Chevron is first oil major to warn investors of risks from climate change lawsuits

Big Oil’s lies about the existential risk posed by its product are now catching up with the industry and threatening profits.

A Chevron gas station in Sacramento, California last July. CREDIT: AP Photo/Rich Pedroncelli
A Chevron gas station in Sacramento, California last July. CREDIT: AP Photo/Rich Pedroncelli

For the first time, one of the major publicly owned fossil fuel companies admitted publicly to investors that climate change lawsuits poses a risk to risk to its profits.

You’re probably thinking that seems like an obvious admission. After all, 190 nations unanimously agreed in the December 2015 Paris climate deal to leave most fossil fuels in the ground because of the existential threat they pose to human civilization.

But this is Big Oil — the industry that has been denying or pretending to deny the existence of climate change for over half a century.

In the “risk factors” section of Chevron’s 2016 10-K financial performance report to the Securities and Exchange Commission (SEC) — amid a discussion of how those pesky climate rules governments are enacting might hurt demand for its product — is this sentence: “In addition, increasing attention to climate change risks has resulted in an increased possibility of governmental investigations and, potentially, private litigation against the company.”

Naomi Ages, Greenpeace USA’s climate liability project lead, said this is the first time a major oil company admitted that such investigations and private litigation were “a material risk to the company and its shareholders.”

Chevron appears to have been motivated by some combination of

  • The New York (and Massachusetts) attorney general investigations into “what Exxon knew about climate change and what it told shareholders and the public.”
  • The SEC investigation into how Exxon “has valued its oil reserves in the wake of low prices and potential curbs on carbon emissions.”
  • The class-action lawsuit against Exxon saying it failed “to disclose the risks posed to its business by climate change” to inflate its stock price.

Big Oil’s decades of lies and denial — and outright disinformation — about the existential risk posed by its products now appears to be catching up with it.

Just this week, media attention was focused on Shell’s 1991 film, Climate of Concern, which warned that the world was risking climate change “at a rate faster than at any time since the end of the ice age — change too fast perhaps for life to adapt, without severe dislocation.” And yet, the UK Guardian reports, over the next quarter-century, Shell still “invested heavily in highly polluting oil reserves and helped lobby against climate action.”

As the speed of human-caused climate change picks up, as it becomes increasingly clear that the fossil fuel-funded disinformation campaign helped delay action until the point where deadly impacts could not be avoided, we can expect more and more government investigations and private lawsuits into Big Oil’s role in this catastrophe.