May 25, 2016
What Did Exxon Know? And When? Investors Want to Know
Recent reports indicate that ExxonMobil knew about climate change decades ago, and used its knowledge to mount an aggressive campaign to undermine climate science and delay policies to regulate and reduce greenhouse gas emissions. As a result, the fossil fuel industry’s profits have swelled while the world has lost valuable time in avoiding catastrophic climate change.
In response to these revelations, Green Century organized a coalition of investors representing $9.95 billion in AUM calling on the Department of Justice to investigate whether Exxon intentionally misled the public and its shareholders about climate change.
The investor letter follows an announcement by Attorneys General from 19 states and territories stating that they will seek to investigate oil and coal firms for misstatements to investors about the risks of global warming, and coincides with an ongoing grassroots movement to hold Exxon accountable.
ExxonMobil knew about the existence, cause, and consequences of climate change
In 1978, James F. Black, a senior Exxon scientist, informed Exxon Management about the relationship between fossil fuels and climate change; “there is general scientific agreement that the most likely manner in which mankind is influencing the global climate is through carbon dioxide release from the burning of fossil fuels.” This prompted Exxon to form an impressive program focused on climate change research.
Four years later in 1982, a corporate primer stated that reducing climate change “would require major reductions in fossil fuel combustion.” It elaborated that without action, “there are some potentially catastrophic events that must be considered,” and “once the effects are measurable, they might not be reversible.” This corporate primer was marked “not to be distributed externally.”
Despite its findings, ExxonMobil focused its attention on doubt
ExxonMobil actively shifted its attitude from discovery to obscurity. With the help of industry leaders and the American Petroleum Institute (API), the Global Climate Coalition (GCC) was formed. The primary reasoning for the GCC was to combat international action on greenhouse gas emissions.
“Unless ‘climate change’ becomes a non-issue, meaning that the Kyoto proposal is defeated and there are no further initiatives to thwart the threat of climate change, there may be no moment when we can declare victory for our efforts,” said a statement distributed by API. A message from a top state official confirms GCC’s participation in this campaign, stating Bush “rejected the Kyoto Protocol in part, based on input from you.” Leading up to the Kyoto Protocol, Lee Raymond, Exxon CEO, spoke to the World Petroleum Congress. Lee claimed, “The earth is cooler today than it was 20 years ago,” despite the fact that 1997 was the warmest year on record.
The GCC disbanded in 2001, but ExxonMobil continued to support groups that spread doubt on climate change. In 2007, the Union of Concerned Scientists found that ExxonMobil contributed over $16 million to groups that misinform the public about climate change. Even despite the fact that ExxonMobil’s website confesses, “The risk of climate change is clear and the risk warrants action,” the company still funds the American Legislative Exchange Council (ALEC), that recently claimed, “The biggest scam of the last 100 years is global warming.”
ExxonMobil’s history of contradiction
ExxonMobil has responded to allegations by calling them an attack on its right to free speech. Former ExxonMobil CEO, Lee Raymond, referred to climate models as “sheer speculation.” However, the company’s actions contradict its statements.
Using the same models, Exxon knew that the arctic would be the first geographical region impacted by warming. The arctic also possesses a significant amount of untapped energy sources. Croasdale, a senior researcher for Exxon’s Canadian subsidiary, focused his research on Exxon’s arctic and offshore operations in the context of climate change. At a 1991 engineering conference, Croasdale’s research team stated that polar ice caps would melt and “help lower exploration and development costs,” an incentive for Exxon to thwart policy.
Croasdale’s team also found that warming would produce costly obstacles. They concluded, “northern structures completed in the recent past do not have any allowance for climatic warming” due to unpredictable and extreme weather, rising sea levels, and thawing. Exxon trusted the validity of the research and understood it needed to protect its infrastructure, but it could not disclose its actions because the research was based on the same models the company continually ridiculed. The company hid the improvements under the guise of “routine maintenance,” as indicated by former Exxon in-house climate expert, Brian Flannery, “You build it into your ongoing system and it becomes a part of what you do.”
In 2012, ExxonMobil and BP* purchased 1 million acres in the Beaufort Sea, an area that their research indicated would open to exploration. All decisions would be the result of the same models the company publicly discounted.
Time is limited
The U.S. Surgeon General revealed the first piece of evidence against the tobacco companies in 1964, but it took another 40 years before effective action occurred. Unfortunately, climate change policy can’t afford to be delayed any longer. If Exxon intentionally misled the public about climate change and fossil fuels, then the company should be held accountable. Join us in calling on the Department of Justice to investigate Exxon.
The Letter and Signatories
May 6, 2016
Ms. Loretta Lynch
Attorney General of the United States
U.S. Department of Justice
950 Pennsylvania Avenue, NW
Washington, DC 20530-0001
Dear Ms. Lynch,
The undersigned financial advisory firms, investment managers, institutional investors, and businesses call on the U.S. Department of Justice and State Attorneys General to investigate Exxon.
Recent reports have shown that Exxon knew about the threat of climate change decades ago. Yet over the course of nearly forty years, the company has contributed millions of dollars to think tanks and politicians that have done their best to spread doubt and misinformation — first on the existence of climate change, then the extent of the problem, and now its cause. If Exxon intentionally misled the public about climate change and fossil fuels, then they should be held accountable. We are calling for an immediate investigation.
It is well established that climate change will have significant and severe economic consequences for society and investors. For this reason, investors demand honesty from companies like ExxonMobil and that’s why the reports of a misinformation campaign are so concerning.
Green Century Capital Management
114 State Street
Boston, MA 02109
On behalf of the following letter co-signers representing $9.95 billion in assets under management:
San Diego, CAJSA Financial Group System
Rhinebeck, NYKrull & Company
California, Colorado, Hawaii, Kentucky, New York, North Carolina, Oregon, South Carolina, Washington
Newground Social Investment
Ascendant Financial Solutions, Inc.
Harrington Investments, Inc.
Reynders McVeigh Capital Management, LLC
Green Retirement, Inc.
Green Asset Management
David L Meucci, CFP, ChFC
David Schreiber, CFP
Boston, MASeattle City Employees’ Retirement
Seattle, WASonen Capital
San Francisco, CA
Progressive Asset Management
California, Massachusetts, Oregon, Pennsylvania
Trillium Asset Management
Massachusetts, California, North Carolina, Oregon
NorthStar Asset Management, Inc.
Colson Financial Group, Inc.
The Sustainability Group at Loring, Wolcott & Coolidge
Fresh Pond Capital
Goodfunds Wealth Management
Horizons Sustainable Financial Services
New Mexico, Colorado
Affirmative Wealth Management
Bob Dreizler, ChFC, CLU, AIF
*No securities mentioned were held in the portfolios of the Green Century Funds as of March 31, 2016. The holdings in the Green Century Funds may change due to the ongoing management of the Funds. References to specific securities, which will change due to ongoing management of the Funds, should not be construed as a recommendation by the Funds, their administrator or their distributor.
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