E&E Legal Petitions SEC to Address Problem of Registrants Making False and Misleading Climate Change Statements

For Immediate Release:
August 13, 2019

[email protected]

Today, the Energy & Environment Legal Institute (E&E Legal) petitioned U.S. Securities and Exchange Commission (SEC) to take action to prevent and prohibit registrants from making false and misleading statements with respect to global climate change. The petition was authored by E&E Legal’s Senior Policy Fellow and JunkScience.com founder Steve Milloy.

“Almost everyone can make false and misleading statements with virtual impunity,” Milloy observed, “except if you are the CEO of a publicly-owned company. As Tesla’s Elon Musk recently discovered via a $20 million fine and other legal sanctions, the SEC takes false and misleading statements by CEOs very seriously.”

The petition is based on a number of undisputed facts and realities including:

  1. Manmade greenhouse gas emissions are presently about 53.5 BILLION tons of CO2-equivalent annually.
  2. Manmade greenhouse gas emissions are growing with no end in sight.
  3. Even if US emissions (about 7 BILLION tons) went to ZERO, the rest of the world’s emissions (46.5 BILLION TONS) are way above the Kyoto Protocol goal (i.e., below 35 BILLION tons).
  4. Even if the US stopped emitting today, the difference in atmospheric greenhouse gas concentrations and global temperature would not be meaningfully different over the 21st century from the US not cutting emissions.

“But when businesses talk about climate and their own related actions, none of this reality is reflected in their typically untethered statements and claims,” Milloy said. Companies routinely boast of cutting emissions to address climate change. “But regardless of your view of climate science, the companies are not actually addressing climate change in the least as the claimed emissions cuts are mere inconsequential drops in the bucket.”

The petition cites four examples of this sort of climate “greenwashing.”

  • Apple Corporation claims it is “significantly reducing emissions to address climate change.” But Apple’s claimed CO2 emissions amount to a mere 0.04% of the global total of 53.5 BILLION tons.
  • ExxonMobil claims it plays an “essential role in addressing the risks of climate change.” While ExxonMobil pats itself on the back for cutting its own emissions by 22 MILLION tons of last year, the company sold oil and gas worth 588 MILLION tons of emissions during the same time period.
  • Electric utility Xcel claims its climate actions (i.e., shuttering coal plants) is “grounded in climate science,” namely the 2-degree Celsius mean global temperature target limit. However, as revealed in the 2009 Climategate emails, the 2C target is arbitrary in nature and without actual scientific foundation.
  • Nuclear utility Exelon sounds like an unhinged environmental group on its web site, proclaiming: “We need the Earth. Today, it needs us.” Towards that self-exalted purpose, Exelon boasts of shuttering the few coal plants it had. Meanwhile, China is building more coal power capacity in 2019 alone (45 gigawatts) than all US utilities plan to shutter through 2025 (17 gigawatts).

“All of these corporate claims are false and/or misleading,” said Milloy. “To the extent investors are making decision based on such claims, they are being defrauded,” Milloy emphasized.

The SEC first issued climate guidance to US companies in 2010. But that guidance only applied to disclosure regarding business risks from climate change. Since then, US companies have evolved from merely disclosing risks to their businesses to dubious marketing use of their climate actions as advertising points.

“If a company wants to talk about climate, that’s fine, but they must do so in a manner consistent with the full disclosure and anti-fraud provisions of the federal securities laws,” said Milloy, formerly an SEC attorney and mutual fund manager. “The false and misleading posturing must stop and it is the SEC’s job to issue appropriate guidance to companies,” Milloy added.

Earlier this year, the SEC Division of Corporation Finance upheld Milloy’s position in related shareholder proposals he filed against electric utilities Duke Energy and Exelon. “It was encouraging that the SEC upheld my proposals in the face of blatantly false and misleading statements made by Duke and Exelon,” said Milloy. “Now it is time for the SEC to take action applicable to all public-owned companies,” he concluded.

The Energy & Environment Legal Institute (E&E Legal) is a 501(c)(3) organization that champions responsible and balanced environmentalism which seeks to conserve the nation’s natural resources while ensuring a stable and strong economy through energy dominance. Specifically, E&E Legal advocates responsible resource development, conservation, sound science, and respect for property rights.