Chevron Under Fire

George  Serafeim; Rebecca   Henderson; Christine  Snively

Case | HBS Case Collection | January 2015

Chevron Under Fire

by George Serafeim, Rebecca Henderson and Christine Snively

Abstract

Oil giant, Chevron, faced numerous challenges on environmental, social and governance (ESG) grounds in the first decade of the 21st century, including some major lawsuits and actions by NGOs. The case describes those challenges and raises questions about what is the optimal response on the part of the company in order to ensure future growth and profitability, and how those challenges are going to affect the future competitiveness of not only Chevron but of the whole oil and gas sector.

Keywords: carbon tax; oil and gas; environment; drilling; Governance; Business or Company Management; Corporate Social Responsibility and Impact; Corporate Strategy; Environmental Sustainability; Energy Sources; Mining Industry; Energy Industry;

Language: English

Format: Print

18 pages

Educators

Citation:

Serafeim, George, Rebecca Henderson, and Christine Snively. "Chevron Under Fire." Harvard Business School Case 115-031, January 2015.

Analyzing data from approximately 1.5 million employees across 1,100 established public and private US companies, we find that the strength of employee beliefs about their firm’s purpose is lower in public companies. This difference is most pronounced within the salaried middle and hourly ranks, rather than senior executives. Among public companies, purpose becomes progressively lower with more concentrated shareholders, especially among firms with high hedge fund ownership. These patterns can be partly explained by differences in CEO backgrounds and compensation: public firms, particularly those with strong shareholders, choose outsider CEOs at higher rates and pay them more relative to their employees. Our analyses suggest that these results are not driven solely by sorting effects, but appear attributable in part to the impact that firm owners have on their employees. In summary, shareholders appear to influence the strength of corporate purpose deep within organizations via the leadership and corporate practices they enable at the top.

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Despite efforts to crack down on illegal activity, crimes like fraud, bribery, embezzlement, and money laundering are rampant in corporations. What steps can leaders take to fix this growing problem?

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Chevron Under Fire

Abstract

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