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NYC Sues Oil Industry, Saying ‘Greed’ Put State at Risk; Oil Giants Say No
New York City is suing BP, Chevron, ConocoPhillips, Exxon Mobil and Royal Dutch Shell, saying that each has contributed to global warming and has cost the city billions of dollars as it has tried to mitigate the harm done from such things as deviant weather patterns. The oil giants, though, are firing back, noting that they are on board with efforts to reduce heat-trapping emissions.
The Associated Press broke the story, all part of a much longer saga in which the city’s pensions have said that they would divest from fossil fuel holdings. The state, meanwhile, has gone after ExxonMobile Corp., saying that the oil giant had purposely mislead investors about what it knew about climate change and when it knew it.
“(W)e’re bringing the fight against climate change straight to the fossil fuel companies that knew about its effects and intentionally misled the public to protect their profits,” Mayor Bill de Blasio said, in a statement. “As climate change continues to worsen, it’s up to the fossil fuel companies whose greed put us in this position to shoulder the cost of making New York safer and more resilient.”
Beyond the allegations that Exxon knew about the risk of climate change four decades ago but didn’t reveal its knowledge, New York State is also alleging that between 2010 and 2014, Exxon used “secret internal figures” that were less than the numbers it had provided to investors: Internally, it applied a cost of $40 per ton of CO2 in 2030 while externally, it said it had been using $60 a ton in 2030. That made the company’s financials look better, the state’s attorney general alleges.
For their part, the environmental activists are exploring all of their options in an effort to lessen the effects of climate change. Their approach is similar to the one taken against the tobacco industry, which knew of the dangers of smoking but which had failed to tell consumers. A key difference, though, is that fossil fuels have long been an essential commodity whereas tobacco is a discretionary product.
However, the Center for International Environmental Law has uncovered evidence that Exxon’s oil executives knew of the coming climate phenomenon: In 1968, the Stanford Research Institute issued a paper to the American Petroleum Institute saying that environmental changes could jeopardize the earth’s future.
“These documents are the tip of an evidentiary iceberg that demands further investigation,” Carroll Muffett, head of the environmental center, has said “Oil companies had an early opportunity to acknowledge climate science and climate risks, and to enable consumers to make informed choices. They chose a different path. The public deserves to know why.”
Ironically, that move comes atop a formal pledge by ConocoPhillips, Gazprom, StatOil, Roy Dutch Shell and Total that they are supporting a global pact to achieve the carbon goals. Those oil companies are already investing in alternative resources.
For Exxon’s part, it says that the information it had nearly four decades ago was not conclusive. But it quickly adds that today a lot more is known — and that climate change is real and that everyone needs to do their part.
“ExxonMobil welcomes any well-meaning and good faith attempt to address the risks of climate change. Reducing greenhouse gas emissions is a global issue and requires global participation and actions,” Exxon said in a statement, following New York’s announcement to divest. “Lawsuits of this kind — filed by trial attorneys against an industry that provides products we all rely upon to power the economy and enable our domestic life – simply do not do that.”
With respect to divestiture, investment fund managers collectively control trillions and money does talk. Hence, the threat of mass withdrawals of cash that provide the fuel to expand their businesses is a powerful weapon. But it is a strategy that should be carefully considered — not one to smear all fossil fuels, which have promoted prosperity and lifted the impoverished throughout the world.
The model is formulated at least in part after the successful anti-Apartheid movement that took place in the 1980s to give blacks equal rights in South Africa. There, 125 major corporations such as General Electric said that they would pull up stakes unless the practice ended.
Studies vary on whether shareholder activism is actually a productive way to drive change and to increase returns. One side argues that the goodwill generated by investing in cleaner energies is enduring and that it goes to the bottom line. Others, though, say that fund managers should concentrate exclusively on building shareholder value — that such a tack is the best way to serve society.
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