New York’s attorney general just forced the world’s largest publicly-traded coal company to tell investors how it believes global warming regulations will impact the viability of its business.
Attorney General Eric Schneiderman announced Monday a settlement with Peabody Energy — a major coal company. Schneiderman says the company “repeatedly denied in public financial filings … that it had the ability to predict the impact that potential regulation of climate change pollution would have on its business” despite having hired consultants to conduct internal reports on how regulations would impact coal use.
“As a publicly traded company whose core business generates massive amounts of carbon emissions, Peabody Energy has a responsibility to be honest with its investors and the public about the risks posed by climate change, now and in the future,” Schneiderman said in a statement.
This is the first time a state attorney general has forced a company into reporting how global warming regulations will impact its business. The settlement comes just days after Schneiderman initiated an investigation into Exxon Mobil for allegedly misleading investors on how global warming will impact the oil business.
For months, environmentalists have been calling on the Justice Department to launch a RICO probe into groups skeptical of man-made global warming.
“A lot of people haven’t seen through the scam that’s being perpetrated,” Rhode Island Democratic Sen. Sheldon Whitehouse told environmental activists earlier this year.
Democratic lawmakers, environmentalists and even liberal presidential candidates have backed federal prosecution of Exxon. Democrats have also called for federal prosecution of companies and advocacy groups skeptical of global warming. Supporters of prosecution argue these groups are acting like the tobacco industry by spreading misinformation about climate science.
“So that’s one of the reasons I hope that we get another lawsuit out of the Department of Justice, like the one they brought against the tobacco industry that showed that the whole fraudulent scam was a racketeering enterprise, held them accountable for it,” Whitehouse said.
New York’s AG says Peabody conducted internal studies and provided “one-sided” descriptions of publically-available reports on how regulations could impact global coal demand. The AG’s office says Peabody only included “current policies” scenarios in its Securities and Exchange Commission (SEC) filings. The company argued it could not predict what governments would do in the future.
“In doing so, Peabody failed to disclose the [International Energy Agency’s (IEA)] other two scenarios, which are much less favorable projections of world coal demand by the IEA,” the AG’s office said.
But were investors really being misled by Peabody’s findings? In the past few years, a plethora of publicly available reports on future coal demand have come out detailing how government policies in the U.S., China and other countries could impact coal use.
Peabody’s stock price has been tumbling for years. The company’s stock peaked in April 2011 at about $1,090 before slowly tumbling to $15.33 Monday. Over the last 5 years, the company’s stock has lost nearly 99 percent of its value.
Investors have clearly been skeptical of coal’s prospects for years as regulations have contributed to a massive fuel switch in the U.S. from coal to global warming.
As part of Peabody’s settlement with the AG, the company “will file revised shareholder disclosures… that accurately and objectively represent these risks to investors and the public,” according to the AG’s office.
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