Yes, Exxon Is Accusing Local Governments of Misleading Investors on Climate Change

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In January, ExxonMobil filed a legal petition seeking to depose more than a dozen city and county government officials in California, claiming that the municipal officials are defrauding investors by not fully disclosing the risks posed by climate change.

You read that right. Exxon is legally challenging cities and counties for not talking up the risks of climate change enough to the investors who purchase municipal bonds for those localities. Has Exxon had a change of heart and now become concerned about transparency and the impacts of climate change?

Let’s take a closer look.

Exxon is responding to the municipalities which have filed lawsuits seeking to hold Exxon and other oil companies accountable for the damages to their cities from sea level rise. Exxon’s legal petition is calling those lawsuits a “conspiracy” because — according to its petition — “A collection of special interests and opportunistic politicians are abusing law enforcement authority and legal process to impose their viewpoint on climate change.”

The oil giant goes on to say: “ExxonMobil finds itself directly in that conspiracy’s crosshairs. Even though it has long acknowledged the risks presented by climate change …”

You have to give Exxon’s lawyers credit for the sheer audacity of this legal maneuver and the claims that Exxon “has long acknowledged the risks presented by climate change.”

According to its legal filing, Exxon just wants to be able to talk about climate change but claims its First Amendment rights are being taken away by the lawsuits the various municipalities have filed:

Through abusive law enforcement tactics and litigation in California, Respondents and others are attempting to stifle ExxonMobil’s exercise, in Texas, of its First Amendment right to participate in the national dialogue about climate change and climate policy.”

How the lawsuits have stifled Exxon’s free speech is not clear from the legal document, but law experts say it certainly looks like an attempt to intimidate anyone considering holding Exxon and the industry accountable for the impacts of climate change.

“It’s an aggressive move,” Howard Erichson, a law professor at Fordham with expertise in the procedure and ethics of complex litigation, explained to Bloomberg. “Does Exxon really need these depositions or is Exxon seeking the depositions to harass mayors and city attorneys into dropping their lawsuits?”

Misleading Investors — Pot Meet Kettle

Exxon’s claim that these municipalities are misleading investors on climate change is interesting because that is — of course — exactly what Exxon has been accused of in multiple lawsuits and in the national dialogue over climate liability.

One recent example of Exxon’s failure to disclose the risks of climate change to investors is its 2018 Energy and Carbon Summary. This is the report in which Exxon says none of its oil and gas reserves are at risk of becoming stranded assets due to climate action and that all of those reserves can be produced and consumed as the world pursues efforts to limit global warming to 2°C (3.6°F).

Kathy Mulvey of the Union of Concerned Scientists highlighted how she believes Exxon is misleading investors in a recent statement:

Already facing liability from a rising number of climate-related lawsuits, the company has chosen to add another layer of risk by failing to disclose the challenges to its business model posed by assets that may not be profitable to extract in a carbon-constrained world, costly litigation, and climate impacts to its operations. ExxonMobil is leaving its shareholders in the dark as climate change barrels down the tracks.”

In an interesting turn of events, Exxon is using the tactic of accusing its opponents of what it appears to be guilty of when it comes to climate risks.

Panic in San Francisco

San Francisco is one of the cities targeted in Exxon’s latest legal effort. The company makes the following claim:

“The San Francisco Complaint contains panicked allegations about the ‘imminent threat of catastrophic storm surge flooding’ that global warming purportedly poses to San Francisco.”

Yet earlier in the same legal document, Exxon said it had “long acknowledged the risks presented by climate change.” Bit of a change of tone.

As for the “panicked allegations” about the threat of flooding in San Francisco, a brand new peer-reviewed study from UC Berkeley and Arizona State University appears to give San Francisco reason to panic. The study notes that San Francisco is even more vulnerable to sea level rise than previously thought because — unfortunately — the city is sinking. When combined with rising seas, concern about the city’s future seems to be warranted.

Considering sea level rise alone, models show that, on the low end, 20 square miles could be inundated by 2100. But factor in subsiding land and that estimate jumps to almost 50 square miles. The high end? The San Francisco Bay Area is looking at 165 square miles lost.

The image below shows various scenarios for San Francisco’s future. The colored sections represent areas that would be experiencing “significant inundation by 2100.” SFO is the city’s main airport. 

Scenarios for local land subsidence only (top), sea level rise in 2100 under a business-as-usual emissions pathway (middle), and a combination of the two (bottom) for Foster City, Union City, and San Francisco International Airport (SFO). Credit: Shirzaei and Bürgmann 2018, Science Advances

Exxon Sticking to its Playbook

Exxon has known about the reality of climate change and its contribution to it for decades and actively worked to mislead the public, both directly and by funding climate science-denying groups, about that reality ever since. However, 40 years ago when Exxon realized the impact its business was having on the world’s climate, it was much easier to deny the scientific evidence.

The idea of regular flooding in downtown Boston probably seemed like science fiction at the time. In all likelihood, no one used the phrase “sunny day flooding” back then. Major prosperous cities weren’t running out of water. No one was sailing through the Arctic without an icebreaker. Those were different times.

The stakes have been raised as today the very real impacts of climate change are much more difficult to deny. But after committing to decades of climate science denial, it appears that Exxon intends to continue that approach and is even upping the ante with aggressive legal actions.

Because even though Exxon fails to mention the company’s exposure to climate liability to its investors, the possibility remains that international efforts to address climate change could seriously cut into Exxon’s profits. It should be expected that as the impacts of climate change continue to intensify, Exxon’s attacks on those looking to hold them accountable will ramp up as well.

Main image: The San Francisco Projection Department on Market Street with the #EXXONKNEW campaign in July 2017. Credit: Peg Hunter, CC BY 2.0

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Justin Mikulka is a research fellow at New Consensus. Prior to joining New Consensus in October 2021, Justin reported for DeSmog, where he began in 2014. Justin has a degree in Civil and Environmental Engineering from Cornell University.

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