NGOs Warn Energy, Cement Companies Of Liability Over Climate Advocacy

Bloomberg BNA — A group of nongovernmental organizations is warning executives of major greenhouse gas emitting companies that they could face personal liability if they are found to have been involved in funding climate denial or opposing policies to fight climate change.

Greenpeace International, World Wildlife Fund and the Center for International Environmental Law asked the executives of 32 energy and cement companies, including ExxonMobil and Chevron, whether they were prepared to face liability questions based on their involvement in the climate debate.

“The corporations who share the majority of responsibility for the estimated global industrial emissions of [carbon dioxide] and methane over the past 150 years may have been or may be working to defeat action on climate change and clean energy by funding climate denial and disseminating false or misleading information on climate risks,” the groups said in letters sent May 28.

The companies' involvement in such efforts could pose a liability risk to directors and officers personally, the letters said. The groups sent similar letters to about 45 insurance companies that cover these executives against personal liability.

The organizations have asked companies to respond to a series of questions about their legal risks within four weeks.

Industry Influence

The letters don't allege that specific companies are involved in efforts to undermine action on climate change or climate science.

Instead, they reference reports, articles and other information on corporate influence over climate science and policy, either directly or through trade associations, public relations firms or other third-party intermediaries.

“Fossil fuel companies have a long and well-documented history of having funded misinformation on climate change,” Carroll Muffett, president of the Center for International Environmental Law, said.

The question to energy company executives then becomes “are you certain that your engagements in this sort of misinformation” about climate “is covered under your own personal directors and officers liability policy?” Muffett told Bloomberg BNA.

Directors and officers liability insurance provides personal indemnification for the directors and officers of a company in lawsuits against their corporation.

Parallels to Tobacco

Personal liability could become an issue for energy executives if they are found to be involved in misleading the public, the market or the government about the risks of their products or the availability of safer alternatives, he said.

Muffett drew parallels between the fossil fuel industry and the tobacco industry.

“At heart, you have a product that is fundamentally dangerous, fundamentally damaging to the environment, fundamentally damaging to society, when used as directed,” he said.

Both industries also have been accused of engaging in active campaigns “to confuse, deny, or undermine legitimate science on the impacts of these products,” Muffett said.

But in the tobacco context, the individual plaintiffs were clear, while “one of the problems with climate change is there's so many victims,” he said. As climate science improves to show regional and local level impacts, it could become easier to hold companies responsible for those impacts, Muffett said.

Risk to Insurers

Some insurance companies are starting to recognize this risk of lawsuits arising from climate change, according to the nongovernmental organizations.

“As early as 2006, insurance companies offering D&O liability policies were wary about writing insurance for companies that are at risk from lawsuits arising out of climate change damages,” the groups said in a document sent with the letters. “Carbon majors, such as ExxonMobil, were said to look vulnerable in this respect.”

ExxonMobil responded to the letters, saying, “recycling discredited conspiracy theories does nothing to develop solutions to the complex issues relating to climate change.”

“The risk of climate change is clear and warrants action,” ExxonMobil spokesman Alan Jeffers told Bloomberg BNA. “There is a broad scientific and policy consensus that action must be taken to further quantify and assess the risks.”

Jeffers said ExxonMobil is taking action by reducing greenhouse gas emissions in its operations, helping consumers reduce their emissions, supporting research that leads to technology breakthroughs and participating in constructive dialogue on policy options.

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