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premature? nope!

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https://www.ecowatch.com/bayer-monsanto-lawsuit-2645411206.html

Carey Gillam

A California shareholder of Bayer AG on Friday filed a lawsuit against the companies' top executives claiming they breached their duty of "prudence" and "loyalty" to the company and investors by buying Monsanto Co. in 2018, an acquisition the suit claims has "inflicted billions of dollars of damages" on the company.

Plaintiff Rebecca R. Haussmann, trustee of the Konstantin S. Haussmann Trust, is the sole named plaintiff in the suit, which was filed in New York County Supreme Court. The named defendants include Bayer CEO Werner Baumann, who orchestrated the $63 billion Monsanto purchase, and Bayer Chairman Werner Wenning, who announced last month he was stepping down from the company earlier than planned. The suit claims that Wenning's decision came after Bayer improperly obtained a copy of the then-draft shareholder lawsuit "through corporate espionage. ...The lawsuit also claims that Bayer's recent announcement of an audit of its acquisition actions is "bogus" and "part of the ongoing cover-up and intended to create a legal barrier to this case to protect Defendants from their accountability…"

The action is a shareholder derivative complaint, meaning it is brought on behalf of the company against company insiders. It seeks compensatory damages for shareholders and disgorgement of "all compensation paid to the Bayer Managers and Supervisors who participated in bringing about this Acquisition…" The suit also seeks return of funds paid to banks and law firms involved in the acquisition.

The defendants include not only Baumann and Wenning, but also some present and former Bayer directors and top managers, as well as BOFA Securities, Inc., Bank of America, Credit Suisse Group AG and the law firms of Sullivan & Cromwell LLP and Linklaters LLP.

A Bayer spokesman did not respond to a request for comment.

The lawsuit comes a little more than a month before Bayer's April 28 annual shareholders' meeting in Bonn, Germany. At last year's annual meeting, 55 percent of shareholders registered their unhappiness with Baumann and other managers over the Monsanto deal and the subsequent loss of roughly $40 billion in market value.

Bayer's purchase of Monsanto has been clouded by tens of thousands of lawsuits alleging Monsanto's glyphosate-based herbicides cause non-Hodgkin lymphoma and that the company deceived customers about the risks. Bayer proceeded with the acquisition even after the International Agency for Research on Cancer in 2015 classified glyphosate as a probable human carcinogen with a positive association to non-Hodgkin lymphoma, and despite knowledge of the spreading legal claims.

Bayer then completed the Monsanto purchase just two months before the first Roundup cancer trial ended with a $289 million verdict against the company. Since that time two more trials have ended in similar findings against the company with verdicts totaling more than $2 billion, though the trial judges in each case have lowered the verdicts. All are now on appeal.

Bayer has said there are more than 45,000 plaintiffs currently making similar claims. The company has been working to settle the lawsuits for a figure widely reported to be around $10 billion but has thus far not been successful in putting an end to the litigation.

The lawsuit claims that during 2017 and 2018, as the filing of new Roundup cancer lawsuits was escalating, the ability of Bayer management to conduct due diligence into Monsanto and the litigation risks was "severely restricted." As a result, "Bayer could not conduct the kind of intrusive and thorough due diligence into Monsanto's business and legal affairs called for under the circumstances."

The suit claims that Monsanto did not disclose a material risk from Roundup and failed to quantify any potential financial impact. Monsanto's executives "had every incentive to minimize the Roundup risk in order to get Bayer to close the deal," the lawsuit states.

The shareholder lawsuit claims that "these types of mass-tort cases… can destroy a company."

The lawsuit points to the fact that Monsanto's glyphosate herbicides are now being restricted and/or banned in many parts of the world, including in Germany.

"The Monsanto Acquisition is a disaster. Roundup is doomed as a commercial product," the lawsuit states.

Reposted with permission from U.S. Right to Know.

bayer epa food glyphosate herbicides pesticides roundup science

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JPMorgan Hopes to Block Shareholder Climate Risk Resolutions

Activist shareholder resolutions ask JPMorgan to report its exposure to climate risk. But the firm has moved to block them from a vote.

https://insideclimatenews.org/news/10122019/exxon-ruling-climate-investor-fraud-new-york-case-impact

A New York judge has cleared ExxonMobil of allegations that it misled investors about the risks posed to its business by climate regulations, handing the oil giant a major victory in the first trial of a fossil fuel company involving climate change.

Justice Barry Ostrager sided entirely with Exxon on the claims brought against it by the New York Attorney General's Office, saying that he found all the company's witnesses to be truthful and that the state had failed to present any evidence that convincingly cast doubt on their testimony.

While he praised Exxon's executives for "rigorously discharging their duties in the most comprehensive and meticulous manner possible," the judge excoriated the attorney general's case, saying it failed to establish that any investor was misled.

Ostrager also made clear, however, that "nothing in this opinion is intended to absolve ExxonMobil from responsibility for contributing to climate change," adding that the company's emission of greenhouse gases was not on trial. "ExxonMobil is in the business of producing energy, and this is a securities fraud case, not a climate change case," he wrote.

For Exxon, the decision ends a years-long battle with the New York Attorney General's Office.

The attorney general had accused Exxon of essentially using two sets of books when it came to evaluating the costs of future climate regulations. Exxon did in fact have two different estimates for what those costs would be, one that was higher and made public in numerous reports, and another that was lower, not disclosed, and which the company used internally to evaluate its own investments. The state had argued that this practice falsely assured investors that the company was taking the risks of regulation seriously, when in fact it was being much less cautious.

In order to win, the attorney general had to establish that Exxon had made "materially misleading" statements—statements that were not only false but that a reasonable investor would have considered important when considering whether to buy or sell the company's stock.

On both counts, Ostrager wrote, the attorney general failed.

Exxon spokesman Casey Norton said the ruling affirms that the company "provided our investors with accurate information on the risks of climate change," adding, "lawsuits that waste millions of dollars of taxpayer money do nothing to advance meaningful actions that reduce the risks of climate change."

Attorney General Letitia James viewed it through a different lens: "For the first time in history, ExxonMobil was compelled to answer publicly for their internal decisions that misled investors," she said in a statement provided by spokesman Fabien Levy.

James maintained that Exxon had failed to tell the truth, which she said "further underscores the lies that have been sold to the American public for decades."

While the ruling ends a grueling battle for Exxon against New York, the company still faces more than a dozen pending climate lawsuits across the country.

New York's case relied on state securities fraud laws and focused narrowly on Exxon's disclosures to investors over the past five years. Most of the other lawsuits focus more broadly on the fossil fuel company's allegedly deceptive marketing and public relations campaigns stretching back decades, and several legal experts said the New York ruling will have little if any impact on these cases.

"Exxon may have beat the rap" in the New York securities case, said Pat Parenteau, a professor of environmental law at the Vermont Law School, "but it can't escape the history of deception that has exacerbated the damage from climate change."

The decision by Ostrager, a judge in the commercial division of the New York Supreme Court in Manhattan, may have a more direct bearing on efforts to pressure oil companies to disclose more about the risks they face as governments try to limit greenhouse gas emissions. The trial centered around just such a campaign that Exxon had faced beginning in 2013.

"This doesn't hold the company accountable for what it tells investors and what it does in practice," said Natasha Lamb, managing partner of the sustainable investment firm Arjuna Capital, who was part of the 2013 campaign and testified against the company at trial.

"That sets a dangerous precedent that companies can say one thing and do another and not be held accountable," she said.

But this is hardly the end of these cases, said Ken Kimmell, president of the Union of Concerned Scientists.

"ExxonMobil is not off the hook," Kimmell said. "More than a dozen communities within the U.S. are already suing such companies for their fair share of local climate damages."

Exxon's Two Different Cost Estimates

New York launched its case against Exxon more than four years ago, when then-Attorney General Eric Schneiderman issued a subpoena seeking a broad set of documents covering decades of internal communications and records related to climate change, including research, marketing and business practices.

The subpoena followed an investigative series of stories by InsideClimate News, and later the Los Angeles Times, that disclosed that Exxon researchers knew in the mid-1970s that burning fossil fuels likely accelerated global warming and foresaw catastrophic consequences. Despite this knowledge, the companies later spent millions to promote misinformation about climate science.

When New York filed its complaint in October 2018, it focused squarely on what Exxon disclosed to investors and the company's estimations of the future costs that climate regulations would impose on its business.

Specifically, the lawsuit said that even as the company was disclosing to investors that it used an escalating cost of carbon estimate to evaluate its investments, it was actually applying much lower estimates internally.

During the trial, Exxon executives—including former chief executive and former Secretary of State Rex Tillerson—explained that this higher, public figure, which it calls a "proxy cost," was used only for estimating future oil and gas demand. The lower estimate, executives said—called a "ghg cost"—was used internally to approximate direct costs that Exxon's operations would face from specific regulations, such as a tax in a given jurisdiction.

In its defense, Exxon's witnesses repeatedly pointed to a single sentence in one report the company published in 2014 in response to the campaign by Lamb and other investors. Exxon argued that the sentence did in fact disclose that the company had a "ghg cost" distinct from its proxy cost that it used when evaluating investments. The attorney general's lawyers argued that it was unreasonable to expect that investors would have understood the meaning of the sentence. They pointed to examples where a market analyst, Exxon's external accountant and even one former executive appeared to conflate the two terms, arguing that no reasonable investor would have understood the distinction. Ostrager was unconvinced.

Perhaps, he wrote, the passage "could have been written in bold type, but the sentence was consistent with other ExxonMobil disclosures and ExxonMobil's business practices."

Ostrager also said the attorney general's lawyers had failed to make the case that this distinction, or any alleged failure to provide clear disclosures about it, registered as important to the investment community.

That finding was a disappointment to Andrew Logan, who runs the oil and gas program at Ceres, a nonprofit that advocates sustainable business practices and was involved in the campaign to pressure Exxon in 2013.

"It's really frustrating to see this judge not appreciate just how important of a financial issue climate change is for investors, to use language that is fairly sweeping in its scope that I think the evidence doesn't support," said Logan, who represents large institutional investors in communications with Exxon and other energy companies. "Hopefully this is an aberration in terms of the courts not being willing to acknowledge climate change as a material issue for mainstream investors."

Climate Lawsuits Beyond New York

Ostrager's ruling hands Exxon a major public relations victory as it battles a bevy of lawsuits it faces across the country. Massachusetts filed a complaint earlier this year that more broadly accuses Exxon of both consumer and investor fraud.

A spokeswoman for the Massachusetts attorney general's office said the New York ruling will not deter prosecutors from pressing their case against Exxon.

"We will continue our work to hold the company accountable for its misrepresentations," said Chloe Gotsis, spokeswoman for Attorney General Maura Healey.

The bulk of the climate lawsuits—brought by more than a dozen cities, counties and one state—are much different in nature. They accuse Exxon and other fossil fuel companies of harming the public by continuing to market and sell products that they knew posed a threat to society. These cases focus on the oil and gas industry's decades-long effort to sow doubt about climate science, even as internal corporate reports had warned of the risks of climate change.

These plaintiffs are seeking compensation from the companies for helping to pay the costs associated with the effects of climate change, including worsening heat waves, more extreme rainfall and rising seas. And Ostrager's ruling, experts say, is unlikely to influence rulings in these other cases.

"It's a footnote, absolutely no more than that," said David Bookbinder, who is part of the legal team representing a group of local governments in Colorado in their suit against Exxon and Suncor, a Canadian oil company. Bookbinder, who is also chief counsel at the Niskanen Center, a nonpartisan think tank, said Exxon's lawyers may try to point to the ruling to establish the company's credibility, but that it wouldn't actually play into any decisions by judges overseeing his case or any similar lawsuits around the country.

Industry groups including the National Association of Manufacturers have dismissed these lawsuits as politically motivated, and Phil Goldberg, a special counsel for the manufacturers group welcomed Ostrager's ruling, saying it showed that the lawsuits "have no place in the courtroom."

In his opinion, Ostrager wrote that Schneiderman had made "certain politically motivated statements" before the case was filed, a position Exxon maintained during the course of the years-long investigation, but which the attorney general's office denied.

Celia Taylor, a professor of securities and corporate law at the University of Denver, said Ostrager's ruling is narrowly focused and not a sweeping win for Exxon or the industry. In particular, she said New York's attorney general faced a much higher burden of proof in its case than its counterpart in Massachusetts.

"They simply have to prove Exxon deliberately misled the public through its advertising," Taylor said of lawyers for the Massachusetts attorney general.

The ruling marks a win for Exxon and the industry, but it does not put them in the clear on climate change, said William Ruskin, a long-time New York industry defense lawyer who is active in environmental issues.

"This is a brutal and very reasoned decision by a judge extremely upset by the way the attorney general tried this case," he said, adding, "Securities fraud is not the way to go after companies with poor track records on climate change."

PUBLISHED UNDER:

BUSINESS AND ACCOUNTABILITY OIL/TAR SANDS

EXXON CLIMATE LITIGATION

https://insideclimatenews.org/news/08112019/exxon-trial-closing-arguments-climate-investor-fraud-new-york-ostrager

icn 1119

Tillerson Takes the Stand, Denying Exxon Misled Investors About Climate Risk

BY: NICHOLAS KUSNETZ

The former Exxon CEO, once Trump’s secretary of state, defended practices he implemented while running the oil company.

https://insideclimatenews.org/news/16102019/exxon-oil-sands-trial-climate-change-fraud-new-york-rex-tillerson

very long, many grfx

neW YORK, New York — In late 2013, ExxonMobil faced increasing pressure from investors to disclose more about the risks the company faced as governments began limiting greenhouse gas emissions. Of the many costs climate change will impose, oil companies face a particularly acute one: the demand for their product will have to shrink.

For years, Exxon had been using something called a proxy cost of carbon to estimate what stricter climate policies might mean for its bottom line. But as pressure from shareholders grew, a problem came sharply into focus: An internal presentation warned top executives that the way the company had been applying this proxy cost was potentially misleading. That's because Exxon didn't have one projected cost of carbon. It had two.

The contents of that presentation are at the heart of a trial set to start next week in a civil case brought against the company by the New York attorney general. Exxon is accused of disclosing one set of these projected carbon costs to investors while planners used an entirely different set internally for evaluating investments. The public set was more conservative and projected that climate policies would be more stringent, while the internal one assumed more modest attempts to limit emissions. The effect of using these dueling estimates, the attorney general says, was that Exxon hid tens of billions of dollars in potential costs, downplaying the risk to investors and inflating the company's value.

If the company is found guilty of defrauding stockholders, the penalties it faces could be substantial. Exxon's stock is among the most widely held in the country, nestled in pension funds, 401Ks and IRAs.

While Exxon has denied any wrongdoing, it does not dispute the core fact of the case: that for years it disclosed a public proxy cost that was higher than what it applied to its investment decisions. Its lawyers have argued these different sets of figures did not mislead investors and had distinct and legitimate purposes. But this only highlights another side of the case.

The energy Exxon produces today is more polluting, according to the attorney general's complaint, because the company took the potential costs of climate change less seriously than it represented to investors.

Applying a lower estimate for carbon costs made high-polluting projects look more financially attractive, and it undermined the investment case for any project that would reduce emissions. Nowhere is this clearer than in Exxon's tremendous investments in Canada's oil sands, a vast expanse of low-grade hydrocarbons that now make up about 30 percent of the company's oil reserves.

"The oil sands crystallizes, at least from my perspective, everything about this issue that is concerning with Exxon," said Andrew Logan, who runs the oil and gas program at Ceres, a nonprofit that works with investors to push for more sustainable business practices. "Oil sands tick all the boxes when it comes to a carbon-risky asset."

Exxon's big bet on Canada's tar sands

Because they require enormous amounts of energy to exploit, the oil sands are among the world's most expensive and carbon-polluting sources of oil. Exxon is one of the top producers there, and the company has continued to commit billions of dollars to the resource even as much of the rest of the global industry has fled the region, puzzling some investors who have tried to square this with Exxon's lip service to climate risk, Logan said.

"The oil sands are this very concrete, specific example — and very big example — of the kind of asset you wouldn't invest in," he said, "if you actually believed the rhetoric of Exxon and others about climate risk."

But the trial may prove to be about much more than Exxon's risky investments. Climate change has abruptly shifted in the public consciousness from a future threat to a present danger, and many people and even local and national governments have begun demanding that courts step in to assign liability for the enormous costs they are facing. In the United States alone, more than a dozen local and state governments have sued energy companies seeking damages. Exxon is a defendant in many of these cases.

"Any one of them presents a real risk," said Lisa Hamilton, an attorney who until recently led the climate and energy program at the Center for International Environmental Law. She said she expects to see more of these cases enter the courts, and that some companies are now reporting that the lawsuits could have a material impact on their financial health.

Of all the lawsuits seeking to hold industry accountable for climate damage, the New York attorney general's case against Exxon would be the first to go to trial. What happens in the New York courtroom will reverberate in the climate cases yet to come.

https://insideclimatenews.org/news/22102019/exxon-climate-fraud-trial-starts-new-york-letitia-james-tar-sands

ExxonMobil went on trial Tuesday in a packed courtroom in New York, where the oil giant stands accused of defrauding investors by misleading them about the risks it faces from future climate regulations.

The civil case is the first major climate change lawsuit to reach trial in the United States, and it is the culmination of four years of investigation by the New York state attorney general's office.

The central allegation is that Exxon fraudulently used two sets of books to estimate the risks it faces as governments take steps to cut greenhouse gas emissions: one that was shared with investors and another that was used only internally. The public estimate was higher, suggesting a future with stricter limits on emissions, while the internal figures were lower, reflecting more lenient regulations.

Lawyers for Attorney General Letitia James, who took office this year, a few months after the lawsuit was filed, have argued that this practice exposed investors to greater risks than Exxon had disclosed and inflated the company's value.

...

The central question that Justice Barry Ostrager will have to decide is whether Exxon's disclosures reflected its practices, Kevin Wallace, acting chief of the attorney general's investor protection bureau, told the state court in his opening statement.

"We are not telling Exxon how to run its business," Wallace said. "But it has to be honest with investors."

Exxon's lead attorney, Theodore Wells, called the allegations "bizarre and twisted" and said the company did nothing wrong.

Exxon does not dispute that it used two estimates for the future impacts of climate regulations, but it argues that it was transparent with investors about its practices and that each had legitimate business purposes.

The opening statements suggested that the case may turn on semantic arguments about what a reasonable investor would have believed from reading Exxon's reports and disclosures, and on a technical forensic analysis of what impact the company's practices had on its share price and value.

Amid this discussion, Exxon's former chief executive and former Secretary of State Rex Tillerson is expected to testify.

Whatever decision the judge reaches is sure to be cited in major climate cases to come. More than a dozen local and state governments have sued Exxon and other energy companies seeking damages to help pay the costs imposed on cities by rising seas and extreme weather caused by climate change. On Tuesday, U.S. Supreme Court justices denied requests by energy companies in three of those cases—involving Baltimore, Rhode Island, and three Colorado municipalities—to intervene as the companies try to have the cases heard in federal rather than state courts.

The Problem with Two Estimates

Since at least 2010, Exxon had been reporting that it was using something called a proxy cost of carbon to model the financial impacts of climate policies decades into the future.

But as the company came under increasing pressure from some investors to better disclose the risks it was facing, Wallace told the court in his opening statement, "Exxon realized it had a problem."

In May 2014, the company's top management was given a presentation written by Guy Powell, Exxon's corporate greenhouse gas manager, warning that the way the company had been accounting for climate risks was potentially misleading. Even as it was reporting its proxy cost to the public, it was using a separate estimate for carbon costs—which it called a "greenhouse gas cost"—to evaluate investment opportunities internally. The proxy cost assumed carbon costs would be significantly higher than the internal estimate.

One effect of using a lower estimate for future carbon costs was that it made high-polluting oil projects look like more attractive investments, compared to if the higher proxy cost were applied.

Powell recommended aligning the costs. Soon after the presentation, Wallace said, Exxon's management directed company planners to start using the higher cost for their internal evaluations, as well. Exxon attorney Wells told the court Tuesday that the decision had nothing to do with the presentation but was a reflection of how the company saw climate policies evolving.

But even after Exxon aligned its two carbon price estimates in the summer of 2014, corporate planners continued to apply lower estimates when evaluating whether to invest in new energy projects, documents obtained by the attorney general show. In Alberta, for example, where Exxon has spent tens of billions of dollars on projects in Canada's oil sands, the company directed planners to apply an existing carbon fee that was much lower than the corporate estimates. In particular, while corporate estimates projected carbon prices continuing to rise up to $80 per ton in 2040, planners in Canada applied a fee that held flat at $24 decades into the future and didn't apply to all of a given project's emissions.

"Assuming that existing legislation would remain frozen in place forever is the exact opposite of accounting for increasingly stringent regulation," Wallace said.

The attorney general argues that this practice hid tens of billions of dollars in potential future costs at these oil sands projects from investors.

In his opening statement for Exxon, Wells argued that the public proxy cost was used to model global supply and demand for its products decades into the future.

Because it was global in scope, the proxy cost was informed by a suite of policies Exxon expects to see adopted around the world, from fuel efficiency standards in the U.S. to carbon taxes in Europe. The lower greenhouse gas cost, Wells said, was meant to reflect direct costs at specific Exxon facilities around the globe, so it was informed by a more limited set of policies. Wells used the example of a hypothetical refinery in Brooklyn, which would pay for its emissions if New York were to implement a tax or fee on polluters.

He pointed to a specific sentence in one report that Exxon issued in 2014 in response to investor pressure, where the company said "we require that all our business segments include, where appropriate, GHG costs in their economics when seeking funding for capital investments." The sentence made clear that the proxy cost and greenhouse gas cost were distinct, he argued.

Wallace countered that this claim hangs on a "tortured reading" of the company's disclosures, and pointed to other reports that he argued obfuscated any difference. In some, Exxon used the term "GHG proxy cost."

"A reasonable investor had every reason to believe that Exxon was using the term proxy costs and greenhouse gas costs interchangeably," Wallace said.

Toward the end of his statement, Wells drew a smile from Ostrager when he mentioned what he called "the elephant in the room," charging that the allegations are part of a political conspiracy by liberal attorneys general, backed by activists, to smear the company. He cited a 2016 press conference held by then-Attorney General Eric Schneiderman with many of his counterparts from other states promising to go after energy companies for their role in fueling climate change.

Ostrager has already dismissed an attempt by Exxon to halt the case on such a claim, as has a federal judge in New York.

Years of Investigation

The New York investigation began in the fall of 2015, when then-Attorney General Eric Schneiderman issued a subpoena seeking documents spanning four decades of research findings and communications about climate change. Massachusetts investigators followed several months later with a separate subpoena. While Massachusetts has yet to file a lawsuit, that state's attorney general sent a letter to Exxon earlier this month saying it plans to file a claim soon.

The two investigations followed the publication of the Pulitzer Prize-finalist investigative series of stories by InsideClimate News and later reporting by the Los Angeles Times that disclosed that Exxon had long understood the science of global warming, predicted its catastrophic consequences, and then spent millions of dollars to promote misinformation about global warming and the role of fossil fuels.

Ostrager has allotted three weeks for the trial and has said he will issue a ruling shortly after it ends. If he rules against Exxon, the company could face substantial fines and be ordered to revise how it discloses climate risks.

https://www.ecowatch.com/warren-climate-risk-disclosure-act-2640576122.html

The Green New Deal has been the focal point of the climate debate among the Democratic presidential candidates. Less publicized is the Climate Risk Disclosure Act, a proposal from Senator and presidential contender Elizabeth Warren, that seeks to frame climate change as a threat to the public markets.

The idea: force companies to publicly disclose how their valuation would fare should climate change continue versus how they would do should temperature rise be capped at 1.5 degrees Celsius higher than pre-industrial levels, the benchmark outlined in the Paris agreement.

"The Climate Risk Disclosure Act empowers investors to make smart decisions about where to invest their money by requiring that public companies be straight about how climate change and related policies will affect their bottom lines," said Sen. Warren in an exclusive statement sent to Cheddar. "Shareholders weighing this new information will compel big companies to speed up the transition to a clean energy economy, reducing the odds of an environmental and financial disaster without spending a dime of taxpayer money."

First proposed in 2018, and reintroduced with changes earlier this summer, Warren's bill would use the Securities and Exchange Commission to force publicly-traded companies to confront their own position within the climate crisis — and share that information with investors. The law, the Senator's office explains, would also have companies reveal their direct and indirect greenhouse gas emissions, share the total fossil fuel assets they own or manage, and outline their climate change risk management strategies.

It's certainly not the only climate proposal from the Massachusetts senator, but the Climate Risk Disclosure Act does appear fundamentally Warren-esque in its hope to use regulatory agencies — in this case, the SEC — to push the free market toward a less environmentally-destructive future.

Notably, the legislation was co-sponsored by several other presidential hopefuls, including Sen. Kamala Harris, Sen. Cory Booker, and Sen. Amy Klobuchar. It has also won the endorsement of sustainability advocacy organizations, including the Coalition for Environmentally Responsible Economies (Ceres) and the U.S. Forum for Sustainable and Responsible Investment (US SIF).

Rep. Sean Casten (D-Ill.) introduced the bill in the House, where it just passed the House Financial Services Committee.

"Public corporations must take responsibility for the large financial risks posed by the impacts of climate change, while embracing the economic opportunity of being global leaders in developing a clean energy economy," said Casten in a statement to Cheddar. "Our bill utilizes market mechanisms to incentivize climate action by ensuring that corporations disclose the risks posed by climate action to the benefit of their shareholders and the public."

This is not the first time an idea like this has come up. As early as 2007, state officials, investor advocates, and climate groups — including Ceres, Friends of the Earth, and Environmental Defense — had begun pushing the SEC to issue guidance as to how companies should disclose risks related to climate change.

"Companies' financial condition increasingly depends upon their ability to avoid climate risk and to capitalize on new business opportunities by responding to the changing physical and regulatory environment," they wrote in a letter to the agency. For instance, the organizations argued the physical impact of climate change could impact a company's ability to operate or expose it to new legal proceedings.

Three years later, the agency commissioners — in [a party-line vote] — finally issued guidance suggesting how companies might go about disclosing the risks related to the impact of climate change. The guidance noted that climate change could impact how a business described itself, its legal proceedings, managements' discussion and analysis of operations, and risk factors facing the company.

"It did not change any of its rules. It just said our current rules mandate addressing the risks of climate change," explains Alan Palmiter, a business law professor at Wake Forest University.

Palmiter has written that, at first, the SEC's guidance drew a good amount of attention. He found that a "flurry" of law firms sent letters to their clients notifying them of the new guidance, with many noting that the SEC could take further action on the subject.

However, Palmiter found that some law firms were unsure how to follow the guidance. Some also questioned the capacity of companies to determine how climate change might affect them, and some doubted the existence of climate change altogether, he found.

But despite some initial fanfare, the guidance didn't seem to have much impact on how many — or how much — companies disclosed about their climate risks. Palmiter notes that "during the first years after the SEC guidance, fewer than three-fifths of companies in the S&P 500 mentioned climate change in their 10-K annual reports" and that most of these were simply "a short one-paragraph risk factor."

In 2014, Ceres argued the SEC had not prioritized "the financial risks and opportunities of climate change as an important disclosure issue." The non-profit noted that the agency comment letters related to the adequacy of climate change-related disclosures had dwindled from 38 in 2010 to none in 2013. Many companies had said nothing about climate change in their annual SEC filings, the organization found, and disclosures were highly variable, often revealing little detailed information.

Two years later, the SEC requested comment on a wide range of issues, including climate change, but there doesn't appear to have been any subsequent action under the Trump administration. Last year, the SEC also received a request for a petition for broader rulemaking governing "environmental, social, and governmental" disclosures.

When asked about its guidance for companies in regard to climate change, the SEC directed Cheddar to the 2010 guidance. The agency did not respond to follow-up questions as to whether further guidance had been issued since then and why enforcement appears to have slowed.

The Government Accountability Office's February 2018 review of the guidance found that the SEC was limited because it "primarily relies on information that companies provide," couldn't subpoena more information, and the information it did have wasn't standardized across companies. It also reported that industry associations said "they consider the current climate-related disclosure requirements adequate and no additional climate-related disclosures are needed," but that "some investor groups and asset management firms have highlighted the need for companies to disclose more climate-related information." Echoing the GAO, Jim Hempstead, a managing director at Moody's told Politico this June, "Climate disclosures that are coming out right now are all over the map," and implying that disclosures "comparable across companies" would be more helpful.

Warren re-introduced the legislation this summer, saying it would "give investors, and the American public, the power to hold corporations accountable for their role in the climate crisis."

The failure of the 2010 guidance has been at the foundation to push this bill ahead, with the leaders of both Ceres and US SIF, citing the SEC's "lax" enforcement in their support for Warren's 2019 Climate Risk Disclosure Act.

Whether the bill will be passed or not, like so much of a growing slate of bills meant to combat the climate crisis, may rest on the ability of Democrats to win back the Senate and the White House in the upcoming election.

And while it's not likely to be signed into law yet, Bryan McGannon, director of government relations at US SIF, notes: "It builds a track record."

This story originally appeared in Cheddar. It is republished here as part of EcoWatch's partnership with Covering Climate Now, a global collaboration of more than 250 news outlets to strengthen coverage of the climate story.

Law360 breaking news.8/19 locked $ cf lexis-n

Exxon Hit With New Stock-Drop Suit Over Climate Disclosures

...

"Internal documents show that Exxon's executives knew the company's disclosures regarding the impact of climate change related risks on its

https://www.climateliabilitynews.org/2019/05/07/exxon-shareholder-lawsuit-climate-change/

An ExxonMobil shareholder has filed a lawsuit against the oil giant and some of its executives alleging they misled investors by understating how much risk climate change poses to the company’s assets.

Sarah Von Colditz filed the suit Thursday in U.S. District Court for the Northern District of Texas. Defendants include current and former Exxon executives and board members, including current chief executive Darren Woods and his predecessor, Rex Tillerson. The complaint accuses the company and executives of violating federal securities law, breaching fiduciary duties and wasting corporate assets.

Exxon is already facing two lawsuits over the company’s alleged misrepresentation of asset values to investors. The state of New York filed a lawsuit in October following a three-year investigation that showed Exxon had used two different sets of numbers to calculate climate risk—one disclosed publicly while the other was used internally. The public numbers indicated that Exxon was using higher costs of potential greenhouse gas regulations, or proxy costs, for internal planning than it was using in its business decisions.

Von Colditz cited this alleged misrepresentation in her complaint. “Exxon’s failure to employ carbon proxy cost policies that actually corresponded to its public statements violated generally accepted accounting principles,” the complaint said.

The complaint also says that Exxon’s behavior and resulting litigation has damaged the company’s credibility and reputation. It calls for stronger oversight of the company’s proxy cost and climate risk considerations.

Another shareholder climate suit against Exxon is moving forward, also in the Northern District of Texas. Exxon recently requested the court deny class certification to that suit, filed as a class action by the Greater Pennsylvania Carpenters Pension Fund.

Exxon has also been opposing efforts by investors to push the company to deal more transparently with climate issues. The Securities and Exchange Commission allowed Exxon to block a proposal requesting it set targets for reducing greenhouse gas emissions. The New York State Common Retirement Fund and the Church of England submitted that proposal for consideration to be included in the materials that shareholders will vote on at the upcoming annual meeting. On Friday, the two institutions filed a notice indicating they would vote against re-election of current Exxon board members and would vote in favor of establishing an independent board chairman.

“The Fund and the Church Commissioners believe that ExxonMobil’s inadequate responses to climate change and to engagement with Climate Action 100+ participants reflect in significant part a board that is not functioning effectively in the absence of an Independent Chairman,” the proposal says. Climate Action 100+ is an investor initiative that works to push the largest corporate emitters to curb emissions and strengthen climate-related financial disclosures.

The notice also said Exxon’s intransigence stands in contrast to other oil majors, such as Shell, that have agreed to set emissions reduction targets.

https://www.climateliabilitynews.org/2019/07/17/sec-climate-risks-disclosure/

Karen Savage

A bill that would require public companies to disclose the risks posed to their business by climate change passed a crucial committee vote in the House on Wednesday.

The House Financial Services Committee passed the Climate Risk Disclosure Act of 2019, which was introduced by Illinois Rep. Sean Casten in 2018. The bill would require the Securities and Exchange Commission (SEC) to develop and implement guidelines for companies on disclosing climate risks. The SEC would be required to make the information available to the public on its website.

“Climate change is a risk to the stability of the global financial system,” Casten said. “This bill presents a market-based solution to understand the impact of a changing climate on companies and provide investors, lenders, and insurers with better information.”

The bill now moves on to a vote by the full House, and if it passes, on to the Senate. With the Senate still controlled by Republicans, it is unlikely to have enough support.

Companies are currently required to disclose the risks that other issues—including lawsuits, significant corporate events and other business trends—pose to their business in annual SEC reports known as 10-Ks. But they are not required to specifically disclose risks posed by climate change.

A study by ClimateWire in 2016 found companies’ voluntary risk disclosures are often vague, with little useful information for investors. Because there are no standard guidelines for measuring and reporting climate risk, comparing risk from company to company is difficult, if not impossible.

The Climate Risk Disclosure Act would require companies in the finance, insurance, transportation, electric power, mining and non-renewable energy sectors to disclose direct and indirect greenhouse gas emissions and to disclose the total amount of fossil fuel-related assets owned or managed by those companies. Companies would be required to use specific parameters for climate scenario analyses and to disclose the methods used in calculating the social cost of carbon. That makes it easier for investors to compare companies based on their climate risk.

Fossil fuel companies have long been accused of not providing complete, consistent or transparent information on the risk climate change poses to their business.

Exxon is currently facing a lawsuit by the New York attorney general’s office for allegedly deceiving investors for years by deliberately downplaying the climate risks to its business and long-term financial health.

In recent years, BP, Exxon, Shell, Chevron and many other major fossil fuel companies have faced intense shareholder pressure to disclose their climate risks. While some have begun to deal more transparently with the issue, many continue to reject shareholder requests.

A law requiring disclosure will help shareholders make better-informed investment decisions, said Danielle Fugere, president of As You Sow, a nonprofit that advocates for corporate responsibility through shareholder advocacy.

“Climate change is very important to investors and shareholders because climate will impact every facet of the economy, from agriculture to supply chains to realty, we’re already seeing those impacts,” Fugere said.

“It’s impossible to predict the next PG&E bankruptcy will be—that was a bankruptcy related to climate change that nobody saw coming last year.”

PG&E, California’s largest utility, has been found liable for several of the state’s largest wildfires, with climate change intensifying the conditions that lead to them. The company’s shareholders have lost more than $10 billion since the company filed for bankruptcy earlier this year.

More than 50 investor and advocacy groups sent a letter last week to Casten and Sen. Elizabeth Warren, who is a member of the Senate Subcommittee on Securities, Insurance and Investment, in support of the bill.

“Ensuring climate risk disclosure is standardized will allow companies and investors—especially those managing state employee pension funds and other long-term portfolios—to plan for a low-carbon future, and that science and data guide the process,” the groups wrote in the letter.

Casten said residents in his home state are already feeling the effects of climate change and said it’s crucial that investors understand the risks.

“In just the past few decades rising temperatures have worsened extreme weather events; wildfire seasons are longer; in Illinois the painting season has been shortened from seven months to six months. Mosquitoes are expanding their territory, spreading tropical disease. Two feet of sea-level rise is already baked in,” Casten said.

“What does that mean if you are a property manager investing in assets on Miami beach? What does that mean if you are a seed developer who has seeds that are not going to be able to germinate at the rising temperatures in my home state of Illinois?

“If you are an investor, you would like to know the answers to those questions.”

desmog

guest post by Zorka Milin, Senior Legal Advisor for Global Witness.

The world was recently stunned to see the highest ever recorded concentration of carbon dioxide in our planet’s atmosphere: 415 parts per million, and rising. This figure, the highest in the millions of years that humans have existed, is unthinkably ominous to most of us. Yet it was no surprise for the company responsible for emitting a good share of that CO2: Exxon’s own scientists predicted this grim milestone with eerie accuracy way back in 1982.

If Exxon knew back then, what is the company doing to tackle the growing greenhouse gas emissions that are already causing a climate and extinction crisis? ExxonMobil investors, and the public, deserve to know. The company’s response has been to bury its head in the sand and continue with business as usual. But that is not cutting it, and this week’s annual general meeting (AGM) is a major test, with the company facing a push by some of its investors such as New York state pension fund to oust the entire board.

READ MOR

chevron takes lead in defense b/c exxon and others KNEW; using 1st amend defense cf drilled season 2

https://www.alternet.org/news-amp-politics/new-york-brings-new-fraud-case-against-exxon-lying-about-climate-change-and-ex

After a three-year probe and amid mounting demands that the fossil fuel industry be held accountable for driving the climate crisis, New York Attorney General Barbara Underwood on Wednesday filed suit against ExxonMobil, the world's largest oil and gas company, for defrauding investors by downplaying the financial threat of regulations crafted to mitigate human-caused global warming.

"Big oil may finally face some consequences for its role in wrecking the climate," declared 350.org co-founded Bill McKibben. "The New York Attorney General is standing up for investors who may have been swindled, and indirectly for the seven billion of us who will suffer from Exxon's lies."

Wow wow wow. Big oil may actually face some consequences. This is huge news https://t.co/MGhDjBPt8D

— Bill McKibben (@billmckibben) October 24, 2018

"Investors put their money and their trust in Exxon—which assured them of the long-term value of their shares, as the company claimed to be factoring the risk of increasing climate change regulation into its business decisions. Yet as our investigation found, Exxon often did no such thing," Underwood said in a statement.

New York investigators, she said, concluded that "Exxon built a facade to deceive investors into believing that the company was managing the risks of climate change regulation to its business when, in fact, it was intentionally and systematically underestimating or ignoring them, contrary to its public representations."

The complaint (pdf) details years of troubling actions by Exxon's leaders—including former CEO Rex Tillerson, who spent more than 40 years at the company prior to his short-lived tenure as the President Donald Trump's first secretary of state.

The fraud alleged in today’s suit reached the highest levels of Exxon management, including former Chairman & CEO Rex Tillerson.

The law is clear: corporations must tell investors the truth. My office will hold accountable those who don’t.

— NY AG Underwood (@NewYorkStateAG) October 24, 2018

The state's probe, launched by Underwood's predecessor Eric Schneiderman, came to light in 2015 after the Los Angeles Times and InsideClimate News reported that the company had "conducted cutting-edge climate research decades ago and then, without revealing all that it had learned, worked at the forefront of climate denial."

Since those reports, Exxon has been named in multiple climate liability lawsuits brought by city, county, and state officials across the country as advocacy groups and the public have increasingly pressured politicians to hold oil and gas companies accountable for contributing to the climate crisis and lying about the devastating long-term impacts of dirty energy.

Exxon's "colossal climate denial operation"—which was also detailed in a Harvard study published last year—"significantly impacted how the climate change debate played out in business, science, and politics," noted Naomi Ages of Greenpeace USA.

And as Richard Wiles, executive director of the Center for Climate Integrity, observed, "Climate change deception is central to Exxon's business model." The company pocketed immense profits while it "bankrolled a 30-year, multi-million denial campaign, manufacturing doubt about climate science when it knew there was none."

While Exxon continues to make money from oil and gas production, coastal communities are facing the mounting financial and environmental costs of the climate crisis. Wiles, like many others who support the ongoing litigation against fossil fuel firms, said Wednesday that Exxon "needs to pay investors they misled and the cities and states now facing massive climate expenses."

In addition to making the companies pay for the consequences of their products, climate campaigners are demanding a worldwide transition to renewable energy. Referencing the recent IPCC report that stated the international community must take rapid action to prevent climate catastrophe, Ages pointed out: "The stakes have never been higher in capping carbon emissions."

https://www.exposedbycmd.org/2018/10/25/exxon-faces-consequences-climate-denial

ExxonMobil, the $78 billion fossil fuel giant, has been lying to its shareholders about the threats of climate change, according to New York Attorney General, Barbara Underwood, following a multi-year investigation.

The New York state lawsuit, filed Wednesday, accuses Exxon of a “longstanding fraudulent scheme” to mislead investors on “the company’s management of the risks posed to its business by climate change regulation,” according to The New York Times. Citing messaging to the public that was inconsistent with internal practices, Underwood brought the lawsuit under the Martin Act, which empowers her to investigate and prosecute securities fraud.

The Center for Media and Democracy (CMD) has reported on Exxon’s illegal and unethical efforts to undermine climate science and hide the global impact of its operations for years.

In 2016, the Center for Media and Democracy (CMD) and Common Cause complained to the IRS that Exxon was running an illegal scheme to use the American Legislative Exchange Commission (ALEC) to promote its climate denial policies and legislative agenda “in gross violation of ALEC’s 501(c)(3) charitable status.”

The Industry Plan to Sow Doubt over Climate Science

Evidence presented in the joint CMD/Common Cause IRS filing showed that Exxon had pumped more that $1.7 million into ALEC between 1998 and 2014 to finance lobbying activities that cast doubt on climate science and promoted public policies benefiting the corporation.

The Exxon/ALEC scheme arose from a 1998 “Global Climate Science Communications Action Plan,” authored by the American Petroleum Institute (API). The stated mission of the API plan was to “inform the American public that science does not support the precipitous actions Kyoto [International Climate Treaty] would dictate, thereby providing a climate for the right policy decisions to be made.” [emphasis added]

Exxon was listed as a source of funding for the plan, while ALEC was listed as a “potential fund allocator.” Public records show that Exxon’s funding of ALEC subsequently increased.

Exxon’s more recent efforts to rehabilitate its public image around climate change led the oil giant to split with ALEC in July 2018, reportedly over ALEC’s opposition to the EPA’s findings on greenhouse gases.

Collusion Between Republican AGs and Industry Lobbyists

In 2016, CMD exposed secret, closed-door meetings between state attorneys general and fossil fuel interests to coordinate push-back against New York’s investigation of Exxon.

CMD published an audio recording of a meeting where representatives of the Competitive Enterprise Institute (CEI) and the American Fuel & Petrochemical Manufacturers (AFPM) — organizations historically funded in part by Exxon — discussed strategies with Republican attorneys general.

The Republican Attorneys General Association (RAGA) facilitated the private sessions, a premium service that the pay-to-play organization provides to corporations that pay RAGA up to $125,000 per year.

“These documents reveal a serious conflict of interest: RAGA is facilitating secret meetings between the profit-motivated fossil fuel industry and attorneys general to engineer pushback on investigations of ExxonMobil — and then raising money from oil and gas companies to keep those same Republican attorneys general in office,” said Nick Surgey, CMD’s Research Director at the time.

History of Misinformation Campaigns

Numerous investigations have shown that Exxon was fully aware of the risks of climate change from burning fossil fuels as early as the 1970s, despite funding multiple groups like ALEC that denied climate science and humans’ contribution to climate change.

A Harvard University study of Exxon’s communications between 1977 and 2014 found that “ExxonMobil misled the public about climate change,” even as its private and academic research acknowledged serious climate risks.

In 2015, the year New York launched its investigation of Exxon, Inside Climate News reported that Exxon had been aware of climate change but “put its muscle behind efforts to manufacture doubt about the reality of global warming.” Exxon warned top executives of possible climate catastrophe, but then “led efforts to block solutions.” The Los Angeles Times also published an article that year telling a similar story. Exxon dismissed those reports as “cherry picked.”

According to the New York Times, this most recent lawsuit “poses a financial risk to Exxon, as well as a potential reputational blow.”

If history is any indication, Exxon could face significant damages. Similar litigation against tobacco companies found in 2006 that the industry had engaged in “a massive 50-year scheme to defraud the public,” and resulted in a $246 billion settlement

https://insideclimatenews.org/news/29082018/exxon-investor-fraud-investigation-climate-change-accounting-new-york-attorney-general-smoking-gun

New York state judge ordered ExxonMobil on Wednesday to quickly turn over some of the documents sought by the state attorney general's office, which is investigating whether the oil giant misled investors about the risks posed by climate change.

But Justice Barry R. Ostrager allowed the company to withhold one batch of the financial records, saying Exxon could instead respond to questions from the attorney general's investigators about their contents.

Exxon agreed to turn over other records that it had provided to the U.S. Securities and Exchange Commission, which earlier this month ended its own investigation into the company's climate accounting practices without taking action.

The mixed instructions came at a hearing in New York Supreme Court in Manhattan, where Ostrager began by urging prosecutors to quickly wrap up their investigation and decide whether to press charges against Exxon or move on.

"This cannot go on interminably," he said. The company has provided millions of pages of documents and answered questions over some three years of investigation, Ostrager said. "It's not my place to tell you when an investigation ends, but it is my place to put an end date on the requests for information and the filing of a complaint."

Manisha M. Sheth, New York's executive deputy attorney general for economic justice, responded that her office is in the final phases of the investigation. She said the office already had found "smoking guns" showing that Exxon had misled investors, but that it needed access to a list of internal spreadsheets.

Ostrager said Exxon must provide some of the spreadsheets within 30 days, and must answer prosecutors' interrogatories—a set of questions about the remaining documents—within 35 days. Exxon had told the prosecutors that some of the data was readily available but that it would be burdensome to produce it all.

Calculating Climate Risk: What Exxon Told Investors

At the heart of the dispute are business records that the attorney general's office said would show how Exxon calculated the financial impact of future climate regulations on its business.

Attorney General Barbara Underwood's office wants Exxon to turn over cash flow spreadsheets that would reflect how the company incorporates proxy costs—a way of projecting the expected future costs of greenhouse gas emissions from regulations or carbon taxes—into its business planning.

Last year, the attorney general's office filed documents accusing Exxon of using two sets of numbers for those proxy costs. The result, it said, was that Exxon misstated the risks and potential rewards of its energy projects.

"Exxon has repeatedly assured investors that it is taking active steps to protect the company's value from the risk that climate change regulation poses to its business," Underwood's office wrote in a 30-page motion filed with the court in June.

Exxon has maintained that its use of different costs was not deceptive and was consistent with the company's public statements. In one case, the company has said, it used an actual carbon tax enacted in Alberta, Canada, rather than the higher figures in its corporate proxy costs.

"We didn't tell people we use $60 a ton or $40 a ton, we said we use costs where appropriate," said Daniel J. Toal, a lawyer representing the company at the hearing on Wednesday. He said the degree to which the company complied with its own internal policies had no bearing on the investigation.

Judge Pressures Both Sides to Wrap It Up

Michael Gerrard, director of Columbia University's Sabin Center for Climate Change Law, said after nearly three years of sparring in court it's a practical matter for the judge to look for the finish line.

"The pressure is on both sides," he said, adding that while Ostrager is urging investigators to end their work, he's also requiring Exxon to provide additional documents and answers within a month to move the case along.

New York investigators, under the direction of then-Attorney General Eric Schneiderman, hit Exxon with the first subpoena in 2015. A second subpoena was issued in 2017. The two parties have been battling ever since, through filings and in hearings, about which documents specifically have to be produced. The Massachusetts Attorney General's Office has a similar investigation underway.

On Wednesday, Ostrager left no doubt that he wants the New York investigation to conclude shortly, either by prosecutors bringing charges or dropping the case. "If you choose to bring a formal complaint," he told the state's lawyers, "this is going to be a 2019 trial."

PUBLISHED UNDER:

BUSINESS AND ACCOUNTABILITY OIL/TAR SANDS

EXXON CLIMATE

https://www.ecowatch.com/exxon-climate-lawsuit-2554739359.html

Court Tosses Exxon's 'Implausible' Lawsuit Seeking to Stop Climate Probe

A federal judge on Thursday threw out Exxon Mobil's lawsuit that sought to derail New York and Massachusetts' probe into whether the oil giant misled investors and the public about its knowledge of climate change.

Exxon tried to convince U.S. District Court Judge Valerie A. Caproni that New York Attorney General Eric Schneiderman and Massachusetts Attorney General Maura Healey were infringing on the company's free speech rights and the AGs were pursuing politically motivated investigations.

But in a searing ruling, Caproni called the company's claims "implausible" and "a wild stretch of logic."

"The relief requested by Exxon in this case is extraordinary: Exxon has asked two federal courts—first in Texas, now in New York—to stop state officials from conducting duly-authorized investigations into potential fraud," she wrote. "It has done so on the basis of extremely thin allegations and speculative inferences."

Exxon's allegations rested on statements made at the AGs' United for Clean Power press conference in March 2016. The company tried to paint Schneiderman and Healey's participation in the event as a evidence of their political bias against the company.

However, Caproni dismissed that argument, which she considered a result of "cherry-picking snippets from the transcript of the press conference."

"Some statements made at the press conference were perhaps hyperbolic, but nothing that was said can fairly be read to constitute declaration of a political vendetta against Exxon," she wrote.

The company's claims that the AGs "are pursuing bad faith investigations in order to violate Exxon's constitutional rights are implausible," the judge continued. She called it a "a wild stretch of logic" for Exxon to contend that the AGs' comments about public confusion relative to climate change showed any intent to "chill dissenting speech."

Caproni dismissed the lawsuit with prejudice, meaning Exxon cannot file it again.

Schneiderman and Healey celebrated the ruling.

"I am pleased with the court's decision to dismiss Exxon's frivolous, nonsensical lawsuit that wrongfully attempted to thwart a serious state law enforcement investigation into the company," Schneiderman said.

...