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Will This Case Finally Bring Down ExxonMobil’s Culture of Climate Deception?
By Elliott Negin
New York State Attorney General Barbara Underwood recently filed what could be an enormously consequential securities fraud lawsuit against ExxonMobil, exposing in great detail the company's long history of lying about issues related to climate change.
According to the findings of the AG's investigation, ExxonMobil kept one set of numbers internally about the likely future costs of carbon-emission rules while using another set for its shareholders that it knew to be false. For internal planning purposes, the company low-balled estimates for the cost per ton of carbon that would likely be imposed by regulation to make its projects appear to be more profitable. Meanwhile, the company told its shareholders it was using a higher, more plausible, price when determining its projects' long-term economic viability. By doing so, the complaint charges, ExxonMobil deceived its investors, falsely assuring them that its oil and gas reserves would not become unusable for economic reasons—what the industry refers to as "stranded assets."
The 97-page legal complaint is chock-full of examples of ExxonMobil reports and statements that deceived shareholders about the likely cost of carbon-emission standards. It charges the company with "a longstanding fraudulent scheme" that "was sanctioned at the highest levels of the company."
Just as the notorious Prohibition-era gangster Al Capone was ultimately brought down on tax fraud charges despite a long rap sheet of murder and mayhem, the case raises the prospect that New York's unique securities fraud law, the Martin Act, could be the legal tool that holds the company accountable for a culture of deception about climate change that spans decades.
The legal complaint cites one notable corporate statement titled "ExxonMobil and the carbon tax" in which the company reiterated its dubious contention that it supports a carbon tax. In fact, ExxonMobil has never publicly supported an actual carbon tax bill and has consistently funded members of Congress who oppose the idea. The company did get some positive press recently for pledging to donate $1 million to Americans for Carbon Dividends, a new lobby group promoting a revenue-neutral carbon tax, but the group's plan would pre-empt climate-related lawsuits against fossil fuel companies and eliminate federal regulations curbing carbon emissions.
ExxonMobil also has long lied about its ongoing support for climate science denier groups. In 2007, a company vice president claimed it stopped funding them after the Union of Concerned Scientists revealed that ExxonMobil had spent millions of dollars on dozens of groups to sow doubt about the reality and seriousness of climate change. The company's own corporate giving reports show that it continues to fund them to this day. From 1998 through last year, ExxonMobil spent at least $36 million on climate science disinformation groups, more than any other funder besides Charles and David Koch, the multibillionaire owners of Koch Industries.
The bottom line of the New York AG's complaint is that, when calculating costs for major projects, ExxonMobil "assumed, contrary to its representations [to investors], that existing climate regulation would remain in place, unchanged, indefinitely into the future."
What would make ExxonMobil so confident that currently weak-to-nonexistent carbon-emission standards would remain the same? Likely its success over the past 20 years in stifling meaningful government action. After all, ExxonMobil and the rest of the US fossil fuel industry have spent enough money on their friends in Congress that a critical mass of them deny the reality of human-driven climate change. So, as long as fossil fuel industry-funded groups continue to provide lawmakers with bogus studies and ply the news media with industry mouthpieces, it is not surprising that ExxonMobil believed it could maintain the status quo.
As the New York AG complaint shows, however, ExxonMobil's strategy relied on the belief that it could get away with privately counting on business as usual while telling investors it was taking into full consideration the risks to its business posed by the global effort to dramatically curb carbon emissions. When it comes to defrauding investors in New York state, this looming court battle may prove the company wrong.
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Global Banks, Led by JPMorgan Chase, Invested $1.9 Trillion in Fossil Fuels Since Paris Climate Pact
By Sharon Kelly
A report published Wednesday names the banks that have played the biggest recent role in funding fossil fuel projects, finding that since 2016, immediately following the Paris agreement's adoption, 33 global banks have poured $1.9 trillion into financing climate-changing projects worldwide.
By Patti Lynn
2018 was a groundbreaking year in the public conversation about climate change. Last February, The New York Times reported that a record percentage of Americans now believe that climate change is caused by humans, and there was a 20 percentage point rise in "the number of Americans who say they worry 'a great deal' about climate change."
England faces an "existential threat" if it does not change how it manages its water, the head of the country's Environment Agency warned Tuesday.
By Jessica Corbett
A new analysis revealed Tuesday that over the past two decades heat records across the U.S. have been broken twice as often as cold ones—underscoring experts' warnings about the increasingly dangerous consequences of failing to dramatically curb planet-warming emissions.
By Madison Dapcevich
Ask any resident of San Francisco about the waterfront parrots, and they will surely tell you a story of red-faced conures squawking or dive-bombing between building peaks. Ask a team of researchers from the University of Georgia, however, and they will tell you of a mysterious string of neurological poisonings impacting the naturalized flock for decades.
The initial cause of the fire was not yet known, but it has been driven by the strong wind and jumped the North Santiam River, The Salem Statesman Journal reported. As of Tuesday night, it threatened around 35 homes and 30 buildings, and was 20 percent contained.
The unanimous verdict was announced Tuesday in San Francisco in the first federal case to be brought against Monsanto, now owned by Bayer, alleging that repeated use of the company's glyphosate-containing weedkiller caused the plaintiff's cancer. Seventy-year-old Edwin Hardeman of Santa Rosa, California said he used Roundup for almost 30 years on his properties before developing non-Hodgkin's lymphoma.
"Today's verdict reinforces what another jury found last year, and what scientists with the state of California and the World Health Organization have concluded: Glyphosate causes cancer in people," Environmental Working Group President Ken Cook said in a statement. "As similar lawsuits mount, the evidence will grow that Roundup is not safe, and that the company has tried to cover it up."
Judge Vince Chhabria has split Hardeman's trial into two phases. The first, decided Tuesday, focused exclusively on whether or not Roundup use caused the plaintiff's cancer. The second, to begin Wednesday, will assess if Bayer is liable for damages.
"We are disappointed with the jury's initial decision, but we continue to believe firmly that the science confirms glyphosate-based herbicides do not cause cancer," Bayer spokesman Dan Childs said in a statement reported by The Guardian. "We are confident the evidence in phase two will show that Monsanto's conduct has been appropriate and the company should not be liable for Mr. Hardeman's cancer."
Some legal experts said that Chhabria's decision to split the trial was beneficial to Bayer, Reuters reported. The company had complained that the jury in Johnson's case had been distracted by the lawyers' claims that Monsanto had sought to mislead scientists and the public about Roundup's safety.
However, a remark made by Chhabria during the trial and reported by The Guardian was blatantly critical of the company.
"Although the evidence that Roundup causes cancer is quite equivocal, there is strong evidence from which a jury could conclude that Monsanto does not particularly care whether its product is in fact giving people cancer, focusing instead on manipulating public opinion and undermining anyone who raises genuine and legitimate concerns about the issue," he said.
Many regulatory bodies, including the U.S. Environmental Protection Agency, have ruled that glyphosate is safe for humans, but the World Health Organization's International Agency for Research on Cancer found it was "probably carcinogenic to humans" in 2015. A university study earlier this year found that glyphosate use increased cancer risk by as much as 41 percent.
Hardeman's lawyers Jennifer Moore and Aimee Wagstaff said they would now reveal Monsanto's efforts to mislead the public about the safety of its product.
"Now we can focus on the evidence that Monsanto has not taken a responsible, objective approach to the safety of Roundup," they wrote in a statement reported by The Guardian.
Hardeman's case is considered a "bellwether" trial for the more than 760 glyphosate cases Chhabria is hearing. In total, there are around 11,200 such lawsuits pending in the U.S., according to Reuters.
University of Richmond law professor Carl Tobias told Reuters that Tuesday's decision showed that the verdict in Johnson's case was not "an aberration," and could possibly predict how future juries in the thousands of pending cases would respond.