American energy companies have found themselves in the crosshairs of US law enforcement authorities. They are accused of suppressing scientific findings about climate change and financing groups that deny a link between greenhouse gas emissions and climate change. Parallels are being drawn with the tobacco industry. John Dyer reports from Boston.
New York authorities are investigating ExxonMobil for allegedly misleading investors about the energy giant’s role in climate change.
The company confirmed on Thursday that New York attorney general Eric Schneiderman had issued a subpoena on Wednesday for internal records to compare the company’s support for advocacy groups that deny climate change and its corporate scientific findings about the role of greenhouse gases in the phenomenon.
The company had not yet determined how to respond to the subpoena, which reportedly was issued after a yearlong investigation. “We unequivocally reject the allegations that ExxonMobil has suppressed climate change research,” ExxonMobil vice president for public affairs Kenneth Cohen told reporters.
Not just ExxonMobil
The New York Times also revealed on Thursday that for the last two years, Schneiderman and his office have been investigating the largest coal producer in the United States, Peabody Energy, for similarly suppressing climate change data while publicly supporting groups that deny how greenhouse gases are altering the environment.
“Peabody continues to work with the New York attorney general’s office regarding our disclosures, which have evolved over the years,” said Peabody in a statement to the newspaper.
Both cases could have enormous ramifications throughout the energy industry. American financial disclosure laws mandate that publicly listed companies disclose trends that might affect their business. The U.S. Supreme Court has ruled that companies must disclose information that “reasonable” people would find important to their investment decisions.
“Presumably climate change, a carbon tax or fracking are material things that reasonable investors want to know about,” said University of Colorado business law professor Peter Huang. “The question is how much do they disclose and what do they say.”
Financing climate change deniers
Cohen said ExxonMobil began including information in its financial reports about the risks of climate change to its business in 2007, including factoring in the cost of carbon releases in its financial planning. The company has funded studies that detail the harmful effects of climate change, too.
But Cohen also admitted that the company has exercised its right to support groups that opposed climate change treaties like the Kyoto Protocol. The company no longer supports those groups, however.
He also noted that ExxonMobil became the largest producer of natural gas in the US in 2009 because of a strategic decision to shift to cleaner energy.
But news reports have recently exposed how ExxonMobil was a significant backer of climate change deniers from the 1990s to the mid-2000s — a period when it also supported scientists who were sounding alarm bells about the dangers of climate change. Earlier this year, for example, numerous media organisations reported that Smithsonian Institution researcher Wei-Hock Soon had published studies that raised questions about climate change research without disclosing that he had received significant funding from ExxonMobil and other energy companies.
Parallels with the tobacco industry
Experts said the situation reminded them of the tobacco companies, which knew cigarette smoking was harmful as early as the 1950s and 1960s but instead suppressed that data and launched campaigns to discredit critics who claimed tobacco was unhealthy.
The tobacco companies reached a USD 365.5 billion settlement with the state and federal governments in 1998 to compensate them for health expenses related to tobacco.
“This could open up years of litigation and settlements in the same way that tobacco litigation did, also spearheaded by attorneys general,” said University of Virginia law professor Brandon Garrett, referring to the New York attorney general’s ExxonMobil investigation. “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.”