Wednesday, March 07, 2007

Did Exxon stop its denialism because of liability concerns?

I attended the symposium on climate change and liability held at Stanford several weeks ago. Possibly the most interesting statement was in the second panel, where a speaker associated with insurance companies said that directors' liability insurance for corporate boards would start containing climate-change exclusions. This means that unless the corporations undertake certain actions to reduce the insurer's exposure, the directors theoretically could be individually liable for harm caused by the company.

Now on the one hand, I expect the "certain actions" required by the insurers would be extremely limited. But on the other hand, the first exclusion I would put in if I were the insurers' lawyer is "if the corporation lies about climate change, all subsequent legal liability for climate change will be born by the company or by its individual directors." The correlation between this imminent change in liability insurance, which Exxon must know about, and Exxon's recent change from denying climate change to accepting it (at least overtly, I won't exclude some circuitous funding of denialism), is interesting.

I'd guess that a giant company like ExxonMobil would be self-insuring, but maybe conflicts-of-interest policies limit their ability to protect their directors, especially from shareholder lawsuits that might ultimately come about.

Other notes from the meeting:

Liability insurance spends tens of billions of dollars in vehicular accident payouts, and those are weather-related (negligence in bad weather is more likely to cause an accident than in good weather). Insurers are concerned about bad weather from climate change.

A Texas lawyer argued that TXU's proposal for eleven massive coal plants wasn't done despite CO2 emissions, but because of CO2 emissions. If they have lots of CO2 emissions in place when regulations eventually come to Texas, then it will be easy for TXU to reduce emissions from all the coal plants it just built and get “reduction” credits the company can use or sell. The proposal is likely scuttled, at least for eight of the plants. (The lawyer, by the way, had been a tobacco litigation lawyer for the defense, and didn't care about this stuff until his wife dragged him to a climate change conference.)

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