A new and potentially potent weapon is being unleashed in the climate wars. Yesterday, three major international environmental organizations warned the corporate executives of some of the largest fossil fuel companies that they could be personally liable for damages for funding climate change denialists and working against efforts to slow climate change.
The notice came in the form of a letter, signed by Greenpeace, the World Wildlife Fund and the Center for International Environmental Law, that was sent to the directors and officers of thirty-two of the “carbon majors”—the ninety companies that a recent groundbreaking study (see “Paying the Price,” The Nation, May 12, 2014) demonstrated may be responsible for some two-thirds of the world’s greenhouse gas emissions. Forty-four of the insurance companies that underwrite the carbon majors also received letters.
Those receiving letters include petroleum giants ExxonMobil, Chevron, ConocoPhillips, plus most of the world’s largest coal companies, including Peabody Energy, Murray Energy and Arch Coal—all investor-owned firms. Insurers included American International Group, Berkshire Hathaway, Prudential Financial and The Hartford.
The letters ask whether Big Carbon’s corporate officers are covered in the event they are found to have misled regulators or the public about the inherent climate risks of their fossil fuel products—liabilities some experts think could amount to many billions of dollars that have gone unmentioned in the energy industry’s annual reports, SEC statements and other filings. The three NGOs warn that “dissemination of false, misleading or intentionally incomplete information about the climate risks associated with fossil fuel products and services to regulators, shareholders and insurers could pose a risk to directors and officers personally.”
Carroll Muffett, president of the Center for International Environmental Law, said the letter campaign is intended both to elicit information and to “start a conversation about climate inside the companies, and with the public and investors.”
That conversation is already well underway in the insurance industry and among the law firms specializing in coverage issues. “Corporations and their management and directors are facing more risks in connection with climate change-related financial disclosures and the potential for shareholder and derivative suits based on alleged climate change-related financial nondisclosures,” wrote two lawyers with Anderson Kill & Olick, an American law firm specializing in insurance issues, in a 2011 article.
So-called directors and officers’ insurance, or D&O policies, which are designed to insulate high-level executives from liability for corporate wrongdoing, usually include exceptions both for misconduct and for pollution, Muffett noted. And many insurers are acutely aware Big Carbon may be courting disaster by denying or minimizing climate risks.