Legally, investors have the right to know what risks a public company faces that may affect its bottom line. Companies disclose those risks in their financial reports.
Now Exxon Mobil and possibly other fossil fuel companies may be in trouble for not telling investors about the business risks posed by climate change–despite their own internal knowledge for decades that fossil fuels were causing global warming. While documents show that Exxon scientists understood the basic science as early as the 1970s, the company was funding groups that worked to stir doubt about climate science until the mid-2000s.
As the New York Times reports, New York State’s attorney general Eric T. Schneiderman has subpoenaed Exxon Mobil on whether it improperly withheld information, asking for internal financial records and emails. The attorney general, the paper says, has also been looking into the same issue for Peabody Coal, the nation’s largest coal company. Other oil companies could also wind up being targets.
The Times calls it a new legal front on the climate change issue, comparing it to the successful efforts to hold tobacco companies accountable for their decades of misinformation campaigns:
“This could open up years of litigation and settlements in the same way that tobacco litigation did, also spearheaded by attorneys general,” said Brandon L. Garrett, a professor at the University of Virginia School of Law. “In some ways, the theory is similar — that the public was misled about something dangerous to health. Whether the same smoking guns will emerge, we don’t know yet.”
The news comes after both Inside Climate News and the Los Angeles Times have published extensive reports about Exxon Mobile’s climate change research program. In the 1970s and 1980s, the company was on the cutting edge of science on the topic and was public with its findings, before it pulled back into a defensive stance that involved funding climate denial groups.
More recently, Exxon Mobil has been disclosing risks to investors–risks that climate policies put in place by nations will lower the value of their reserves or possibly limit their ability to burn their reserves at all.
It’s not clear whether the attorney general’s case will be successful or how forcefully it will move forward. However, it’s another validation that climate change could cause financial loss to fossil fuel companies–especially coal, tar sands, and other especially carbon intensive fuels–sooner rather than later.