Editorial Board

Eric Schneiderman Vs. Exxon Mobil

Not against the law.

Photographer: Scott Olson/Getty Images

Exactly what New York Attorney General Eric Schneiderman hopes to discover in the stack of climate-change documents he's ordered Exxon Mobil to produce is unclear, because his investigation isn't public. But he apparently suspects that the company lied to investors about the risks climate change posed to its future profits -- which, if true, might be fraud.

His grounds seem pretty thin. Much as one may sympathize with Schneiderman's desire to encourage stronger action on climate change, this is not the way to go about it.

QuickTake The Martin Act

Exxon's critics have argued that the company's own researchers believed, as far back as the 1970s, that carbon emissions from the burning of fossil fuels were causing climate change. Yet, as they point out, Exxon has long opposed strong action on emissions, and until a few years ago gave financial support to researchers and campaigners that cast doubt on the scientific consensus.

The company later acknowledged that this was unwise: In 2007, it said it would stop funding such groups. The earlier practice deserved no prizes for good corporate citizenship -- but failing to be a good corporate citizen isn't lying, and isn’t a crime. Not yet anyway. Unless the company deliberately misled its investors, it's hard to see why its scientific and public-relations efforts should be any concern of New York's attorney general.

On the face of it, the company's research on climate change and its previous public positions on climate policy not only fail to amount to fraud, they aren't even necessarily at odds. You might accept the reality of man-made global warming and still argue against strict new rules on emissions -- if, for example, you believe that such restrictions would do more harm than good. You'd be wrong, but that position isn't indefensible, and certainly shouldn't be illegal.

An alternative theory of Schneiderman's case -- the idea that the company had proof of the damage caused by carbon emissions and then suppressed the information -- just seems preposterous. Climate change has been intensively investigated by countless researchers worldwide. No one company is in a position to direct or defeat the scientific consensus.

QuickTake Climate Change

To be sure, there's a financial risk to investors from stronger efforts to regulate emissions. Companies have a duty to inform investors of such risks. In general terms, though, investors could hardly have been unaware in this case. And energy producers aren't in a good position to be any more specific, because the future form and content of climate policy are so hard to predict.

Regulating emissions is a job for politicians -- and they're failing. That's frustrating, and in the absence of effective government action, there's an added moral obligation on companies to act. Even so, engaging in scientific research and public advocacy shouldn't be crimes in a free country. Using the criminal law to shame and encumber companies that do so is a dangerous arrogation of power.

To contact the senior editor responsible for Bloomberg View’s editorials: David Shipley at davidshipley@bloomberg.net.