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Exxon's Failing PR Strategy

Kara Alaimo is an assistant professor of public relations at Hofstra University and author of “Pitch, Tweet, or Engage on the Street: How to Practice Global Public Relations and Strategic Communication.” She previously served in the Obama administration.
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This Thursday’s issue of the New York Review of Books features a remarkable accusation against ExxonMobil: that the company has engaged in a decades-long effort to cover up what it knows about climate change. The charge, leveled in a 6,000-word essay by David Kaiser and Lee Wasserman of the Rockefeller Family Fund, is the latest salvo in a high-profile campaign funded by the heirs of John D. Rockefeller against the largest successor to the company he founded. It began when the Rockefeller Family Fund announced it would divest from ExxonMobil in March, arguing there was “no sane rationale” to invest in fossil fuels as the world warms. And the push is far from over: In a follow-up essay, Kaiser and Wasserman warn investors that unless the company addresses climate concerns, its share price will “probably decline substantially.”

Addressing this public relations crisis has become critical for Exxon Chief Executive Officer Rex Tillerson, who is interviewing with Donald Trump this week to be the next U.S. secretary of state. But so far, Exxon is epically mismanaging the problem. Back in March, an Exxon spokesperson responded to the Rockefeller Fund’s concerns by accusing the nonprofit of “funding a conspiracy against us.” If a student proposed this response in my PR 101 class, I’d fail him.

Here’s how the company should handle the Rockefellers.

First, Tillerson needs to set the company’s priorities straight. At the end of the day, Exxon’s most valuable asset isn’t its booked reserves. It’s the company’s reputation. According to research by Weber Shandwick, one of the world’s largest PR firms, 63 percent of a company’s market value is attributable to its reputation. Leslie Gaines-Ross, the firm’s chief reputation strategist, says CEOs believe reputation risks are the very gravest threat to their companies -- greater than the hazards posed by regulation, political uncertainty, security breaches, natural disasters and a host of other dangers.

This means that Exxon’s top priority must be protecting its reputation at any cost. That can’t be done without making peace with the Rockefellers. By accusing the Rockefellers of a conspiracy, Exxon is wagering that it can convince shareholders, law enforcement officials and the larger public that the company is right and the Rockefellers are wrong. But it can’t.

Exxon is a company that burns fossil fuels, which scientists have proven threatens the continuation of human life on earth. The Rockefeller Family Fund is a philanthropic organization funded by a venerated American family that backs efforts to help elderly people vote and moms take time off work when their kids are sick. In a battle for public opinion, the Rockefellers will win every time.

Therefore, the only way for Exxon to effectively address this problem is to satisfy the Rockefellers. Specifically, in their follow-up story, Kaiser and Wasserman call for Exxon to publicly release all of the documents requested by New York Attorney General Eric Schneiderman in his investigation of the company for consumer and securities fraud. Exxon should do so today.

Withholding information requested by journalists only deepens reputational damage because it prolongs a PR disaster. The truth always emerges eventually. That’s why I teach my PR students that, when they experience a crisis, the best thing to do is to lay out all the facts immediately for the media. They’re going to face a slew of negative press in the short term regardless of their response. But if they come completely clean, afterwards, journalists and investigators will be left with nothing new to report. 

If Exxon has covered up information, as Kaiser and Wasserman allege, it’s in the company’s interests to admit to any past wrongdoing on its own terms and make amends now, rather than waiting for law enforcement officials to force them to do so. Perhaps the only thing worse for the company’s reputation than causing catastrophic environmental degradation is being perceived as doing so deliberately and deceptively.

Another tenet of reputation management is to never let a good crisis go to waste. Helio Fred Garcia, who as president of the crisis management firm the Logos Consulting Group has counseled dozens of Fortune 500 CEOs facing critical challenges, is fond of reminding clients that the ancient Greek roots of the English word “crisis” refer to the moment in a tragedy when the protagonist makes a choice that determines his or her destiny. The same is true for companies.

To be sure, if Exxon has and discloses information that it knew the fossil fuels it’s burning will have catastrophic effects on the environment, the company will be forced to make some very painful changes. However, they could serve Exxon well in the long run. At the turn of the 20th century, horse and buggy companies would have benefited if they saw themselves as transportation companies rather than horse companies. Likewise, if Exxon makes a greater push away from fossil fuels and toward clean energy -- the business of the future -- it will be better-positioned to survive over the longer term.

That’s why effectively managing crises can actually make a company stronger. In fact, the researchers Rory Knight and Deborah Petty have found that the stock prices of companies that handle crises well actually increase

Once Exxon is set on this course, it needs to make public amends with Kaiser and Wasserman. One of the Rockefeller Family Fund’s major priorities is addressing the climate crisis. It is not unthinkable that Exxon and the family might partner on such initiatives, which would be an enormous boon for the company’s reputation.

Of course, Exxon’s alternative is to keep claiming the Rockefellers are wrong. The current U.S. secretary of state speculated about that possibility in 2015. “It’s tobacco -- it’s R.J. Reynolds all over again,” John Kerry told Rolling Stone last December. “Exxon Mobil stands potentially to lose billions of dollars in what I would imagine would be one of the largest class-action lawsuits in history.”

To try to head this off, ExxonMobil’s best bet is to disclose what it knows and any past wrongdoing now. The company must forcefully work to rebuild its reputation and long-term viability by making greater investments in the energy of the future. Its current strategy just isn’t good enough.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the editor responsible for this story:
Tracy Walsh at twalsh67@bloomberg.net