, and desertifying lands.

Climate change is clearly going to continue to impact living things. As the

Earth’s average temperature rises, economic activity is negatively impacted, whether

through sea-level rise affecting cities, stronger storms flooding infrastructure, or

drought reducing freshwater availability. In addition, entire ecosystems that are not

considered part of human society will be impacted as well. From the economic side, we

can divide ethical considerations into economies largely responsible for climate change

and economies being impacted by climate change but not responsible for it.

The economies largely responsible for climate change are characterized with

heavy use of natural resources and inconsideration of other humans and species. This

way of lifestyle has resulted in significant carbon dioxide emissions, especially from

7 Gondek, Adela J. 2008. Class Notes for Ethics, Values, and Justice. Columbia University. Lectures 1-3.8 Gondek, Adela J. 2008. Lectures 1-3.

Climate Change Ethics



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petroleum combustion. It is a way of life that the world strives for but that has led to

ethical issues regarding the “rights” of others being compromised because of the use of

“property rights.” At the same time, the burden being shared by economies that were

not responsible for climate change is significantly larger, not only because of more

severe impacts, but because they have less resources to cope with the impacts.

The divide between those who are at fault and those who are being impacted the

most can also be linked to a pattern of global change that has been occurring over the

last several decades. Climate change is one aspect of the global changes that are being

witnessed as the world significantly increases its consumption of natural resources. The

concept of giving future generations a world “with a few domestic plants and animals”

clearly poses fundamental questions of morality.9 The “hedonistic” lifestyles enjoyed in

the world’s developed economies raise questions about how we ought to live and what

our relationship should be with other humans and species.10 It also presents a conflict

among things we value but tend to ignore, such as valuing the living poor and the

“hedonistic lifestyle” that has contributed to global inequalities.11

Not only is climate change interfering with the “rights” of other people globally,

thus creating inequalities among economically different peoples, but it is also creating

inter-generational inequality. The prospect of intensifying climate change resulting

9 Jamieson, Dale. 2003. Ethics, Public Policy, and Global Warming. In Environmental Ethics: An Anthology. Blackwell Publishing. Pgs.

371-375.10 Gondek, Adela J. 2008. Lecture 4.11 Gondek, Adela J. 2008. Lecture 8.



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from continued greenhouse gas emissions implies that future generations will have to

share a greater burden of the problem than previous and current generations. This

further contradicts the moral principle that fundamental equality among generations is

ethical since not doing so would be interfering with the “rights” of those to come.12

Climate change threatens the survival of future generations13 by challenging any

progress made in a growing urban world.14

On the other hand, climate change also interferes with existence “rights” of non-

human species.15 From extinction to the deterioration of ecosystems and the ways of life

of many species, climate change raises the question of whether we ought to not interfere

with the “way” of other species. From an ethical standpoint, anthropogenic climate

change immorally interferes with myriad of non-human lives, but it also interferes with

the rights of humans themselves to value the rest of the world.16 Clearly, the ethics of

climate change raises questions regarding whether the rights of other living things

should be respected or not, or whether we should continue to fuel climate change in

spite of available alternatives.

12 Barry, Brian. 2003. Sustainability and Intergenerational Justice. In Environmental Ethics: An Anthology. Blackwell Publishing.

Pgs. 487-489.13 Davidson, Marc D. 2008. Wrongful Harm to Future Generations: The Case of Climate Change. Environmental Values 17: 471-488. 14 Gondek, Adela J. 2008. Lectures 11-12.15 Gondek, Adela J. 2008. Lectures 3 and 8.16 Rolston III, Holmes. 2003. Value in Nature and the Nature of Value. In Environmental Ethics: An Anthology. Blackwell Publishing.

Pgs. 143-147.



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ExxonMobil has traditionally been skeptical of climate science. It wasn’t until

recently that the company decided to accept that climate change is largely attributed to

human activity and that something must be done about it.17 In 2005, a survey conducted

by the UK’s Royal Society determined that ExxonMobil had contributed roughly $22.9

million to nearly 40 groups that worked to misinterpret the science behind climate

change to confuse the public and prevent government action. In fact, it is largely

believed in the non-profit sector that ExxonMobil has funded a “climate denial

industry” over the last decade. Although the company decided to cut investments in

many groups, it continues to fund several key groups that undermine climate science. 18

Despite ExxonMobil’s new stance on climate change, it continues to treat it as

another global issue to consider rather than an urgent emergency that needs to be

addressed quickly and aggressively. In fact, while competitors invest more in

alternative energies, ExxonMobil continues to believe that petroleum will be a

significant energy source well into the future.19 This stance is unethical because of the

known consequences climate change threatens to pose and because ExxonMobil is one

of the best well-positioned companies to lead the world with technological solutions

that can improve lives. ExxonMobil’s time for action is now.

17 ExxonMobil. 2008. Pgs 1-10.18 Adam, David. 2008. Exxon to cut funding to climate change denial groups. The Guardian.

http://www.guardian.co.uk/environment/2008/may/28/climatechange.fossilfuels. 19 Baue, Bill. 2006. BP, Suncor, and Shell Top Oil Sector Sustainability Rating; Chevron and ExxonMobil Rank Low. Social Funds.

http://www.socialfunds.com/news/article.cgi/2072.html.

ExxonMobil’s Stance



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If there is one well-known fact regarding what may influence ExxonMobil’s

future viability, it is the end of the carbon era. The world has largely come to a

consensus that it must substantially reduce carbon dioxide emissions to prevent the

worst consequences of climate change.20 In effect, this means that petroleum combustion

will likely be curtailed significantly this century as a result of government action to fight

climate change. Regardless of what strategy is used to address the challenge,

ExxonMobil will have to reinvent its business to remain one of the world’s most

significant companies and ensure its viability.

Furthermore, it will have to adopt a strategy in which it not only reduces the

carbon dioxide emissions it produces, but also provides the technologies that will lead

the world towards decarbonization. Given that carbon dioxide emissions will have to

come down dramatically, the best path for ExxonMobil is to capitalize on existing

alternative technologies that are emissions-free and can be scalable. This will mean

entering new markets while maintaining its mission of providing reliable energy to the

world and improving its tarnished image.

20 Associated Press. U.N. climate chief hails Obama commitments. 19 November 2008. http://www.msnbc.msn.com/id/27810959/.

3. An Action Plan: Responding to

Climate Change

The End of the Carbon Era



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ExxonMobil has the unique opportunity to capitalize on its investment capacity

to gradually shift investments from petroleum and gas to renewable energy and energy

efficiency technologies, both for the electricity and transportation sectors. Under a 10-

year strategic investment plan, the company can shift its total annual investments from

petroleum and gas to renewable energy and energy efficiency technologies, as well as

sustainable modes of transportation, such as rail, train, buses, and even highly energy

efficient personal vehicles. This will not only enable the company to seize the

opportunity at hand, but it will ensure the company’s future viability under a carbon-

constrained world.

Under this plan, ExxonMobil should take advantage of all business strategies for

market entry, including leveraged buyouts and investments in university research. It

should seek to attract the best researchers and market its new strategy to gain

government and public support. It should also continue to lobby the government, only

that under this plan it will be regarding the government provision of funding and

incentives for renewable energy, energy efficiency, and sustainable transportation. With

strong government and public support, ExxonMobil can develop new technologies that

will transform the way the world gets and uses energy. From an ethical standpoint, it

will be a way of respecting the “rights” of certain humans and all other species.

This strategy will enable ExxonMobil to address climate change ethically by

reducing the extent to which future impacts will impair human rights and the rights of

A New Business Path: Renewable Energy and Sustainable Transportation



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other species on Earth. This “[greening]” of human rights addresses both environmental

degradation and social deterioration.21 On one hand, this new strategy will create

innovative technologies that will de-carbonize the world. On the other, it will create

millions of jobs globally, reduce climate change impacts, enhance projected natural

resources availability, and promote healthier and better lifestyles. In this way,

ExxonMobil will be known as a company that capitalized on a great opportunity

offered by a global emergency to take the world on a different path.

Finally, working with governments and other competitors to mitigate climate

change will avoid future conflicts that will save lives and create new business

opportunities for ExxonMobil. While it is largely assumed that coordination alone

among governments will lead to conflict,22 ExxonMobil can demonstrate that this does

not have to necessarily be the case. By fully entering the carbon-mitigating market, it

will force other competitors to also heavily invest in this new market, freeing up

government resources that can instead be used to socially protect those most impacted

by climate change. In this way, the “rights” of other people can be better protected in

the future, allowing people’s quality of life to improve and a new sustainable economic

order to take place, where people’s decisions play a more important role.23

21 Nickel, James W. and Viola, Eduardo. 2003. Integrating Environmentalism and Human Rights. In Environmental Ethics: An

Anthology. Blackwell Publishing. Pgs. 474-476.22 Kamminga, Menno R. 2008. The ethics of climate politics: four modes of moral discourse. Environmental Politics 17 (4): 673-692.23 Cobb Jr., John B. 2003. Toward a Just and Sustainable Economic Order. In Environmental Ethics: An Anthology. Blackwell Publishing.

Pgs. 365-368.



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In order to implement this strategy, ExxonMobil will have to analyze the existing

carbon-mitigating markets to understand what entry options exist. This will entail

designing entry options based on market size, technological improvement potential,

and competition. The table below provides recommended strategies for each of these

categories.

Category Strategy

Market Size1. Purchase largest businesses if market size is small.

2. Purchase cutting edge businesses if market size is large.

Technological

Improvement

Potential

1. Heavily invest in research and development at universities.2. Transform existing research operations to focus heavily on

carbon-free technologies.

3. Heavily invest in start-ups with innovative technologies and

great cost-reduction potential.

Competition

1. Establish joint ventures with leading businesses by providing

substantial funding for growth.

2. Strive to dominate emerging markets, whether small or large.

In many cases, the company will have to adopt a mix of these strategies in order

to competitively enter a market. For example, the solar photovoltaic industry is

relatively small, yet competition is very strong, so that ExxonMobil will have to

combine buying large businesses while establishing ventures and entering as many

emerging markets as possible. These strategies are designed to enable the company to

rapidly enter the existing markets and maximize its investments. With such strategies,

ExxonMobil will be able to enter a new, bright period in the company’s history,

eliminating the immoral image it currently has and creating a more prosperous world.

Diversification Strategies



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Climate change poses significant challenges to the world as it threatens to widen

inequalities and impact non-human living systems. The ethics of climate change involve

the interference with the rights of humans and non-human living things, particularly in

relation to access to natural resources critical to survival. It also involves questions

related to whether we should leave a place to live for future generations that is better or

worse than what it currently is. The combustion of petroleum products therefore creates

a problem for ExxonMobil as it cannot meet its goals of improving the lives of millions

of people with energy provision as that same provision unintentionally destroys lives.

ExxonMobil’s stance on climate change has been unethical for far too long, and it is fair

that the company is now beginning to change its view on climate change.

However, ExxonMobil must make a turn as one of the world’s most well-known

companies by accepting the fact that the age of carbon emissions is over. Moreover, it

must embrace the opportunity the challenge of de-carbonizing the world presents by

implementing a 10-year plan under which it will enter and eventually lead new markets

that will supply energy with carbon-free and sustainable technologies. Under this plan,

the company will adopt strategies that will not only maximize its future financial

viability, but that will also improve millions of lives and make itself the most well-

respected company in the world. The time is now to show global leadership.

4. Conclusions



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Adam, David. 2008. Exxon to cut funding to climate change denial groups. The Guardian.

http://www.guardian.co.uk/environment/2008/may/28/climatechange.fossilfuels.

Associated Press. U.N. climate chief hails Obama commitments. 19 November 2008.http://www.msnbc.msn.com/id/27810959/.

Baue, Bill. 2006. BP, Suncor, and Shell Top Oil Sector Sustainability Rating; Chevron and ExxonMobil

Rank Low. Social Funds. http://www.socialfunds.com/news/article.cgi/2072.html.

Barry, Brian. 2003. Sustainability and Intergenerational Justice. In Environmental Ethics: An

Anthology. Blackwell Publishing.

Cobb Jr., John B. 2003. Toward a Just and Sustainable Economic Order. In Environmental Ethics: An


Davidson, Marc D. 2008. Wrongful Harm to Future Generations: The Case of Climate Change.

Environmental Values 17: 471-488.

ExxonMobil. 2008. 2007 Corporate Citizenship Report.

http://www.exxonmobil.com/Corporate/files/Corporate/community_ccr_2007.pdf.

Gondek, Adela J. 2008. Class Notes for Ethics, Values, and Justice. Columbia University. Lectures 1,

2, 3, 4, 8, 11, 12.

Intergovernmental Panel on Climate Change. 2007. Climate Change: Synthesis Report. UNFCCC.

Jamieson, Dale. 2003. Ethics, Public Policy, and Global Warming. In Environmental Ethics: An


Kamminga, Menno R. 2008. The ethics of climate politics: four modes of moral discourse.

Environmental Politics 17 (4): 673-692.

Nickel, James W. and Viola, Eduardo. 2003. Integrating Environmentalism and Human Rights. In

Environmental Ethics: An Anthology. Blackwell Publishing.

Rolston III, Holmes. 2003. Value in Nature and the Nature of Value. In Environmental Ethics:

An Anthology. Blackwell Publishing.

Stern, Nicholas. 2006. The Stern Review on the Economics of Climate Change. UK Treasury.

5. References

Documents

15438649 Responding to Environmental Ethics Moving From Petroleum to Renewable Energy in the 21st Century