As the significance of the environmental catastrophe caused by the Exxon Valdez sank deep into the American psyche, it became a banner for people who believe business has failed to protect the Earth's resources.
That belief was expressed at the Exxon Corp. annual board meeting in May, where the corporate directors bowed to pressure and appointed a scientist to their ranks.
Perhaps of greater longterm consequence was the birth of the Valdez Principles, a set of ethical standards for corporate behavior toward the environment.
The principles were drafted by a group of activist investment counselors, environmentalists and institutional investors. They hope the broadly worded, 10point document stressing conservation, waste reduction and accountability becomes a tool for social change like the Sullivan Principles have for business in South Africa or the MacBride Principles in Northern Ireland.
Joan Bavaria, a Boston investment counselor who cochairs the Coalition for Environmentally Responsible Economies, said the principles are an attempt to pressure corporations to treat the environment better.
The pressure is coming from within the investment community, she said, principally from managers of pension funds, governments and institutions with concerns beyond bottomline profits and quarterly earningspershare.
"There's absolutely no question that Exxon was pressured like all companies are pressured by Wall Street to cut costs in the short term," Bavaria said in a recent interview.
"Corporate management is not totally culpable, but also investors. It's clear, after the fact, that Exxon had really dismembered its spill reaction capabilities. They didn't have much of an organization. And also, there's the fact that most of the oil companies are not building doublehull boats."
The coalition had begun drafting the principles before the oil spill, but the Exxon Valdez provided a vehicle to move them into the public eye.
"I think that a lot of the oil companies have a reputation for this kind of attitude, that they're really above public opinion and above the process we're talking about that they have too much money to worry about it. That's too bad. They're going to have to listen.
"It's interesting to reach between them and the reaction by the chemical industry to Bhopal," she said, referring to the Union Carbide disaster in India that claimed thousands of lives.
After that catastrophe, the Union Carbide chairman braved arrest in India to visit the scene and voice his condolences, while Exxon sent relatively lowlevel officials to Alaska to manage the cleanup.
In the aftermath of Bhopal, the chemical industry drafted a strongly worded code of ethical conduct, while some of the leading chemical companies "withdrew into a very introspective phase," Bavaria said. The oil industry's response to Valdez, through the American Petroleum Institute, pales by comparison, she said.
Bavaria and others say their concerns are based on economics, not emotions.
"It's real practical," she said. "The companies are going to be facing huge lawsuits after the fact, and the lawsuits will be punitive."
While assigning an economic value of the environmental loss to Prince William Sound will be arbitrary at best, she said, the cost to Exxon is quite real: a billion dollars in cleanup costs, not to mention loss of public image, future lawsuits, greater regulation, and the ire of customers and people in communities where it operates.
William Randol, an oil analyst at First Boston Corp., estimated that Exxon stock has lost $15 billion in total value since March 24, compared to what it would be selling for had the spill not happened.
The Valdez Principles were announced in New York on Sept. 7. Speaking with Bavaria were Harrison Goldin, the New York City comptroller, and Gray Davis, California state controller.
The Alaska Permanent Fund Corp., which owns nearly $30 million in Exxon shares, does not subscribe to a political or social ethic when it comes to investing, said Director David Rose. But that doesn't mean it's completely blind either, he added.
If a company has extensive investments in South Africa that could be lost in a bloody revolution, it might not fit with the fund's conservative investment attitude, Rose said. The same could be said of a company that operates in an environmentally unsound manner.
The permanent fund did break with its tradition for the Exxon annual meeting, when it informed the corporation it would withhold its vote of 650,600 shares a symbolic protest, since the total represents 1|20th of 1 percent of Exxon's outstanding shares.
But that voice, combined with those of other institutional investors including Comptroller Goldin and New York's pension funds, which controlled 5 million Exxon shares won a pledge that Exxon would add a 15th outside director to its board who could articulate environmental concerns.
When the appointment of John Steele of the Woods Hole Oceanographic Institution was announced Aug. 30, it was greeted with mixed reviews. Goldin said he was pleased, but organizations that had lobbied heavily for someone with environmental credentials were bitter.
"John Steele is an excellent scientist, an oceanographerecologist, one of the best in the country, but he is not a representative of the environmentalist community there's a difference between the two," said Robert Howarth, a Cornell University professor who worked with Steele at Woods Hole.
While not disputing Steele's scientific background, Brent Blackwelder of Friends of the Earth said the appointment is not what Exxon needs.
"Putting a scientific expert on the board implies that Exxon made the spill because Exxon lacked scientific experience," Blackwelder said. "In fact, it occurred because there was a lack of adequate conscience."
Except for a brief remark that he hoped he could be effective on the board, Steele declined to comment.
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