by Justin Pidot, Associate Professor of Law, University of Denver Sturm College of Law
News broke last week that the New York Attorney General is investigating Exxon Mobil for providing false information about climate change to investors and the public. Similar investigations of other energy companies may be on the horizon.
Specifics about the investigation are in short supply. This could be, as an article in Forbes suggests, the opening salvo in a billion dollar litigation campaign like that brought against big tobacco for concealing information about the health risks of smoking. Or it could be a more limited effort to ensure that energy companies fully comply with their obligations to disclose information under securities laws.
My guess is the latter is true. Just four days ago, the New York AG’s office announced that it had entered a settlement with Peabody Coal under which the company would revise shareholder documents and more fully disclose climate risk in the future. In 2008 and 2009, the New York AG entered similar settlements with three other energy companies. These settlements do not involve million or billion dollar payments, but rather, simply require better information about the risks that climate change poses to the financial health of the companies involved. Frankly, they look a lot like run-of-the-mill settlements of potential securities violations. No one would pay any attention except they involve the words “climate change.”
Not only does this investigation seem relatively unremarkable, it also seeks to vindicate principles upon which we should generally be able to agree. Legal regimes that require information disclosure need enforcement to stay vigorous.