GMS802 Ethics CASE 4 PDF

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GMS 802-031 Jian Guan March 12, 2018 ExxonMobil and the Chad/Cameroon Pipeline Exxon and Mobil are both multi-billion-dollar oil companies, that merged in 1998, creating ExxonMobil. They were two of the largest oil companies in the world; Exxon had revenues of $137.2 billion and Mobil had revenues of $65.9 billion in 1997 (Wicks, Freeman, Werane, & Martin, 2011). After years of research in economic and environment feasibility, a group of oil companies signed an understanding with the government of Chad and Cameroon to develop oil fields and underground pipelines to transport the oil to the coastline of Cameroon, then to the rest of the world. The companies included Shell, Elf, and ExxonMobil. The project was expected to generate millions and billions of dollars in revenues for all the parties involved. However, when Shell and Elf pulled out of the project, it threatened to put a halt on the project, and brought credence to those who believed that that project would have detrimental effects to the environment and humans in the poor countries of Chad and Cameroon. This left the CEO of ExxonMobil, Raymond Lee, wondering if the company should continue with the oi exploration or not. Before this project, both Exxon and Mobil struggled with their reputations. In 1989, Exxon Valdez had an oil spill in Alaska’s Prince William Sound, that spilled 1.26 million barrels of oil that covered 460 miles and took four years to clean up (Wicks et al, 2011). The spill also killed an abundance of sea life. This caused a worldwide public outcry, and very negatively tarnished Exxon’s reputation. Fuel was added to the fire as the actions Exxon took to fix the situation was considered how not to handle a public relations disaster. Mobil had a questionable

reputation as well as they considered environmentally friendly power options as economically unattractive, and were involved with corrupt regimes, and oppressive rulers and dictators. Many environmental groups placed pressure on companies like ExxonMobil to switch to more environmentally friendly fuel options, however, ExxonMobil was firmly committed to fossil fuels, and rebutted that other fuel sources were impractical. ExxonMobil entering two of the world’s poorest countries, Chad and Cameroon, posed many risks. Both countries had gained independence less than 50 years ago (in 1999) and had very rates of poverty, infant mortality, illiteracy (although Chad had the highest rate of literacy in all of Africa), had civil turmoil and corrupt governments with many economic problems. The pipeline project had potential environmental and social costs to Chad and Cameroon, that were identified in a report of environmental assessment that was sent to the World Bank. However, because of the poverty in the two countries, the World Bank stated that just because of environmental setbacks, they could not ignore the possibility of poverty alleviation and development, as the project was expected to increase government revenues by 45 to 50 percent. Along with environmental problems, this project posed many issues among the populations of Cameroon and Chad. The pipeline project in Cameroon would compromise the forests that was home to an indigenous group called the “Pygmies.” The Pygmies were a marginalized group for many reasons: they were not recognized as Cameroonian citizens; they did not have any identity papers; and they did not interact with the mainstream citizens. The project would wipe out the forests, which the Pygmies depended on for survival. Deforestation also led to a loss of biodiversity and environmental benefits. The drilling process produces a lot of waste, which oil companies overlook as waste management processes were expensive. Roads

would also have to be paved to support the infrastructure of the drilling and pipelines, which would affect communities and families surrounding the area. The two options for CEO Raymond Lee would be to either continue with this project in Chad and Cameroon or completely cancel the project. By continuing and building the oil fields and pipelines, ExxonMobil would continue to generate revenue. They would also help the economy of the poor developing countries and increase government revenues. The negative effects of this option would be harming the environment, displacing many groups and communities, and building onto their negative reputation from environmental groups and the rest of the world. However, if ExxonMobil pulled out of the project, they could save themselves a lot of political, environmental and social turmoil. The company could look for opportunities in different countries that would not be so negatively affected by a project. ExxonMobil could save their company’s reputation and become favorable to environmental groups and human rights groups for considering their negative impacts on the environment and to the populations in Chad and Cameroon. The negative effects of this decision would be the loss of potential revenue. Also, the economies in Chad and Cameroon would still be in a poor state, as the country would not receive any of the benefits from having oil extracted from their land by foreign companies.

References Wicks, A, Freeman, R., Werane, P., & Martin, K. (2011). Business Ethics A Managerial Approach. Prentice Hall / Pearson...