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Case Study 1 - Exxon

Just after midnight on 24 March 1989 the single-hulled oil tanker Exxon Valdez hit Bligh Reef in Prince William Sound. Over the net few days 11 million gallons (270,000 barrels) of crude oil spilled into the senstlive subpolar ecosystem of the Sound and the Gulf of Alaska. Blamed on the negligence of the oil tankers captain, Joseph Hazelwood (who was later acquitted), this was the biggest oil tanker spill in United States history. It transform this Alaskan region into a global symbol of ecological catastrophe.

The immediate environmental impact of the spill was hr-reaching. Approximately1,300 miles of shoreline was oil. (200 miles suffered hew), to moderate oiling and 1,100 miles light to very light oiling), while of washed up on shores 470 miles away torn Bligh Reef. An estimated 250,000 seabirds, 2,800 sea otters, 300 harbor seals, 150 bald eagles, up to 22 killer whales, and billions of salmon and herring eggs died as a direct result of the spill.

Despite the cleanup efforts between 1989 and 1992, and again in 1997, oil was still present in a large area of the Sound by 2001. Ten years after the spill, only two species (the bald eagle and the sea otter) of the original list of twenty-eight directly affected fish and wildlife species, had been declared fully recovered from the spill.

Human communities nearby also suffered, especially the native peoples who rely upon fish, plants, and wildlife in the region. Even now these communities have not yet fully returned to normal. The spill also cancelled the 1989 fishing season, hurling the commercial fisheries industry in the area, and commercial fishing was again cancelled from 1993 through to 1996.

The after effects of the spill did, however, create new job opportunities for those involved in the cleanup operations, which in turn have led to the emergence of a new economic class labeled the "spillionaires." This was largely seen in the business sectors such as hotels/ motels, car rentals, air taxi and boat charters. A significant increase in their business occurred.

Exxon spent more than $2 billion in cleanup efforts in the four years following the spill. On 8 October 1991 the United States District Court accepted an agreement between Exxon end the United States Government, in which Exxon agreed to pay $900 million over a period of ten years as a civil settlement. In 1994 a separate class action suit brought against Exxon by over 40,000 commercial fishermen and other interested parties led to a jury award of $5 billion in punitive damages. Through the use of their considerable legal resources, ExxonMobil have been able to both delay the payment of these damages and reduce the payment amount these actions have served to exasperate the emotional and financial crises being faced by these groups. Currently the case is still under appeal, although some of the original plaintiffs have since passed away.

Perhaps the most significant result of the Exxon Valdez to spill was the enactment of the Federal Oil Pollution Act of 1990. This act required faster and more aggressive cleanup operations after an oil spill forced the responsible party to pay for a cleanup, and provided tougher penalties and more liability for oil spillers. Oil companies have also implemented changes in response to the Exxon Valdez spill, Including a commitment to phase out single-hulled oil tankers in the Alaskan waters by 2015, improved techniques for loading and unloading oil, better employee training, stricter drug and alcohol screening, and faster deployment of oil spill response personnel and equipment at times of crisis.

1.  Explain the social contract How is the social contract illustrated in this case study?

2. Referring to the case study and with support from what you learnt in the unit. explain what the companyts corporate public policy is and the ways they are conveyed to stakeholders.

Utilise the knowledge you have stained in this unit to respond to the following questions. State your position and support it using logical arguments and content from your own research and that of your classmates. In particular, you should support your arguments using examples from at least two of the eight companies that were the basis for research in this semester's assessments. These companies were Royal Dutch Shell, Qantas, Citigroup, Toyota, Apple, Philip Morris International, HSBC and Rio Tinto.

State your position with regards to ONE of the following questions:

1. Milton Friedman stated that -The business of business is business. "More recently Gordon Roddick, the co-founder of Body Shop. quoted "Business must save the people."' Discuss.

OR

Discuss the nature of corporate power and how it is wielded in society.