The oil major is being investigated by 12 US states for fraud after decades of funding denial groups
While ExxonMobil Corp says publicly that its views on climate science are in line with that of the United Nations, it has a long history of financially supporting anti-climate change legislation and action. That may finally be hurting the company as it faces US investigations claiming it may have defrauded the public by hiding its knowledge over time.
Late last month the Competitive Enterprise Institute (CEI), a rightwing think tank that has received Exxon funding, said the investigations against the oil major are unconstitutional and a “fishing expedition”, designed to shut down debate on global warming.
At its annual general meeting in May CEO Rex Tillerson told shareholders that ExxonMobil agrees with the scientific consensus of the UN’s Intergovernmental Panel on Climate Change and backs the conclusions that humans contribute to the changing climate and weather. Yet several shareholder resolutions asking Exxon to stress-test its business strategy against a world where global temperature rises are limited to 2°C were defeated. And the company’s financial contributions to numerous entities that either deny climate change or work to block climate legislation have continued unfettered for decades.
This duplicity was dramatically exposed last year when Inside Climate News published a series showing the company’s long knowledge of climate science and its numerous attempts to keep this knowledge from the public. US attorneys general from Massachusetts, New York and 10 other states are now investigating the company for consumer and securities fraud related to this knowledge.
'Bringing sunlight' to policies
ExxonMobil not only withheld its internal conclusions, it has also handsomely funded groups actively denying the validity of climate science. This lack of transparency about political and other trade group funding is common in corporate America. The Center for Political Accountability created the Zicklin Index to benchmark the transparency policies and practices of Standard & Poor (S&P) 500 companies. In its latest 2015 report, Zicklin found that slightly more companies were “bringing sunlight” to their spending, though overall only 18% report what they give to trade organisations and only 11% report payments to other tax-exempt groups such as think tanks. Out of a possible 100% for full disclosure, ExxonMobil’s score in 2015 was 50: it doesn’t voluntarily report its trade organisation spending, though in 2015 it did create a list of its worldwide "public policy" donations.
This list detailed that Exxon is continuing to support the American Enterprise Institute, the American Legislative Exchange Council, the US Chamber of Commerce Foundation and the CEI, all organisations known for rejecting the conclusions of climate science. Greenpeace Group ExxonSecret.org concluded the company has given $33m to denial groups since 1998.
Dan Dudis, director of the Washington DC based non-profit US Chamber Watch, said Exxon’s funding of the US Chamber of Commerce Foundation had influenced the business group.
“Over time, the Chamber Foundation has strayed quite far from its original mission of 1912, which was to advocate for the interests of all business,” Dudis said. “Now it is picking issues of importance to particular industries, and has become the biggest group in the US in terms of lobbying. It has probably done more than any other trade group to fight action on climate change.”
Dudis says the US Chamber’s opposition to climate change legislation in 2009 caused Apple, Nike and Pacific Gas & Electric Company (PG&E) to cancel their memberships.
Congress blocks disclosure rule
The New York Times recently noted that corporate influence in the US is being amplified by streams of donor cash flowing into "think tanks" and organisations such as the Chamber. Generally the public is unaware of the financial connections between these organisations and big business. Though activist investor Stephen Silberstein and the Washington DC-based Campaign for Accountability have tried to get the federal US Securities and Exchange Commission (SEC) to create a rule forcing public companies to disclose this type of spending, so far the effort has been blocked, in part by a Republican-controlled Congress. Last year, Congress passed a budget bill that included a provision barring the SEC from issuing that exact type of rule.
To ExxonMobil’s credit, it does disclose its direct political spending – approximately $14m in 2015, and estimated by OpenSecrets.org to be $1.5m so far in the 2016 election year. Exxon also reports lobbying expenditures – $11.98m in 2015 and $5.7m in the second quarter of this year.
While experts say a lack of transparency to shareholders and stakeholders increases a company’s business risk, CEO Tillerson continues to assure investors that ExxonMobil’s oil assets aren’t in danger of being stranded. In the second quarter of this year, the company’s profits fell 60% in comparison to 2015, due to low commodity prices and what Tillerson called a “volatile industry environment”.climate change ExxonMobil United Nations CEI global warming climate science transparency Greenpeace pg&e Environment