♠ Posted by Emmanuel in
CSR,
Energy,
Environment
at 11/08/2015 01:40:00 PM
 |
| So evil that prospective investors should be warned: "OWNING XOM SHARES IS HAZARDOUS TO YOUR SOUL"? |
There is an interesting legal wrangle underway concerning the energy giant ExxonMobil--I can recommend Steve Coll's
book Private Empire: ExxonMobil and American Power if you need further information on the company's globe-spanning reach. Unsurprisingly as one of the world's biggest energy companies, ExxonMobil has long been a bogeyman for environmentalists. The latest investigation involves these corporate evildoers failing to
disclose fuel-burning's effects on climate change when it supposedly knew of them long ago:
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."
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.
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:
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:
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.
It's a weird case all around, and one that would not get all that far outside a politically-charged climate.
