ExxonMobil accuses California of violating its free speech
In a significant legal move, ExxonMobil has filed a lawsuit against the state of California, challenging two recently enacted laws aimed at enhancing corporate transparency regarding greenhouse gas emissions and the financial risks posed by climate change. The company argues that these laws are designed to “embarrass” major corporations like itself, which the state holds accountable for their role in climate change. California’s legislation requires large companies to disclose their greenhouse gas emissions in accordance with internationally recognized standards and to report on the potential financial implications of climate-related risks. ExxonMobil contends that these requirements violate its First Amendment rights by compelling it to present emissions data and climate risks in a manner with which it fundamentally disagrees.
The lawsuit centers on two specific laws: SB 253 and SB 261. SB 253 mandates that companies with annual revenues exceeding $1 billion disclose not only their direct emissions but also “indirect” emissions, which include those generated by their supply chains, electricity consumption, and the end-use of their products. ExxonMobil argues that this could lead to double counting of emissions, particularly in cases where emissions from vehicles using their fuel are reported both by the company and by vehicle owners. Meanwhile, SB 261 requires companies earning over $500 million to disclose the financial risks they face from climate change, such as the potential impacts of extreme weather and rising sea levels. ExxonMobil describes these disclosures as “speculative,” asserting that they require the company to engage in conjecture about uncertain future developments.
This lawsuit is part of a broader narrative concerning corporate accountability and transparency in the face of climate change. While California has set ambitious standards for corporate disclosures, the federal government has moved in the opposite direction, weakening similar regulations proposed by the Securities and Exchange Commission (SEC). ExxonMobil’s legal action comes amid ongoing scrutiny over its past practices, including allegations that it misled the public about the environmental impact of its products. As the state of California continues to push for greater transparency, officials are prepared to defend the laws in court, emphasizing the importance of public access to information regarding corporate contributions to climate change. Christine Lee, a spokesperson for the California Department of Justice, noted, “These laws are about transparency. ExxonMobil might want to continue keeping the public in the dark, but we’re ready to litigate vigorously in court to ensure the public’s access to these important facts.”
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Darren Woods, chairman and chief executive officer of Exxon Mobil Corp, during the Summit on Methane and Other Non-CO2 Greenhouse Gases on day three of the COP28 climate conference at Expo City in Dubai, United Arab Emirates, on Saturday, Dec. 2, 2023. | Photo: Getty Images
ExxonMobil is suing California over state laws that compel large companies to share a more comprehensive picture of their greenhouse gas emissions, as well as disclose financial risks that climate change might pose to their investors.
The oil and gas company claims that the
two laws in question
aim to “embarrass” large corporations the state “believes are uniquely responsible for climate change” in order to push them to reduce their greenhouse gas emissions. There is
overwhelming
scientific consensus
that greenhouse gas emissions from fossil fuels cause climate change by trapping heat on the planet.
ExxonMobil alleges that California is violating the First Amendment by setting specific standards for how certain companies report those emissions and the associated climate risks. Under laws the state passed in 2023, “ExxonMobil will be forced to describe its emissions and climate-related risks in terms the company fundamentally disagrees with,” a complaint
filed
Friday says. The suit asks a US District Court to stop the laws from being enforced.
It’s the latest in an ongoing saga over how transparent companies should be about their impact on the climate
It’s the latest in an ongoing saga over how transparent companies should be about their impact on the climate. California has set higher standards than many companies follow in their sustainability reports. That, plus the state’s enormous economy, has allowed it to raise the bar for corporate climate disclosures even as the
federal government moves in the opposite direction
. ExxonMobil’s accusations that the state is compelling corporations to adopt its views on climate change also follow a landslide of allegations that ExxonMobil has
misled consumers
about the impact its products would have on the environment.
One of the laws ExxonMobil is suing over, SB 253, requires companies doing business in California with more than $1 billion in annual revenue to disclose their emissions according to internationally recognized standards set in the
Greenhouse Gas Protocol
. The company already publicly shares data on its greenhouse gas emissions, but says it disagrees with the Greenhouse Gas Protocol’s methods. The big tussle is over requirements to include emissions from a company’s supply chain, electricity use, and consumer use of its products — considered
“indirect” emissions
. Those indirect emissions often make up the
majority of a company’s carbon footprint
, and SB 253 would require full disclosure of them by 2027.
ExxonMobil’s suit, however, claims that including indirect emissions leads to double counting. It would mandate that the company claim tailpipe emissions from cars and trucks that burn their fuels, for example, while the owners of those vehicles might also claim those emissions in their reporting.
The other law in dispute, SB 261, says that companies earning more than $500 million in annual revenue need to disclose financial risks they face from climate change, such as how
coastal flooding or more extreme weather
might impact their business, by January 2026. The suit calls such disclosures “speculative,” requiring “the company to engage in granular conjecture about unknowable future developments.”
Under the Biden administration, the SEC proposed similar rules at the federal level, which it
ultimately weakened
after facing pushback from industry over requirements to disclose indirect emissions. This year, the
SEC
under the Trump administration
announced
that it
would no longer defend those rules
in court.
Separately, ExxonMobil is embroiled in another
suit
California filed against it last year
over plastic pollution. That suit claims that the company “deceived Californians for almost half a century by promising that recycling could and would solve the ever-growing plastic waste crisis.” Plastics are made from fossil fuels and are
difficult to recycle; less than 10 percent of plastic waste has ever been recycled
. ExxonMobil subsequently filed a
defamation
lawsuit against the California Attorney General in January over the disputed recycling claims.
California filed another
suit
in 2023
against multiple oil and gas companies including Exxon, alleging their “deceptive and tortious conduct was a substantial factor in bringing about these devastating climate change impacts in California,” including more intense heat, droughts, wildfires. Over the past decade a series of
investigations
into ExxonMobil
, as well as
peer-reviewed research
, have shown how the company’s own scientists
accurately predicted climate change while publicly dismissing the issue
.
ExxonMobil’s latest suit now says the company “understands the very real risks associated with climate change and supports continued efforts to address those risks,” but that California’s laws would force it “to describe its emissions and climate-related risks in terms the company fundamentally disagrees with.”
“These laws are about transparency. ExxonMobil might want to continue keeping the public in the dark, but we’re ready to litigate vigorously in court to ensure the public’s access to these important facts,” Christine Lee, a spokesperson for the California Department of Justice, said in an email to
The Verge
. Officials with the state regulatory agency named as defendants in the suit declined to comment on pending litigation.
