Business Policy Issue

You are: Darren Woods, CEO, ExxonMobil [xxxThe President of the United Statesxxx] We are: Business School Consultants
Background: In the first part of our analysis, The Best Argument, we give you arguments for adopting or rejecting a policy proposal for ExxonMobil, briefly described below, that has been presented to you by a key advisor, and then give our position. In the second part, Relationship Management, we give you ways you can talk to key business and governmental stakeholders, first if you adopt the proposal and then if you reject it, and then a few thoughts.
The Proposal: Replacing ExxonMobil’s current non-commitment on “Scope 3” emissions, found at https://corporate.exxonmobil.com/Sustainability/Energy-and-Carbon-Summary/Scope-3-emissions, with the following policy, under which ExxonMobil would take responsibility for entering into compacts with other companies, including competing fossil fuel companies, auto/truck companies, and power companies: [insert your policy language here—it can be a paragraph long, as in the public policy sample, or a few paragraphs—it should be no more than a page.] Part I. The Best Argument： [In this part, you want to make relevant consequences arguments, principles arguments, precedent/“how things have been done” arguments, economics/game theory/psychology arguments, and self-interest arguments. The following chart show an example of how you should structure the argument, you only need to refer to the format, the content has nothing to do with the business policy paper] For advancing the proposal Against advancing the proposal
1. [xxxIf the proposal were adopted by the U.S. and other nations, its consequences for global military security and climate security, and thus for human lives and health, would be extremely positive—the very bad path the human race is now on in regard to climate and conflict would become much better.] [consequences] 1. [xxxEven in the unlikely case that it were adopted in full by all nations, the proposal would have bad consequences—global carbon taxation is not necessary to counter climate change, and a world government that could become a tyranny is a much bigger threat to the human future than great power rivalry is. [consequences] 2. [xxxThe values behind the proposal—democracy, minority rights, and global unity against a looming climate change disaster—are morally correct ones. We should be guided by these values–and that means we should back the proposal.] [principles] 2. [xxxThe values weighing against the proposal—tolerance of different systems and realism about climate change—are morally correct ones. We should be guided by these values—and we should reject the moralism and the alarmism of the proposal.] [principles] 3. [xxxEven if the proposal fails in part or in full, its idealism will endure and provide a model for future progress. A precedent to consider: Although Woodrow Wilson’s idealistic League of Nations proposal was rejected by the U.S. Senate after World War I, it became a central model for the U.S.-led formation of the United Nations after World War II.] [precedent] (1) 3. [xxxAssuming the proposal fails, as it is highly likely to do, that failure will make the future of global security worse than it would have been otherwise. A precedent to consider: Wilson’s counterproductive idealism on the League of Nations led to U.S. withdrawal from international leadership, and contributed to the disaster of World War II.] [precedent] (2)
4. [xxxGarrett Hardin’s Tragedy of the Commons, Pigou’s analysis of externalities, and Nordhaus’s Green Economics all underpin the need for overriding the choices of individual nations on conflict and climate—without a binding legal structure such as that offered by the proposal, self-interested nations will act in ways that harm collective security.] [economics/game theory] 4. [xxxAdam Smith’s Invisible Hand, the Ethical Wisdom of Crowds game we’ve played in class, and Green Psychological Economics all illustrate how the proposal’s reliance on compulsion is unnecessary—to save the environment, a combination of self-interest plus concern for the whole can get the job done fine at the national, state, local, and firm levels.] [economics/game theory] 5. [xxxA global carbon tax is the best way to address global climate change—second-best approaches, such as subsidies for favored industries, entail massive inefficiencies. [economics] 5. [xxxPeople and firms should be rewarded for doing good things—the penalty-oriented nature of carbon taxation makes it rightly unpopular, despite its theoretical advantages. [economics/psychology] 6. [xxxThe practical considerations are important. It’s looking terrible for you and the party in the next election cycle, so you should take a chance—the proposal is a high-road way for you to reframe the conversation that increases the chance of a good outcome for you and the party, as well as for the country and the world.] [self-interest] 6. [xxxYou should *not* decide for the proposal based on your or the party’s self-interest. Since human nature may lead it to be one factor in what you decide, you need to bear in mind long-term interest, which is more important than short-term—you do not want you and your party stigmatized in the eyes of history as advocates of a biased, poorly thought-out idea.] [self-interest]

Part I—Conclusion: [In the Business Policy format, I’m also looking for a strong, decisive, well-written argument in this section. A good structure: start with a clear statement of your position, do the nuances in the middle paragraph or paragraphs, and then wind up with a clear, decisive conclusion.] The following paragraphs show an example of how you should structure the conclusion, you only need to refer to the format, the content has nothing to do with the business policy paper] [xxxSometimes, you should go big or go home. This is exactly such a time. Arguably, the two biggest problems you face as President and Commander in Chief are the global climate change crisis and the need to update or replace the 1940s NATO security model. Treated alone, each of these issues is an example what a former U.S. Ambassador to the U.N. called “a problem from hell.” (3) Treated together, though, they offer you a real chance to be the leader in advancing an imaginative, effective grand bargain that ensures our generation does its duty to our successors and to the planet.
The key reason why it’s right to take on both climate security and military security together in the way that the proposal does is that it will create what political scientists call “cross-cutting cleavages.” (4) (5) When cleavages are cross-cutting rather than reinforcing, people’s and nations’ interests and values on one issue are countered by their interests and values on another issue, which allows for constructive debate and compromise. True, the proposal has a pro-U.S., pro-EU, pro-democracy tilt with its idea of reframing NATO as a world league of democracies—but it also has a pro-China, pro-Russia, pro-authority tilt with its idea of giving leadership on global climate change to China and Russia and by acknowledging the need to address it with a global carbon tax, an example of the kind of authoritative compulsion in which the more authoritarian Chinese and Russian systems excel.
It might very well be that a United Nations Security Council and General Assembly empowered by its member states to impose a global carbon tax would wind up instead creating complex subsidy systems in which nations, businesses, and individuals with low carbon emissions would receive payments from those with high carbon emissions. Even if subsidy systems are less efficient than a universal carbon tax, they would be greatly preferable to what we have now. The perfect should not stand in the way of the good—we urgently need concerted global action to counter climate change, whether it takes the economist’s ideal form or not.
The same point about the urgent need for action applies to the critic’s point about self-interest. Yes, you should support the proposal for reasons beyond self-interest—but good things are very often brought about by self-interest. You should in no way be deterred from supporting what the world needs because your critics in the U.S. and abroad will claim you are acting out of self-interest. Perhaps you are–but they are, too. It’s not time to dither—it’s time to act.] Outside sources, keyed to analysis—[Same format for Business Policy—remember to include titles as well if you use links as sources, and include numbers in your arguments that reference the sources, as I do above] (1) Walter Russell Mead (2001). Special Providence, p 1.
(2) Winston Churchill (1948). The Second World War: Volume I, The Gathering Storm.
(3) Samantha Power (2003). A Problem from Hell: America and the Age of Genocide.
(4) Seymour Martin Lipset (1960). Political Man.
(5) James Madison (1787). The Federalist Papers: Federalist 10.

Part II. Relationship Management

[The language below is revised some from the previously-posted language in the sample paper. Because I think it applies to both the Business Policy and Public Policy formats, I’ve revised the Public Policy sample.]

Background: You have asked us to analyze how you as the CEO of ExxonMobil can best act as a person of character and vision in what you say to major relevant groups in the wake of a decision either to advance the proposal or to continue with the company’s current stance. You have also asked us to analyze how major stakeholders are likely to react, and how relevant that should be to whether you advance the proposal or not.
Option A–Advance the Proposal Option B–Continue Current Approach
[Here, you want to relate to the different groups you choose just as you do in the Public Policy format. In Business Policy as well as in Public Policy, I recommend a mix of a more informal, casual style (as in the “Advance the Proposal” box below for Non-Allies) with a more formal, corporate style (as in the “Continue Current Approach” box for American people).] [American People] [Maybe, but another group—e.g., Customers—is probably a better choice for an ExxonMobil Business Policy paper] [xxx“The state of our Union is threatened. America is faced by mounting, aggressive challenges to a free, peaceful world from the forces of dictatorship, and by a climate change crisis that could destroy us all if we can’t join together to take effective action. But just as we did after World War II, we can join together as a nation that like no other is a city on the hill, a light unto the world. We are America, and we can do it. Yes, we can.”] “The state of our Union is improving. We are emerging from a grinding pandemic. We have in collaboration with other nations recently agreed on ambitious, important climate change goals, and we have advanced important legislation to counter the existential threat of runaway temperature increases. In close consultation with our allies, we are effectively responding to aggression abroad.”
[Allies (Britain, EU, Japan, etc.)] [Less relevant for a Business policy paper—pick another group, e.g., shareholders] [xxx“Look, we’ve got to stick it to the Russians and the Chinese, and we’ve got to give them something, too. You guys and gals may think we’re impractical idealists in America—Woodrow Wilson and all that—but that’s exactly what we need to change the world. And you know it. We know it’s about freedom and democracy. And it’s about saving the planet, too.”] [xxx“On energy, I would urge you to do what we’ve done in the US by expanding production. No, natural gas and fracking aren’t perfect, and neither is nuclear—but importing from Russia and the Middle East is way worse. On security, we gotta rise and fall as one—there’s no equity in any of you cutting your own deals with the Russians and the Chinese.”] [Non-Allies (China, Russia, Iran, etc.)] [Less relevant for a Business policy paper—pick another group, e.g., government/regulators] “I gotta admit that I’ve fallen in love with you, man. You click your fingers and you build a light rail line in your country and a giant dam in another country! And all that stuff about freedom and democracy…hey, I know we’re messed up, too—just look at the whole history of the world—my country ain’t one little bit better than yours morally. We’re all bad boys and girls, everywhere—so let’s have some fun and do some good stuff together!” “We have a real opportunity for us to collaborate on climate change and energy security. I’ve instructed my staff to come up with proposals for collaboration, and I’ve instructed them to fast-track any proposals you want to give to us. On the military security issues: We need to extend the old concept of the hot line to strengthen our communication. There’s cool stuff we can do together!”
[The Base in Your Party] [A somewhat parallel group that’s often good to use for the Business Policy format—your managers, and/or employees—in some cases, though probably not the ExxonMobil example, you may well want to use employees as a separate group from managers] [Another possible group you can use that’s often good for the Business Policy format—NGOs-activists]

“This is an exciting moment! It’s good either way! Either the guys in the other party get with the program and our international leadership the way both parties did after World War II, or they can lose elections for the next thirty years as the isolationists who want to stick their heads in the sand. I did this because it was right—but I also did it for all of you. I’ll be with you all across the country—who wants to join me on a whistle stop campaign train from Scranton to Green Bay?!” “I know some of you are frustrated that we haven’t yet been able to pull off the kind of big change on climate and other issues that a lot of us want. But we’ve got the commitment—there’s almost a trillion for clean energy and other proposals in our latest version of the bill. And we’ve got the fight. I’m committed to take the battle for a better future for the planet to the American people—and I’m confident the people will choose us over the denialists and the know-nothings!”

Stakeholders [The stakeholder part in Business Policy is parallel to the one below in Public Policy.] [xxxStakeholders. First, on how your remarks are likely to be received by different global and domestic stakeholders in the short term: We believe you are likely to get a better response from the base in your party and from allies by continuing your current policies. For its part, the base will be more comfortable with your using the traditional party talking points illustrated in the Option B dialogue. For their part, allies in our judgment are likely to be concerned about a potential reduction in their current “in the middle” role in a possible new world order in which China and Russia are in some respects partners rather than foes of the U.S., and also about whether the proposal signals a more erratic, less predictable role for the U.S. in the future We are also not too optimistic about the reaction to Option A by the American people. We suspect that the differences between the post-WWII world, in which American leadership against Communism was clearly called for and was embraced by voters, and the current world, in which the case for American leadership is much more ambiguous and debatable, will lead to a negative electoral response. Finally, non-allies are a wild card, who could react positively or negatively to the proposal—but they are less important to consider as stakeholders, in our judgment, than the other three groups.
Although our pessimistic stakeholder analysis is not intended to negate the positive analysis we gave you in Part I of the merits of the proposal—and long-term stakeholder reactions might be quite different from the short-term ones we focus on here–we believe that it should be taken into account by you in considering what to do. In our judgment, your sense as the decision-maker of how key stakeholders are likely to react in the short-term (which is what we’ve considered above) and also in the long-term to the proposal ought to be roughly as significant to you as your own sense of the underlying merits. Your beliefs about right and wrong are important—but you also need to consider others’ thoughts, feelings, and reactions.xxx] Character [The Character part in Business Policy is parallel to the one below in Public Policy.] [xxxCharacter. Here, as in many situations, you face a choice between a more assertive, aggressive, radical approach—in this case, Option A—and a more accommodating, status quo approach—in this case, Option B. You also, as in many situations, face a choice as to whether to carry out your decision, whatever it is, with a sanguine, optimistic approach or a more sober one. Examples of such a sanguine approach—which often goes along with a more informal style—are found in the remarks to the non-allies and to the party base. Whichever direction you decide to go in, we think that sanguine reason along the lines that we suggest, or that you come up with, can be a helpful part of your toolkit.
Since effective leadership in our judgment involves a blend of temperamental elements—choleric assertiveness as well as melancholic compliance, happy sociability and the optimistic reason associated with it along with calm detachment—we are not telling you whether you should tilt in this case toward the assertive, adamant side or the flexible, harmonizing side of the ethical spectrum. Both sides, depending on the facts of the situation and the specifics of the people you are dealing with and your own character, have great value. Our analysis here, unlike the advice we gave you in the earlier, prescriptive part of our report and in the stakeholder discussion, is not aimed at directing you toward which option to take—rather, it is aimed at helping you as a leader to be all you can be, whether you decide to embrace the spirit of radical change represented by the proposal or to reject it.xxx]