Climate Change Liability: Holding the Perpetrators Responsible

Can the primary culprits of global warming be held liable for undermining efforts to combat climate change?  That may sound like something a heavier, bearded Al Gore might have scribbled on a napkin in the middle of the night, but there’s reason to believe that it may not be so far-fetched.  At least, that’s what a trio of high-profile environmental groups are suggesting.

On May 28, Greenpeace, the World Wildlife Fund and the Center for International Environmental Law sent letters to the executives of 35 fossil fuel companies, including ExxonMobil, Conoco and Chevron, asking the question posed above.  They also sent letters to those companies’ primary director and officer (D&O) insurers, asking them a series of questions regarding how coverage for D&Os might be affected by evidence that the insured misled regulators, investors and the public as to the safety and/or risks associated with their products.  The full list of targeted companies is here.  If you’re an energy executive, you should now be very, very scared (and equally interested in the insurance companies’ responses).  The notion even has its own hashtag on Twitter:  #climateliability.

So what’s the legal theory?  As Greenpeace, et al. put it in their letters:

“The corporations who share the majority of responsibility for the estimated global industrial emissions of CO2 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.”

They also attached a helpful Annex to their letters, detailing the involvement of the fossil fuel industry, either directly or indirectly, in undermining action on climate change and in climate denial efforts.  According to a recent study, just 90 carbon producers (so-called “Carbon Majors”) are responsible for more than half -- 63 percent of global industrial emissions, in fact-- of the greenhouse gases that cause global climate change.  Of the Carbon Majors, 50 are publicly-traded and investor-owned (just five of which — BP, Chevron, Conoco, ExxonMobil and Shell — produced enough fossil fuel to account for 12.5 percent of human-generated CO2 since 1854).

Publicly-traded companies have certain duties to their investors and to the public, and what they say or fail to say -- particularly concerning risks related to their operations -- can have serious legal consequences.  One thing that a publicly-traded company cannot do, for example, is mislead investors as to “material” facts -- i.e., facts that would influence an investor’s decision whether or not to purchase, sell or hold a company's stock.  Such behavior is more commonly known as “securities fraud,” and it is criminal.  As the Nation puts it, “anthropogenic climate change has been accepted science since at least 1990” — meaning fossil fuel companies have been aware for a quarter-century that they are contributing to global warming.  So, to the extent that publicly-traded Carbon Majors were hiding -- or working to delegitimize the science regarding -- climate change-related risks associated with their products, they may be guilty of fraud.  That, at least, seems to be the theory.

And there’s more.  Last month, insurance giant, Farmers, filed nine class action lawsuits against dozens of localities in Illinois, accusing them of failing to prepare for severe rains and flooding -- the costs of climate change, in other words.  Farmers’ argument is that local governments should have known that the rising temperatures caused by global warming would result in heavier rains and, therefore, they should have taken certain precautions.  Yet, according to Farmers, the local governments failed to sufficiently prepare (i.e., they neglected to fortify the sewers and storm drains).

Since we’re on the subject, there is even more encouraging news, this time from the federal government.  Last week, the Environmental Protection Agency (EPA) proposed the “Clean Power Plan” rule -- the first-ever rule aimed at regulating CO2 emissions from America’s existing coal-fired power plants.  When combined with forthcoming emissions targets for each state, the new carbon regulations will aim to cut CO2 emissions to 30 percent below 2005 levels by 2030 (or 17 percent from 2013 levels).

This being 21st Century America, the EPA’s action -- and the president’s support thereof -- has been called Obama’s “War on Coal," and it is a war that is desperately needed.  As I have summarized here, coal is really bad for the environment, and, as a majority of Americans now recognize, climate change is real and it is probably going to kill us all unless we do something really drastic to stem the tide.

Yet, for the Carbon Majors, there is a hell of a lot at stake.  As Chris Hayes pointed out in a remarkable recent piece, if we are serious about saving our planet, the Carbon Majors are going to have to forfeit trillions of dollars of wealth -- an ask so monumental that the only real historical parallel is the abolition of slavery.  Which is to say that there is an immense amount of work to do and there is sure to be a brutal fight ahead.  However, these recent developments -- new legal avenues to hold companies’ liable for climate change; Obama ramping up his “War on Coal” -- are legitimate steps forward, and ones to watch closely in the coming years. Image credit: Flickr/Steve Brady Michael Kourabas is a lawyer and business development professional, currently working for an international law firm in New York. He also serves as an Editorial Adviser to radioBANG. His experience includes international human rights, CSR, and educational policy work in both the private and public sectors.