For some time now ExxonMobil Corporation has been under scrutiny for having a) known about climate change, yet b) helped cause climate change, while c) investing corporate resources into getting people and the government to not take climate change seriously.
Worst case allegation: ExxonMobile has taken material steps, knowingly and intentionally, that will cause the end of civilization as we know it.
That, of course, is not illegal. But along the way, perhaps some laws have been broken, and some in the legal biz have been looking into this.
Now, suddenly, we hear from the Wall Street Journal that the US Securities and Exchange Commission (SEC) is looking into the way ExxonMobile has valued assets under conditions of falling energy prices in the context of expected increasing regulations. In other words, the climate change crisis will (and has) freeze assets held by giant corporations, and that makes those assets of relatively little value. I assume the question here is, has Exxon addressed that impending shift in value?
Apparently, the SEC has been digging into this since at least mid summer.
Also, this is apparently part of a broader shift by the SEC in how they look at the disclosure of information pertaining to the same basic problem, more broadly.
It is all very complicated, and the implications are potentially profound. Check out this piece in the Wall Street Journal, and report back with your opinion.
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The article makes claims that the investigation is related to climate change issues, but presents no evidence that this is actually the case. What seems to be going on here is that XOM does not follow standard industry practice in writing down the value of oil and gas reserves as prices drop. XOM claims they don’t need to, because they value these assets conservatively in the first place and therefore have some room to accommodate a fall in prices. Whether these practices will make it harder for XOM to accurately value these assets in a more regulated future world is a legitimate question. But the investigation does not seem to have any direct relationship to XOM’s past activities regarding climate change research.
This does not, indeed, relate to ExxonMobil’s other and earlier problems, but it does represent, I have on good authority, a conflict with reality vis-a-vis the value of stranded or potentially stranded assets.
This is just coming to light now, it will be better understood in a few days, I suspect.
In comments to one of your posts earlier this month I said I would like to see new regulations regarding fiduciary responsibilities with respect to climate change. Perhaps the SEC is going down that route now?
“ExxonMobile has taken material steps, knowingly and intentionally, that will cause the end of civilization as we know it.
That, of course, is not illegal. ”
I wouldn’t be so sure about that!:
http://www.reuters.com/article/us-global-landrights-icc-idUSKCN11L2F9
Yeah, I saw that! We’ll see how that works out…