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Ethics, Enterprise, and the Multinational Corporation

R&L: In your view, what are the primary ethical responsibilities of a business professional in a free society?

Raymond: The main professional responsibility of a person in business is business. He or she must be successful in economic terms, but always within an ethical framework. Whether his or her constituency is a corporation and its shareholders or the customers in a small and privately held business, his or her first responsibility is to serve that constituency. But I also feel strongly that when a person is successful in an economic way, he or she thereby gains the tools to do many more things. That means supporting the broad activities of the corporation, including the people who work for that company and the communities in which it operates. It is important to remember that all business has an impact on the lives of real people. In order to gain the tools to fully address the broad impact of business on society, economic success is indispensable. It makes no sense to talk of the social obligations of the corporation without reference to its economic obligations. The two are intertwined.

R&L: Do you think that a case can be made for the moral potential of a free economy?

Raymond: Absolutely. A free economy is as essential to society as democratic political institutions. A strong market-based economy is the fertile ground for democratic freedoms that we think are important. The freedoms that people have that flow from all civic institutions fundamentally come from the success of a market system. I read a quotation from Woodrow Wilson that makes this point: “You can’t have a free society without having the free enterprise system.”

R&L: What do you see as the primary moral and practical challenges that face people in a free economy now and in the future?

Raymond: In every aspect of life, including the economic dimension, we are always challenged to do the right thing. In many cases in the market system, which allows a great deal of latitude for human choice, people can get carried away to excess. We have seen that in this country in the last few years, particularly on Wall Street, with the rise of the old human frailty of greed. This occurs when people begin to serve only their own needs to the detriment of everyone else. To counter such trends, we must work to become not just players or owners but also stewards of the free market system. That means that we need to recognize the pitfalls that come with it. To avoid those pitfalls means to treat fairly everyone with whom one has dealings, and we need to assure that in all matters of business that we are direct and clear.

R&L: Of course, plenty of people think that the capitalist system is inherently immoral. How do you respond to that?

Raymond: It is unfortunate that there are people who say that capitalism is inherently immoral. I do not view it that way at all. I think that capitalism, more than any other system, gives a person the capability, through economic growth and economic development, to provide more opportunity to people. There is no system that is inherently moral if the participants themselves are not. The market system requires that people be committed and willing to work hard. Inherent with that is what I call a merit system, which I think gives people the greatest opportunity. I do understand that there are some people who would want to place a higher value on abstract ideals like equality of position and wealth over practical ideals like freedom. What these people forget is that everyone in our human family has different skills and different talents. We should seek a system that provides outlets for those skills and talents so that everyone can find a way to work and serve in a manner that best suits the strengths of each individual. That is only going to happen under the freedom offered by the market system.

R&L: How about competition? Competition is often seen as an antagonistic relationship and that is, perhaps, even socially destructive. How do you see this?

Raymond: Competition can be viewed in two ways. It can be viewed in a negative light and be seen as destructive, but one can also have the view that it is competition that drives people and institutions to higher and higher levels of excellence and, therefore, to more and more opportunity. Again, I think that is a function of how competition is managed by the participants. Competition can be both inspiring and exhilarating. The competitive instinct is what I think drives organizations and people to become better and better. It can promote change toward progress and development, which is good for everybody. It can be the motivating force behind improvement in our social well-being that is far beyond anything we might have imagined on our own. When we think, for example, about technology, it is clear that the competitive drive is what underpins development and economic growth in the world. Without competition, the spectacular development of technology that we have seen in the last one hundred years in this country would not have happened.

R&L: In an economic sense, do you think that ethical business practice or moral values always facilitates the best interests of the company?

Raymond: I cannot think of cases where that would not be true. Ethical conduct is something that becomes inherent in an organization over a long period of time. From a business point of view, however, one cannot get caught up in whatever the ethical fashion is of the day, so many of which are merely masking a political agenda. What we should seek is broader than that, a sense of obligation, promise keeping, fairness, and all those traits that we associate with individual ethical conduct. These apply to business too.

R&L: In your multinational operations, you deal with a variety of cultures and legal regimes that surely pose ethical challenges.

Raymond: Most certainly. In some of the countries where we operate, there is a tradition of corruption, in which the political elites work with business in the framework of unsavory relationships. We do not participate in that. People sometimes ask, “Well, how do you operate in these countries without being involved?” I answer that we have operated in these countries for years, and everybody there understands that we do not participate in corrupt activities. We are accepted on this basis. It takes resolve and commitment over a very long period of time to establish these credentials and to have people in the organization understand the value of them.

R&L: What about your responsibilities as an ethical businessperson particularly in the energy industry? How does this differ from other industries?

Raymond: I view energy as the lifeblood of world economic activity. And as a result, the energy industry has a profile that is particularly acute. As a matter of fact, the energy industry is by far the largest industry in the world. Because everybody needs energy, there are certain commitments that we have to have, such as continuity of supply. People have to have it, and not having it creates havoc. We have seen this from time to time when there is interruption in the energy supply.

R&L: Some interest groups urge a total ban, or at least stringent restrictions on, the sale and use of fossil fuels. What is your response?

Raymond: I find it interesting that many of the people who want to restrict fossil fuels live in well-developed countries where abundant and affordable energy is readily available. There are very few people in developing countries who hold this opinion for the use of fossil fuels in their countries. Economic activity and economic growth are the lifeblood of human progress. It is the potential for economic growth that provides the basis for the development of countries, for bringing to people essential goods and services, such as water to drink and facilities for healthcare. These ultimately provide the ability for people to have education, without which there really is not much of a future. I have a great deal of difficulty with those who live in a hugely prosperous country telling people in the developing world that they should be deprived of a critical source of energy. It turns out that the development of fossil fuels not only provides economic growth for those areas where it is a natural resource but it also provides a basis for international or multinational prosperity. People who want to curb the use of fossil fuels need to understand that not everyone in the world has the luxury of inventing romanticized scenarios. Many people just need clean water and energy to fuel social and economic progress.

R&L: Paint for us a picture of what the world would be like if there were a ban on the sale, use, or development of fossil fuel.

Raymond: It would be devastating. That is not to say that, as time goes on, there may be a form of energy that none of us can imagine now. But if we want to be realistic and live with what we have today, banning fossil fuels would shut a country down. That may sound simplistic and draconian. But, in fact, if we did not have fossil fuels, it would be draconian. It is always hard for people to imagine that without fossil fuels there would be no effective mode of transportation, that there would be no way to heat everyone’s homes. There is hardly an activity that a person can think about that does not intrinsically involve energy, most of which is currently provided by fossil fuels.

R&L: What about the concern that your company has shown for the environment? There is a lot of junk science going around.

Raymond: If one looks at the environmental record of ExxonMobil, it is the best in our industry. All the way from transporting crude oil and products to how we operate our facilities. As one would expect, we are one of the big energy users, just by the processes that we have to employ to produce the products that people want. Over the years, we have continued to become more and more energy efficient. It is not only good for society, but it makes economic sense. In our worldwide operations, whether it is water or air or how we deal with all the other environmental issues, our company is responsive and is very sensitive to how we operate, recognizing, of course, that there are just some practical and scientific limitations as to what we can accomplish. Of particular note is that late last year we committed to invest $100 million in a groundbreaking research effort at Stanford University called the Global Climate and Energy Project. We believe this project holds great promise for yielding new technology that can help us continue to produce reliable and affordable energy while reducing greenhouse gas emissions in a cost-effective way. Our involvement in this project continues our long history of advancing technological innovations and supporting scientific research.

R&L: How do you respond to attacks by environmental extremists? What is the effect of these attacks on your corporation’s ability to provide a sustained source of inexpensive energy?

Raymond: We do come under criticism, which is not often based in fact. People talk about how our tankers operate and then, when they look at the facts, they find out that we have the best tanker operation of any fleet in the world. Many critics of the company generally have an agenda, which is not necessarily related to the company, but is a somewhat broader agenda in terms of the use of fossil fuels, and probably gets back to a point that we raised earlier about the competitive, free enterprise system. Economic enterprise is all about service. We obviously want to produce things that people want. We are going to continue to do that in an environmentally responsible way, while still being aware of the physical, scientific, and practical issues that we have to deal with.

R&L: As the Chief Executive Officer of one of the largest corporations in the world, what is your view of the “little man,” the employee at the introductory level of your company?

Raymond: I was one of those at one time. I went to work right out of school at Exxon’s research company in Tulsa, Oklahoma. It was an exciting place to be. One step at a time, I moved around in the company and ended up with experience in every aspect of the organization. Everybody in senior management at this company started as I started. They went to some college or university and went to work for one of our companies somewhere around the world. Gradually, as they gained experience, they were given opportunities to do more and more things. It has been forty years since my career at ExxonMobil began, but I still recognize that the lifeblood of the company is bringing in new people. Their new skill sets and perspectives are going to make this company continue to be successful long after I am not here anymore. We take great pride in each and every one of our employees around the world.

R&L: Is ExxonMobil a charitable company? What programs and charities that ExxonMobil has supported are you particularly proud of?

Raymond: I was looking at some data the other day. In today’s dollars, in the last fifty years, we have donated about $3.5 billion to various organizations and causes around the world. The vast majority of our contributions have been devoted to education, much of which has supported activities directed toward science, engineering, and mathematics, starting at the elementary school level all the way through the university level. We were one of the founders of the United Negro College Fund and the National Action Council for Minorities in Engineering, and we have been involved in similar activities all over the world. We do this because we believe that education is really the vehicle to opportunity and growth. Through our philanthropy people have been given opportunity in education and have seen themselves grow. This helps underscore the quality of life that the free society can produce. Both economic success and philanthropic generosity is in all of our interests. We participate in areas where we can have a significant impact, because we owe that to our employees and to society. It is important to try and provide more opportunity for people. Ultimately, that is of value to all of us, not only in the narrow sense of growth for our company and industry, but also in terms of society’s knowledge of, and commitment to, the free enterprise system.