Question 13

Compare the efforts to improve operational safety at ExxonMobil

after the Exxon Valdez disaster (1989) and at Anglo American under
the tenure of CEO Cynthia Carroll (2007-12). Which company
appears to have been more effective in improving safety? Do the
improvements in safety appear to have improved operational
performance?
after the Exxon Valdez disaster 1989

• Improved oil tankers with double hulls

• Increased penalties
• Spills have reduced since the 1970’s from 79 per annum to 6.
• Large spills over 700 tons falling from 24.5 per annum to 2.
• Significant technology improvements in oil spill recovery.
after the appointment of
Carroll in 2007

• Retraining of 30,000 workers

• Fatalities reduced 62% by 2011
• LTI’s reduced 50%
• Operating income increased 34%
between 2007 and 2011
“led to a profound rethinking of safety
management at the company”

• Exxon created a lot of industry wide changes – increasing safety measures

which significantly lowered the number and size of oil spills:
• All vessels must be double hulled
• All vessels undergo extensive QA
• Best practice for vessel management
• Creating opportunity to advance oil spill technologies
• Founding member of all major oil spill organizations worldwide
• Over 1000 Exxon employees involved in oil spill response
• Regular oil spill drills
• Developed and implemented newspill-detection technologies
• Environmental performance
• An industry leader
• Initiate self assessment in addition to current standards
• Ongoing voluntary support for innovation
“Our goal is zero harm”

• Carroll fundamentally challenged the industry acceptance that

fatalities are inherent in mining - driving AA to new heights in
operational safety.
• Historic shutdown of Platinum mine in South Africa – and retraining
30,000 workers from the top down.
• Looked to best practice worldwide and made recommendations on
how to improve from AA experience.
• By 2011, LTI’s were reduced by 50% and fatalities by 62%.
• Increased Operating Profit based on the belief that safety drives
overall performance.
• Overall reduction in industry fatalities of 25%
How did operational
performance fair?

• Operating profit increased around 34% during the

period of Carroll’s tenure
• Compared to other miners, Anglo holds well when
compared to BHP and Rio Tinto with a better asset to
cash ratio and comparable debt to equity ratio

• Peer comparison shows that Exxon outperformed

other operators
• Operating profit was steady until the 2000’s where it
then increased significantly
 • Saving Lives - Carroll truly challenging industry norms by
maintaining the seemingly unrealistic goal of Zero Harm. Exxon
indirectly helping to minimize environmental damage and the lives
and livelihoods of those who depend on the ocean for their income.

Conclusion • Industry wide change - both Anglo and Exxon both made significant
inroads by championing key safety challenges and driving innovative
change across their respective arenas – not just internal to their
own business.
• Operational performance – proof that a focus on safety has a direct
flow on effect to productivity and profitability meant that Anglo
were able to achieve big improvements in their performance. Exxon
continued with a renewed commitment to development
underpinned by safety to see its share value increase 6% YoY from
$4 to $49 as at Feb 2021.

Both companies played significant industry leading improvement roles

whilst improving their performance. The key question on personnel
safety is hard to determine. Anglo measurably improved internal
employees' level of safety whereas Exxon’s changes really impact the
environment more – which obviously has a direct effect on people
outside of Exxon rather than their employees.
References
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https://www.nationalgeographic.com/environment/article/oil-spills-30-years-after-exxon-valdez
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https://hbr.org/2012/06/the-ceo-of-anglo-american-on-getting-serious-about-safety
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https://www.nytimes.com/1990/01/25/business/company-earnings-profits-off-at-chevron-and-exxon.html
10. OrangeTree (2015) Four reasons (or more) why you should own Anglo American. [Online]. Available from:
https://www.stockopedia.com/content/four-reasons-or-more-why-you-should-own-anglo-american-112086/