New York v. ExxonMobile — the climate fraud case

Global warming — the rise in the atmosphere’s average temperature since pre-industrial times — forms the background to the State of New York v. the ExxonMobil Corporation lawsuit.

Chart of ice core data showing CO2 levels from year 1000 to1990’s
Ice core data showing CO2 levels from year 1000 to 1990’s. Image: CSIRO

Before 1800, the concentration of CO2 in the atmosphere fluctuated around 280 ppm (see chart above). The level of CO2 began its steep rise around 1800 due to the heavy use of coal during the industrial revolution. By the 1990’s, the continued burning of fossil fuels had  raised the CO2 level to 350 ppm. Today the level exceeds 411 ppm (NOAA-ESRL, March 2019).

CO2 in the atmosphere traps heat from the sun, a result of the greenhouse effect. As the level of CO2 increases, so does the atmospheric temperature. The Paris Climate Agreement set a goal of “holding the increase in the global average temperature to well below 2°C (3.6°F) above pre-industrial levels.” As of this date (March 2019), the average increase has already exceeded 1°C.

ExxonMobil does not deny that global warming is occurring. Nor does it deny that burning fossil fuels is the major cause of it. It is also fully aware of the various government actions being taken worldwide to limit the burning of fossil fuels. What the company is supposed to do is incorporate that knowledge into its financial statements so that investors can judge for themselves whether or not to risk their money. This requires that the company anticipate future government actions, such as, for example, the imposition of carbon taxes, and calculate their financial effects. What the lawsuit alleges is that the company lied to its investors about the potential impact of such actions. In other words, it deliberately underestimated the risks.

The New York Attorney General in her filing of October 24, 2018, against the company puts it more strongly. Exxon, the filing says, perpetrated a “longstanding fraudulent scheme … to deceive investors and the investment community … concerning the company’s management of the risks posed to its business by climate change.” Considering that the AG’s office spent three years investigating Exxon before charging it with fraud, you can bet that whatever the company is accused of doing, it won’t be easy to explain or prove in court.

Which of the parties involved in this lawsuit deserves support or sympathy? None of them. Not the investors. Not the Attorney General’s office. Certainly not ExxonMobil. Whether or not Exxon is found guilty of fraud, we know that it is guilty of pushing its product onto the market by any means it can get away with including: heavy lobbying of government; ladling out election financing to friendly politicians; feeding money to pro-industry organizations (propaganda outlets).

The internet provides investors with the same global warming information available to the Exxon Corporation. The risks of investing in the fossil fuel industry are plain to see. Signs of the industry’s slow but inevitable decline are already evident. Just how slow is anybody’s guess. Spreadsheets from corporate accountants will not aid in the guessing. The risk-free option is not to invest in the industry.

According to Bloomberg News (Oct. 24/18), the State of New York holds about $1.5 billion worth of Exxon stock. The investment includes “the state’s common retirement fund, with more than 1 million employees and retirees, and the New York State Teachers Retirement System, with nearly half a million members.” Considering that New York is a member of the U.S. Climate Alliance, and therefore supposedly committed to upholding the objectives of the 2015 Paris Agreement on limiting global warming, it strikes me as odd, hypocritical even, that the state retains its investment in a fossil fuel company, particularly one that’s being sued by its own Attorney General.

Some people say that the Trump administration’s opposition to the Paris Climate Accord, and its total support of the fossil fuel industry, should make it unnecessary for business, or the courts, or investors, to take global warming seriously. Those people are wrong. Dealing with the Trump Administration is like dealing with a monkey in a dining room leaping about spilling drinks, snatching food off plates, shitting on the table cloth. The prudent diner will wait until the monkey is removed before ordering a meal.

Gatehouse entrance to ExxonMobil headquarters, Irving TX
Gatehouse entrance to ExxonMobil headquarters, Irving TX. Image: Google