ExxonMobil has initiated a lawsuit against California concerning legislation requiring large firms to provide a thorough account of their greenhouse gas emissions and press disclosures on the financial challenges climate change presents to their stakeholders.
The oil and gas corporation argues that the two specific laws are designed to “humiliate” the major companies that the state “deems primarily accountable for climate change,” with the intention of driving them to curtail their greenhouse gas emissions. Scientific agreement indicates that greenhouse gas emissions generated by fossil fuels are a key factor in climate change by trapping planet heat.
ExxonMobil contends that California is infringing upon the First Amendment by implementing specific criteria for how certain firms must document these emissions and their associated climate risks. A complaint submitted last Friday claims that the 2023 laws compel “ExxonMobil to report its emissions and climate-related threats in ways that the company fundamentally disagrees with.” The lawsuit seeks an injunction from a US District Court to halt the enforcement of these laws.
This is the latest chapter in an ongoing discourse about corporate transparency regarding their environmental impact. California has established more stringent standards than many businesses currently uphold in their sustainability reports. This, along with the state’s significant economy, has enabled it to elevate expectations for corporate climate disclosures despite the federal government moving in a conflicting direction. Allegations from ExxonMobil that California is compelling companies to adopt its viewpoint on climate change also emerge amid a wave of accusations suggesting that the company has misled consumers about the environmental ramifications of its products.
One of the laws ExxonMobil is contesting, SB 253, mandates that companies operating in California with annual revenues exceeding $1 billion to reveal their emissions in accordance with globally acknowledged standards laid out in the Greenhouse Gas Protocol. The company already discloses information about its greenhouse gas emissions publicly but argues that it disagrees with the methodologies prescribed in the Greenhouse Gas Protocol. The primary contention lies in the obligation to include emissions stemming from a company’s supply chain, energy consumption, and consumer use of its products — identified as “indirect” emissions. Such indirect emissions often represent the majority of a company’s carbon footprint, and SB 253 would necessitate complete disclosure by 2027.
ExxonMobil’s lawsuit, however, asserts that accounting for indirect emissions leads to double counting. It would require the company to acknowledge tailpipe emissions from vehicles utilizing their fuels, while the owners of those vehicles might also include those emissions in their own disclosures.
The other contested law, SB 261, stipulates that companies generating over $500 million in annual revenue must disclose the financial risks associated with climate change, such as how coastal flooding or increasing severe weather could affect their operations, by January 2026. The lawsuit describes such disclosures as “speculative,” necessitating “the company to engage in detailed conjecture regarding unpredictable future situations.”
Under the Biden administration, similar proposals were made at the federal level by the SEC, which it ultimately diluted after industry backlash regarding requirements for indirect emissions reporting. This year, similar to the SEC, the Trump administration announced it would withdraw its defense of those rules in court.
Additionally, ExxonMobil is currently involved in a separate lawsuit filed by California last year concerning plastic pollution. This suit alleges that the company has “misled Californians for nearly fifty years by asserting that recycling could address and resolve the escalating plastic waste crisis.” Plastics, derived from fossil fuels, are challenging to recycle; under 10 percent of plastic waste has ever been recycled. In response, ExxonMobil launched a defamation lawsuit against the California Attorney General in January over the contentious recycling assertions.
California has also initiated another lawsuit in 2023 against multiple oil and gas entities, including Exxon, asserting that their “fraudulent and tortious behavior significantly contributed to the severe climate change consequences in California,” which include increased heat, droughts, and wildfires. Over the last decade, various investigations into ExxonMobil, alongside peer-reviewed studies, have revealed that the company’s own scientists accurately foresaw climate change while publicly downplaying the issue.
ExxonMobil’s current lawsuit states that the company “recognizes the genuine dangers associated with climate change and endorses ongoing initiatives to mitigate those risks,” yet California’s laws would require it “to communicate its emissions and climate-related perils in terms that the company fundamentally opposes.”
“These regulations are meant for transparency. ExxonMobil may prefer to keep the public uninformed, but we are prepared to fight vigorously in court to guarantee the public’s access to this crucial information,” Christine Lee, a spokesperson for the California Department of Justice, stated in an email to The Verge. Officials from the state regulatory body named as defendants in the lawsuit refrained from commenting on the ongoing legal matter.
