ExxonMobil Changes Tune on Climate Change

RelevanceWhatever your views on climate change (and there are many differing views, reflecting the complexity and uncertainty of the issue) it is still possible to recognize the change in position that ExxonMobil is currently engineering. We can expect to see a further softening of ExxonMobil’s stance in the coming months, starting with better presentation of ExxonMobil’s environmental credential’s (which are actually pretty good) and culminating in participation in internationally sponsored initiatives to address climate change. What has precipitated such a change by ExxonMobil? It is now clear that the momentum is with those who believe in global warming due to carbon dioxide emissions and wish to do something about it. Sometime this year we reached a tipping point (perhaps the G8 summit, where President Bush signaled his policy change). Whatever ExxonMobil’s true beliefs, they must have a seat at the table to influence important, upcoming policy decisions.

AnalysisIt has been obvious for some time now that ExxonMobil is altering its position on climate change. Perhaps the biggest hint came at the CERA conference in February this year when ExxonMobil’s new CEO, Rex Tillerson, said:

“The risks to society and ecosystems from climate change could prove to be significant. So, despite the uncertainties, it is prudent to develop and implement sensible strategies that address these risks.”

ExxonMobil’s timing, as ever, is perfect. It is surely no coincidence that ExxonMobil is softening its position on climate change just President Bush is doing the same. Also, Tillerson has just taken over as CEO from Lee Raymond, making a change of policy more likely and easier to implement.

Industry insiders know that, actually, ExxonMobil’s HSE credentials are very good. It has one of the best safety records of any large oil and gas company, and since the Exxon Valdez disaster in the late 80s it has reorganized to produce very good environmental performance too. However, its perceived anti climate change stance has made it the pariah company of not only the environmental lobby, but also (and more worryingly for the firm) many more conservative consumers too. The firm did little to alter this perception through its funding of pro carbon dioxide think tanks, and its reluctance to support alternative energy sources.

ExxonMobil was clearly swimming upstream if it thought it could ignore, or even oppose, opinion on climate change. There were just too many investors (e.g. the Ceres group), consumers, politicians and probably even employees who thought differently. With many amongst its peers joining groups such as the US Climate Action Partnership (ConocoPhillips and GM being the latest), it became a question of “when” and not “if” ExxonMobil would change its policy.

Now that ExxonMobil is engineering a seat at the table, the only remaining issue is its motivation to do so. Is the firm changing policy as a damage limitation exercise; to gain influence in order to scupper or slow down progress? Or will it engage as a fully committed player? This writer firmly believes that it is the latter: ExxonMobil has shown a robust honesty when it opposed climate change and this, together with the undoubted quality of the firm and its people, indicates that the firm will fully engage in the process under a new policy.

19 June 2007

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