(Bloomberg Opinion) -- The first problem with Exxon’s apology is that it had to issue an apology.
In the latest installment of un-Exxon-y things happening to Exxon Mobil Corp. — a series that has really picked up the pace in the past year or so — saying “sorry” in response to a Greenpeace sting operation is a real twist.
The second problem with Exxon’s apology is how it phrased that apology:
Comments made by the individuals in no way represent the company’s position on a variety of issues, including climate policy and our firm commitment that carbon pricing is important to addressing climate change. The individuals interviewed were never involved in developing the company’s policy positions on the issues discussed.
The “individuals” in question were caught speaking frankly on an undercover video first aired by Channel 4 News in the U.K. As lobbyists, representing the company’s position on a variety of issues describes their job exactly, even if Exxon now disowns their candid comments. Whether they “were never involved in developing” policy positions is irrelevant. Lobbyists sometimes do that, sure, but their main role is to sell those positions via, as the job title suggests, lobbying. The apology, while framed as words from Chief Executive Darren Woods, looks like it was maybe written or at least edited by a lobbyist.
The third problem with the apology — not helped by that artful wording — is that it doesn’t sound credible. This was Woods speaking at the annual shareholder meeting just about five weeks ago:
ExxonMobil has supported the goals of the Paris Agreement since its inception. The company has published on its website a report on its policies and processes with respect to lobbying that explains our policy positions and risk mitigation strategies. Without exception, the company’s lobbying efforts are aligned with its publicly stated positions.
Are they, though? One of those publicly stated positions is supporting a carbon tax, something characterized by lobbyist Keith McCoy in the video footage as “a talking point” for Exxon that serves a useful purpose principally because it will never happen. That seems like an exception to me.
This leads into the fourth problem with Exxon’s apology, which is that it comes at the end of a tumultuous six months or so for the company, centered on the issues at the heart of this video. In that time, Exxon has bent over backward to prove its Paris-aligned bona fides, from announcing a new low-carbon business unit to appointing a green-branded activist to its board to updating its emissions targets and reporting.
Yet these all happened in response to the arrival of activist Engine No. 1 LLC late last year and amid Exxon’s growing anxiety about losing a proxy battle. Which it did. If that’s partly because large investors didn’t necessarily buy the sudden change of heart in Dallas, well, this video shows they were onto something.
Which gets to the fifth problem with that Exxon apology: its audience. Exxon’s defeat at the hands of Engine No. 1 was rooted in a loss of mystique, manifested in the collapse of the oil major’s traditional valuation premium during much of Woods’ tenure as CEO (see this).
In other words, Exxon has a lot of ground to make up in reapplying for the job of being Big Oil’s de facto leader. What exactly is Woods going to say about that shiny new low-carbon business on the next conference call (or to its employees)? ESG-minded investors won’t likely be impressed by the spectacle of lobbyists smirking as they openly confirm everything already suspected about Exxon’s climate aspirations. Ordinary oil investors may simply roll their eyes at the amateur-hour antics of this once-revered company.
Another important audience is the one these lobbyists target: the political class. That may explain why the second half of Woods’ apology began by addressing them specifically:
We condemn the statements and are deeply apologetic for them, including comments regarding interactions with elected officials.
These are dangerous times for the likes of Exxon, precisely because the industry’s long campaign of sowing doubt about climate science — given a nice shout-out in the video — and blocking legislation has sparked calls for faster, more prescriptive policies that make the whole carbon-tax thing, real or not, look quaint (see this).
The revelation that Exxon’s K Street squad may be indulging in underhanded tactics is gambling-in-the-casino territory, of course. Even so, I doubt members of Congress will relish the release of indelible footage in which they are described as “assets” and characterized as flopping fish on Exxon’s line as the company’s now most-famous lobbyist mimes winding his little reel.
The best apologies convince the recipient of true remorse. The next-to-best apologies provide some damage limitation at least. Exxon’s doesn’t reach either level.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.
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