ExxonMobil’s Alleged Climate Change Lies Dwarf Big Tobacco
The most interesting response to the allegations that ExxonMobil lied about climate change is the response we haven’t heard yet.
New York state’s attorney general, Eric Schneiderman, issued a subpoena on Wednesday to ExxonMobil, directing the oil company to provide financial records, emails, and other documents as part of a sweeping investigation into whether it lied about the danger of its products to protect its business model.
The attorney general’s action caps weeks of growing demands for official investigations of ExxonMobil. All three Democratic presidential candidates have urged the U.S. Justice Department to probe whether the oil giant “knew its product was causing harm to the public, and spent millions of dollars to obfuscate the facts in the public discourse,” as Vermont Sen. Bernie Sanders wrote to Attorney General Loretta Lynch. More than 40 environmental, faith and social justice groups separately urged Lynch to investigate, charging that ExxonMobil’s alleged actions recall the lies of the tobacco industry but threaten damages ‘potentially much greater in scale...particularly in the poorest communities of our nation and our planet.’” An editorial in ExxonMobil’s hometown paper, the Dallas Morning News, also endorsed the Big Tobacco parallel: “With profits to protect, Exxon gave climate change doubters a bully pulpit they didn’t deserve and gave lawmakers the political cover to delay global action until long after the environmental damage had reached severe levels.”
Yet the business and financial communities, on Wall Street and beyond, remain silent. That is odd. As the New York investigation highlights, the implications of the allegations against ExxonMobil for companies and investors throughout the economy, not to mention ExxonMobil’s own economic and legal future, are staggering.
A Smoking Gun memo uncovered by the Los Angeles Times brings those implications into focus. The memo, written in 1988, describes how ExxonMobil’s executives deliberately chose to deceive outsiders about the risks of burning carbon fuels and the climate destabilization that could result. If authentic, the memo and the subsequent deceptions it advocated indicate that ExxonMobil’s leadership in effect off-loaded massive amounts of risk and loss onto the rest of the market and every business enterprise in it.
Obstructing public understanding and government action enabled ExxonMobil to keep selling oil and gas without restrictions for decades to come. Burning that oil and gas, along with other carbon fuels, has driven rising temperatures and extreme weather events that have cost other companies and investors, not to mention governments and individuals, many billions of dollars, with much larger costs ahead.
ExxonMobil has issued “unequivocal” denials of wrongdoing and accused Inside Climate News, the other news outlet whose investigation has fueled the controversy, of being an “activist” organization that has published “deliberately misleading” reports. The oil company offers its side of the story at its “Get the Facts” webpage.
ExxonMobil seems to be feeling the heat, though. On Wednesday, the oil giant’s chairman, president and chief executive officer, Rex Tillerson, made a rare television appearance. In response to friendly questioning on the Fox Business Channel, Tillerson confirmed that the company began conducting climate science research in the 1970s. He denied that it subsequently misled the public and policymakers about the attendant risks, asserting that, “Nothing could be further from the truth.”
However, the evidence presented by the Los Angeles Times and Inside Climate News is detailed, voluminous, and based on ExxonMobil’s own documents and interviews with its former officials. Both news organizations found that Exxon’s own scientists knew by the mid-1980s that burning oil, gas, and other carbon-based fuels would eventually overheat the planet, bringing ruinous changes to food production, water supplies, coastal settlements, and other essentials of modern life. The scientists repeatedly shared these findings with the company’s top executives and its board of directors
Hence the hashtag activists are employing to hype the scandal, #ExxonKnew.
But if Exxon knew, the journalistic investigations conclude, it nevertheless took steps to make sure nobody else did. ExxonMobil's leadership chose to bury its scientists’ findings. What’s more, it went on to lead the fight to discredit mainstream climate science. Since 1998, the company has spent almost $31 million to fund public relations groups, lobbying campaigns, and other efforts to portray man-made climate change as a “premise that…defies common sense,” as Lee Raymond, ExxonMobil’s former chairman and CEO, argued in a 1997 speech opposing the Kyoto Protocol, an international treaty that would limit greenhouse gas emissions.
Business leaders and investors owe it to themselves and their shareholders to read this investigative journalism for themselves, for its findings bear directly on their bottom lines today and for years to come. Insurance companies have been sounding the alarm about the risks and costs of unchecked climate change for decades. Now, as the effects grow ever more apparent, other sectors are awakening to the threat.
Citing the impact of harsher heat waves and deeper droughts on their global supply chains, General Mills, Kellogg, Unilever, and other food companies are cutting their emissions and calling on others to do the same. The food companies, along with 81 corporations invited by the Obama White House, are also calling on world leaders to reach an ambitious climate agreement at the Paris summit in December.
Nevertheless, climate change continues to advance faster than most companies’ and investors’ response to it—even in Silicon Valley, where many firms have been profiting handsomely from clean energy investments. Global warming is projected to bring at least 16 inches of sea level rise to San Francisco Bay by 2050. Google, Facebook, Yahoo, Dell, and Oracle are just some of the IT giants that would be flooded. Factor in the effects of high tides and storm surges, and the day of reckoning is likely to arrive considerably sooner than 2050. Yet public officials who have tried to focus Silicon Valley companies on the impending threat say they have gotten little response.
That may change, however, as the risks and losses become too obvious and costly to ignore. Mark Carney, the governor of the Bank of England, has warned that as climate change intensifies, “parties who have suffered loss or damage…[may] seek compensation from those they hold responsible.” In a Sept. 29 speech to the Lloyd’s of London insurance company, Carney cited the precedent of claims against asbestos manufacturers that have cost insurers $85 billion, “equivalent to almost three Superstorm Sandy-sized loss events.”
It’s no secret that ExxonMobil has long opposed government-ordered limits on carbon emissions and funded climate doubters. All this has been widely reported and is not illegal.
What’s new—and legally actionable—are the allegations that ExxonMobil deliberately lied about the dangers of using its products. Similar behavior led attorneys general of 46 states to sue the tobacco industry’s four biggest companies in 1997 for the costs of providing health care for smokers and secondhand-smoke victims. The resulting settlement obliged the companies to pay damages in perpetuity, with at least $206 billion due to the states over the first 25 years.
The smoking gun memo uncovered by the Los Angeles Times team makes the tobacco connection hard to overlook. “Emphasize the Uncertainty,” urged ExxonMobil’s top PR official in a 1988 memo outlining how the company should respond to growing concern about global warming. The memo’s phrasing echoed the infamous “Doubt Is Our Product” memo Big Tobacco’s PR boss authored in 1969, advising colleagues that their job going forward was to emphasize the supposed uncertainty of the science linking smoking with cancer.
This “Emphasize the Uncertainty” memo presents legal difficulties for ExxonMobil, as it indicates that company executives knew that their product was dangerous but decided to conceal that knowledge. That could expose the company to prosecution under the Racketeer Influenced and Corrupt Organizations Act, according to Sharon Eubanks, a former Justice Department attorney who successfully prosecuted tobacco companies for RICO violations. “A RICO action is plausible and should be considered” by the Justice Department in the ExxonMobil case, said Eubanks.
Big Tobacco’s lies imposed grievous losses on smokers and their loved ones, but that damage is dwarfed by ExxonMobil’s alleged deceptions. If it helped to keep carbon emissions rising for decades beyond when the company’s own scientists knew that this invited disaster, ExxonMobil helped destabilize the climate that every person and business enterprise on earth relies upon.
ExxonMobil is innocent until proven guilty. But the rest of the business community—and all of us who depend on it for jobs, pensions, products, and more—have a strong interest in knowing the truth. Who will be the first business leader to stand up and say so?