State AGs Join Forces to Ramp Up Investigations of Climate Change Financial Disclosures
A handful of attorneys general want to join forces on ongoing and potential investigations into whether fossil fuel companies misled investors and the public about the impact of climate change on their businesses.
New York Attorney General Eric T. Schneiderman announced the joint effort on March 29, during a one-day climate change conference for attorneys general. He was joined by Attorneys General William Sorrell of Vermont, George Jepsen of Connecticut, Brian E. Frosh of Maryland, Maura Healey of Massachusetts, Mark Herring of Virginia, Claude Walker of the U.S. Virgin Islands, and former Vice President Al Gore.
New York State reached a settlement with publicly traded coal company Peabody Energy on financial statements and disclosures in 2015, and the state is now investigating whether ExxonMobil lied to investors and the public about the threat of climate change.
Attorneys general from Massachusetts and the Virgin Islands said at the March 29 event that they would join Schneiderman in his investigation of ExxonMobil, which was begun in November. California has separately started its own investigation.
The Securities and Exchange Commission (SEC) in 2010 issued a guidance that calls for disclosure of climate-related business risks. These include the anticipated impact of climate change on assets and financial risks associated with compliance costs for existing and pending regulations.
The attorneys generals may also ply the Racketeer Influenced and Corrupt Organizations Act and the Martin Act to take action against ExxonMobil and other fossil fuel companies, industry experts suggest.
Teri Donaldson, a partner with DLA Piper and a former federal prosecutor, in December warned attendees at a POWER event to “keep an eye on and be fearful of” this aspect of climate change litigation. She said that, in essence, the SEC guidance is asking companies to look into a crystal ball and guess what could happen in the future, with the possibility of being held responsible for inaccurate predictions.
“There are potential consequences that are not only expensive in terms of defending an investigation, but there is also the potential for criminal penalties for your inability to have an accurate crystal ball, and I think that’s really alarming,” she said.
With no adequate legal framework in place to combat climate change in the U.S., about all companies can do is keep fighting litigation that seeks to misuse the laws and the courts. Donaldson suggested that state and federal lawmakers must be pressed into action to do their jobs and pass suitable legislation.
—Sonal Patel, associate editor (@POWERmagazine, @sonalcpatel); Aaron Larson, associate editor, contributed to this report (@AaronL_Power)