Let me introduce you to a fairly normal American man. He is a father of four and a lifelong Boy Scout with a sash full of badges. Friends describe the sixty-two-year-old as honest and straightforward. One friend has publicly applauded this man’s refusal to bribe an official in the Middle East where his company has some business, a sign of uncommon integrity. Others report that he runs his company like a Boy Scout troop, handing out badges for good behavior. He was a serious student at the University of Texas at Austin where he studied civil engineering and played percussion in the marching band. Instead of throwing wild parties, his fraternity was more apt to assist the elderly. Today, he lives with his family in a small town in northern Texas.
This small-town family man, all silver hair and sagging jowls, also happens to run the third largest company by revenue in the world. His name is Rex Wayne Tillerson.
Despite Tillerson’s apparent virtues, his company, ExxonMobil, is less virtuous. In addition to profiting from a product that directly contributes to three million deaths per year, more than AIDS and malaria combined, and causing some of the worst oil spills in history, the company has misled the public and influenced the government to perpetuate a problem that will lead to far greater destruction than three million premature deaths per year.
Carbon emissions from ExxonMobil’s products are disrupting the global climate system, and an unstable climate will lead to destabilized regions; hundreds of millions will be displaced, nations will fall, and widespread conflicts will ensue. The US military considers disruption of the global climate system one of the greatest national security threats of the twenty-first century. Meanwhile, biological systems on which we depend — forests, farms, fisheries — will further degrade; about a third of species risk extinction.
Rex Tillerson knows about these risks. He publicly voiced concern for them in a March 2013 interview with Charlie Rose, saying, “I view global warming and climate change as a serious risk….You take sensible steps that can mitigate the risk by controlling the growth of greenhouse gas emissions.” ExxonMobil’s management has known about global warming since 1981, seven years before the issue became broadly recognized. But for twenty-seven years, the company sought to cover it up, funding organizations that misled and confused the public.
ExxonMobil has consistently worked to perpetuate climate disruption, building a mosaic of lobbyists and political front groups to block action addressing climate change. ExxonMobil is a member of the American Legislative Exchange Council, a group that has aggressively lobbied the government to eliminate support for renewable energy development. The company is a member of the American Petroleum Institute, the largest US trade association for the oil and gas industry, which retains several political front groups seeking to repeal renewable energy standards. The American Energy Alliance, a shadowy political group that has received funding from ExxonMobil, has fought against clean energy production tax credits, important mechanisms in limiting climate disruption.
The company has spent about $220 million since 1998 lobbying the government. ExxonMobil helped defeat the failed 2008 cap-and-trade bill, the closest Congress has ever come to passing climate legislation. ExxonMobil is committed to extracting carbon far beyond safe levels, which suggests they are willing to discard global stability for the company’s security.
Rex Tillerson claims to support action against climate disruption. But he has led ExxonMobil to do the opposite. As head of his company, he has done everything in his power to maintain a dangerous status quo. How is it that Rex Tillerson, apparently a psychologically healthy, normal person, can lead his company to pursue a path that will continue to harm countless lives, destabilize the global economy, and disrupt the planet’s climate system for centuries?
To begin trying to answer this question, let me tell you about another fairly normal American man. He was a middle-aged resident of New Haven, Connecticut. His name was Jim McDonough, but he went by the pseudonym “Mr. Wallace” in Stanley Milgram’s famous experiments at Yale. In 1961, Milgram conducted studies ostensibly on learning, but secretly testing obedience to authority. Mr. Wallace appeared to participants, volunteers from the community, as just another volunteer, but he played a special role in Milgram’s experiments.
In the experiments, a stern-looking man wearing a white lab coat leads participants into a crisply lit room where they notice a bulky metal contraption with switches lining the front. Each switch corresponds to an increasing voltage. The machine is called a “shock generator.” The man in the lab coat introduces the participant to Mr. Wallace, whom he leads into the next room. As the experimenter straps Mr. Wallace into a chair and attaches a wire from the shock generator to his arm, Mr. Wallace mentions — in earshot of the participant — that he has a heart condition. The participant and the experimenter then leave the room and close the door behind them.
The participant begins administering a test through a microphone to Mr. Wallace. When Mr. Wallace answers a question incorrectly, the participant must flip a switch on the shock generator and press a red button that emits a loud buzz, apparently shocking Mr. Wallace as punishment. The participant starts at the left, the lowest voltage, and, with each wrong answer, increases the voltage.
Participants often display discomfort, grimacing a little, the first time they shock Mr. Wallace. But they are volunteering to advance scientific knowledge and the experimenter has assured them the experiment is safe. So they continue. Though participants cannot see Mr. Wallace, they can hear him through the speaker. At first, Mr. Wallace gasps and complains of the pain. When the participant hesitates, the experimenter says, “Please continue.”
As the voltages increase, Mr. Wallace’s gasps turn to screams and pleas to stop the experiment. The participant approaches the higher voltage switches labeled, “DANGER SEVERE SHOCK.” Mr. Wallace begs to stop. He complains of his heart condition. The participant hesitates, then continues. Eventually, Mr. Wallace falls silent, no more cries, no more pleading, and for a moment only quiet from the other room. The participant continues. He approaches the final two switches, these labeled simply “XXX.” When the participant expresses discomfort, the man in the lab coat says, “the experiment requires that you continue.”
Sixty-five percent of the participants in this version of the experiment continue to shock Mr. Wallace all the way up to the maximum voltage, to the point where they believe they may have killed or seriously injured him. In a variation on the experiment in which the participant could neither seenor hear Mr. Wallace being shocked, one hundred percent of participants administer the highest voltage. Mr. Wallace of course was not being shocked and participants were relieved to find him alive and healthy when debriefed after the experiment. But in the midst of the experiment, most people were willing to harm, even kill, another person they had just met.
Milgram’s experiment was inspired by the trial of Nazi war criminal Adolf Eichmann. Milgram sought to address the question of whether Eichmann was just following orders. He sought to answer whether psychologically healthy, normal people could really carry out the horrors of the holocaust. Milgram’s experiment provides an important voice in the ongoing conversation on the nature of evil.
The experiment has been replicated globally and produced remarkably consistent results among diverse groups, including men and women of different ethnic, cultural, and socioeconomic backgrounds. The study seems to show that most people are willing to harm another person, something they know is wrong, when they are able to relinquish their moral agency to the larger goal or institution they serve. The participants seemed not to view themselves as responsible for their actions; they were simply serving the goal of the institution.
These results provide one answer to the question, Why does Rex Tillerson willingly perpetuate a catastrophic problem? As Milgram showed, when a person relinquishes his moral agency and sense of responsibility to a larger goal or institution, an otherwise normal person can rationalize doing something he knows to be wrong.
We can clearly see this phenomenon play out as Tillerson seeks to publicly absolve himself of the harm he is causing in his role as CEO of ExxonMobil. When Charlie Rose asked him about the many risks associated with carbon energy, Tillerson responded defensively saying that his “philosophy is to make money,” and to make “quality investments for [ExxonMobil’s] shareholders.” Like the participants in Milgram’s study, Tillerson seems to give up his moral agency to the larger goal of serving shareholders, attempting to relinquish his responsibility.
Horizontal hydraulic fracturing, or “fracking,” is a new, controversial kind of gas and oil drilling. Some regions where fracking is widespread, like Pennsylvania and Texas, have seen drinking water contaminated, wildlife die off, and new seismic activity. A nationwide civic movement has risen to limit the use of fracking due to its harm to public health and the environment. Despite the risks, ExxonMobil under Tillerson has led the industry in spreading fracking throughout the nation. This is logical given Tillerson’s sense of responsibility; as CEO, he is simply trying to maximize his company’s value.
Another company planned to build a fracking well near Tillerson’s ranch in Texas — probably seeking to maximize their own profits — and in early 2014 he joined a lawsuit to oppose the drilling. Tillerson and the other plaintiffs worry about the “environmental harm they believe it will cause.” According to Tillerson’s personal ethical judgment, fracking is bad. It could harm his family’s health. It could harm the wildlife near his ranch. It could reduce his property value. But when working as an agent of his company, fracking is good.
When he steps out of his small-town home and into ExxonMobil’s Irving headquarters, his sense of responsibility shifts. Tillerson becomes a different man. Like the participants in Milgram’s study, Tillerson seems to say, “I’m just acting on behalf of the larger goal and institution, I’m not responsible for harm to Mr. Wallace,” despite the fact that it is Tillerson’s hand on the shock generator. As CEO, he has a sense of obligation to build his company’s wealth. When not representing his company, he has a sense of obligation to his community’s well being. What might it look like if the Tillerson who cares about his community were the same Tillerson sitting behind the big desk at ExxonMobil? How might he run his company if he recognized his responsibility to the communities ExxonMobil is harming?
Some might argue that if this more responsible Tillerson were to run ExxonMobil, he would quickly be replaced, shareholders would rise against him, and the board of directors would fire him. Both critics and defenders of corporate actions frequently proclaim that public companies are legally required to maximize shareholder value; they argue that corporate leaders, by law, must make decisions based foremost on increasing returns for shareholders.
This is false. There is no law that requires companies to maximize shareholder value. The myth that companies must maximize shareholder value originated in the 1970s among management theorists and market-focused academics. Business leaders and the media have repeated the myth ever since, turning it into a sort of folk wisdom that is simply not true.
In fact, companies regularly act against the interests of their shareholders. Large stock giveaways to CEOs, for instance, often harm shareholder value yet remain rampant throughout industry. ExxonMobil in particular has a reputation for ignoring shareholder demands. New York City Comptroller William C. Thompson Jr. told Associated Press reporter John Porretto that, “Exxon Mobil has long evinced a culture of defiance and indifference to many important concerns of long-term shareholders.” ExxonMobil shareholders have even tried to remove Tillerson as Chairman of the board and the company ignored them.
If shareholders cannot do much to influence Tillerson’s decision-making process, what about the board of directors? Could they fire a more community-minded Tillerson? Probably not. As Chairman of ExxonMobil’s board, Tillerson maintains significant influence over their decisions. This is common in corporate culture. Many CEOs serve as board chairs, cultivating close relationships with board members, and maintaining significant sway over the board of directors.
A study by Wharton professor Luke Taylor found that about two percent of Fortune 500 CEOs are fired annually, but if these executives did not have such close relationships with their boards, this number would likely rise to thirteen percent. Executives sometimes even rebuild their company’s board of directors installing members they personally know to further avoid accountability.
Corporate executives can get away with a lot. Even when they and their companies make catastrophic mistakes, executives are rarely punished and even frequently rewarded. ExxonMobil has caused at least half a dozen major oil spills that have done substantial harm to human and animal populations. The Exxon Valdez accident was the second largest oil spill in US history. The company’s CEO during the Exxon Valdez spill, Lawrence Rawl, suffered no repercussions. He retired comfortably a few years after the accident at the mandatory retirement age of sixty-five. The Deepwater Horizon/BP oil spill was the largest in history. BP’s then-CEO Tony Hayward was fired, but also received a severance package worth $18 million and then was promptly hired at Glencore to a lucrative position as their head of environment, health, and safety.
The government does not generally hold corporate heads responsible for misdeeds by the company. “Courts are far less likely to impose personal liability on a corporate officer when the harm is the result of negligence rather than intentional conduct,” according to a partner at Los Angeles law firm Greenberg Glusker. Officers can and do argue negligence or ignorance to avoid responsibility, as in the case of oil spills, fracking pollution, or other major harms that occur in the course of running an oil company.
Chief executives of both public and private companies wield immense power over their institutions. Through perpetuating myths of shareholder value and maintaining feckless boards of directors, they have cleverly convinced the public that they are bound to serve at the whim of more powerful forces. It is a brilliant tactic for evading culpability while maintaining significant control over their organizations. It is an ancient strategy: Caesars hiding behind the false legitimacy of broken Senates.
In fact, it is not the law or shareholders demanding that Tillerson commit harm to maximize profit. It is not his board of directors forcing his hand. Rex Tillerson himself is morally, if not legally, responsible for his company’s actions. Everyday he makes decisions that impact countless communities, that could perpetuate great harm or could do good. Like the participants in Milgram’s experiments, Tillerson can choose to shock Mr. Wallace to death, or not.
Rex Tillerson is a normal man vulnerable to the same forces that Milgram’s participants experienced. He is not making his decisions alone, but within in a larger culture that compels him to maximize his own wealth and his company’s wealth. He is making decisions in a culture urging him to focus solely on the bottom line, a culture that rewards executives with limitless opulence for doing so.
Maybe he is simply motivated by money. He took home $40 million in 2012. Or maybe he is driven to preserve an old institution. ExxonMobil is heir to Standard Oil, one of the first multinational corporations in the world. No one can know precisely what motives drive Tillerson to relinquish his moral agency and knowingly perpetuate great harm. Perhaps he does not know himself. But one factor that he and his peers share is this culture they have built compelling them to relinquish their moral agency and harm vulnerable communities.
Multinational corporate executives now maintain tremendous sway over the course of human history. With their impact on the climate and myriad ecological and human rights issues, they can decide whether civilization as we know it will fall into instability or turn toward safer paths. If these executives continue to make decisions without moral agency, we may all suffer severe consequences. What might compel them to exercise their moral agency?
There’s no one answer, but perhaps Milgram has more to say on this. In less famous variations of his experiment, Milgram found that harmful behavior could be avoided in two ways. When Mr. Wallace sat next to the participants, compliance dropped more than half to around thirty percent. Just seeing Mr. Wallace made participants far less likely to continue shocking him. But there was an even more powerful variation. When other volunteers — actually actors — pretending to administer the shocks alongside participants refused to continue shocking Mr. Wallace, compliance by participants dropped dramatically to just ten percent. Social pressure compelled ninety percent of the participants to do the right thing and stop shocking Mr. Wallace, despite commands by the experimenter to continue.
If we want executives to act morally, social pressure may help. While outside pressure is important, influence must also come from within the culture. Executives must begin to build a culture of accountability, compelling each other to exercise moral agency and act in the interest of the common good. Management theorists, shareholders, employees, and board members must all be involved in this process of demanding moral decision-making. This would constitute a revolution in the corporate world and it may only take a handful of leaders to launch it.
Today, too few executives are showing this kind of leadership. But some are. Elon Musk is working to disrupt the energy system and build viable clean energy products. Musk has made patents available to competitors with the stated goal of driving innovation. If more business leaders summon the courage to defy the culture that rewards them for ceding their moral agency, perhaps more will join them. If Rex Tillerson decides to recover the courage he wielded to protect members of his community from the perils of fossil fuels and begin to protect the rest of us, perhaps other business leaders will follow. Maybe more will stand up, reclaim their moral agency, and do what they know is right.