|So evil that prospective investors should be warned: "OWNING XOM SHARES IS HAZARDOUS TO YOUR SOUL"?|
Oil giant Exxon Mobil is being investigated for misleading the public about the impact of climate change. The New York attorney general has sent a request for emails and financial records to the company. Allegations surfaced last month that the company's own scientists raised concerns about global warming decades ago and that Exxon had worked to suppress that information.From the environmentalists' standpoint, it is similar to the tobacco industry not disclosing that its products literally caused people to die (from lung cancer and other smoking-linked diseases). However, as Matt Levine points out at Bloomberg, this analogy has limitations.
Ah, but of course misleading people about climate change isn't just political. It's also, plausibly, a business decision. People might not have bought gas if they knew the full risks of climate change, but if Exxon covered up those risks, then people would have been fraudulently induced to buy more gas, and harmed by that fraud in the form of climate change. This is to a large extent the theory of previous investigations of tobacco companies, and "some experts see the potential for a legal assault on fossil fuel companies similar to the lawsuits against tobacco companies in recent decades, which cost those companies tens of billions of dollars in penalties."There is also the questionable assumption at work that shareholders are being harmed by the deception ExxonMobil allegedly wrought all those years ago. The claim of "securities fraud" doesn't seem to register IMHO:
The analogy strikes me as a bit strained, though. The harm of misleading smokers is just so direct, as is the commercial benefit of doing it. If you sell people cigarettes that kill them, those same people are obviously harmed. And if you lie about whether cigarettes will kill people, people will probably buy more cigarettes. But who is defrauded by an oil company that funds climate-change deniers? There is no particular reason to think that the people most harmed by climate change and the people who buy a lot of crude oil products are the same set of people, whereas to a first approximation the people most harmed by smoking are smokers. If you stop smoking, your risk of lung cancer goes way down. If you stop putting gas in your car, your risk of ending up underwater when the ice caps melt does not go down by any measurable amount.
But Americans don't just vote and drive. They also own stocks. And Schneiderman's probe isn't just about lying to the voting public, or the oil-consuming public. It's also about lying to the investing public:It's a weird case all around, and one that would not get all that far outside a politically-charged climate.
Whether Exxon Mobil began disclosing the business risks of climate change as soon as it understood them is likely to be a major focus of the New York case. The people with knowledge of the case said the attorney general’s investigators were poring through the company’s disclosure filings made since the 1970s, but were focusing in particular on recent statements to investors. Exxon Mobil has been disclosing such risks in recent years, but whether those disclosures were sufficient has been a matter of public debate.This is in certain ways the weirdest theory. For one thing, if you actually think that Exxon Mobil is engaged in a diabolical conspiracy to suppress climate science to wring extra profits out of an earth-destroying business, the last people you should be worried about are Exxon's shareholders. They're the ones profiting from all that destruction! For another thing, if you are concerned about those shareholders, the last thing you should do is fine Exxon a lot of money. They're the ones who will ultimately have to pay that money! "This is not good news for Exxon Mobil or Exxon Mobil shareholders," says an analyst.