There is an age-old adage that states reputation is everything, and with regard to business, it couldn’t be closer to the truth. Some experts even believe that reputation is a company’s bottom line. Martha Stewart knows it. ValueJet, at least by name, no longer exists because of it. But the Corporate Gods seem to make at least one major exception: for the notorious irresponsible bend-for-nobody Exxon.
Oil is inherently dirty business, of which Exxon is unquestionably the very unpopular King.
It is hard to forget the images of sea birds and otters fatally drenched in oil after the 1989 Exxon Valdez tragedy – a spill that is considered the most devastating human-caused environmental disaster ever to occur at sea. And while researchers once estimated that decimated bird populations would take 20 to 70 years to recover, it’s not likely that Exxon’s reputation ever will. In a recent survey of 26,000 consumers, Exxon’s reputation was ranked third to last, and participants mentioned the Valdez spill as their reason for ranking the King of Energy so poorly.
Although Valdez is a significant factor in Exxon’s unpopularity, it’s far from the only blemish on its corporate responsibility grade report. Betterworldhandbook.com ranks Exxon at the bottom of its “Social Responsibility Rankings for Gas Stations” (awarding the company the only grade F), citing numerous black marks on its record, including Money Magazine’s 10 worst list (x4) and Money Magazine’s Top 100 Corporate Criminals. Moreover, Exxon is drawing increased criticism for its stance on global warming, unwillingness to pursue alternative energies, and its support of drilling in the Arctic National Wildlife Refuge.
Could things be worse? If reputation really is a company’s bottom line, one would think that Exxon must be in pretty bad shape. And one couldn’t be more wrong. (Even Greenpeace knows Exxon is a machine).
Exxon laughs in the face of reputation. The incredible undefeatable petrol giant now reigns as America’s most profitable company, checking Wal-Mart from the post after reporting a record setting 2008 profit of $45.22 billion. And that victory came at a time when the world was falling to its knees in recession. Exxon, the brute we love to hate, made money when many companies weren’t, and paid an average of $318 million per day in taxes (yes, the amount of taxes it paid in 2008 was 2.5 times its net profit), at the very same time that other genius “too big to fail” American multinationals were hat in hand begging tax payers for a bailout.
There truly is no business like oil business.
Exxon pumps almost twice as much oil and gas a day as Kuwait, and its energy reserves stretch across six continents, larger than those of any nongovernmental company on the planet. If Exxon were a country… fill in the blank.
The success is certainly a quandary for anyone who believes in reputation management. But there is reason behind its madness. Most likely the secret lies in Exxon’s shrewd (if controversial) management style, discipline, and strict attention to cost management. By its hard line anti-casual-Friday business model, the company manages to extract more dollars than its rivals out of each barrel that it pumps or refines. And it has razor sharp focus. When asked why Exxon spends so little on renewables such as ethanol, CEO Tillerson said frankly, “We are investing heavy in conventional oil and natural gas, which is the business we are in. We are not in those other businesses.”
But one question yet remains: is this anti-conservation approach sustainable? Congress thinks not. In fact, one New York Democrat told Fortune Magazine that, “Exxon’s attitude is that they’re the big boys on the block, and they don’t have to bend for anybody, but there is no question there is a new phase for Exxon. If I were giving them advice, it would be, ‘Get used to it and prepare for it.’ They have a self-righteousness that sooner or later will catch up with them.”
The Rockefellers, who descend from Exxon’s forefather, Standard Oil, also think not. Neva Rockefeller Goodwin, an economist, great-granddaughter of John D. Rockefeller, and the prominent voice of the Rockefeller family, fears that “Exxon Mobil is profiting in the short term from investments and decisions made many years ago, and by focusing on a narrow path that ignores the rapidly shifting energy landscape around the world.”
Has the presumably corrupt King of Energy reigned in tyranny for far too long? Gauging by Congress and Rockefeller concerns, it seems that Exxon needs to learn the modern rhetoric of corporate responsibility, or soon it could be falling like King Charles to the cries of “off with its corporate head.”
But the numbers suggest – not that soon.
Either way, maybe the responsibility lays altogether somewhere else? After all, there are no “Corporate Gods.” There are only consumers. So long as we love our cars, our planes, our gas, our oil, Exxon will keep pumping it. And if not the oil, we love the shareholder paybacks and the tax support. Whatever it is, we love Exxon as much as we love to give them corporate responsibility F’s. Now back to the bottom line: inasmuch as we’re afraid to profess our love for the hand that feeds us the petroleum we so readily devour, reputation really is everything.
And it’s an Exxon world.