California’s Warning to Big Oil

Written by Swasti Mehta.

In Short: California’s Governor and Attorney General have filed a climate lawsuit against five Big Oil companies in the USA. The companies are ExxonMobil, Chevron, Shell, BP, and ConocoPhillips along with American Petroleum Institute.

What is Going On?
California is one of the states that have witnessed huge costs (billions of dollars!) in handling the climatic degradation caused by companies such as Big Oil. The 135-page-long lawsuit is a bold statement against entities that have for years operated in a manner harmful to the environment. The AG has invoked state laws that allow procurement of company profits that are a result of the violation of consumer protection or advertising laws. He has also requested the creation of a ‘victim’s restitution fund’ for the deposition of these profits.

The lawsuit alleges the defendants of ‘greenwashing’, misleading the consumers, and denying that they have known the adverse effects of their actions for years. Greenwashing is when a company portrays its products to be ‘cleaner’ than they actually are – therefore, false advertising! There is also considerable evidence showing that the companies have refused to accept studies that have proven the harmful effects of their operations.

What Does This Mean?
Such lawsuits can be highly damaging to companies apart from being expensive. Climate litigators believe that it also acts as a trigger for other states that have been reluctant until now to start a fight with powerful companies. The AG has also requested for a jury trial which makes situations worse for Big Oil since their culpability will potentially be judged by individuals who have faced the repercussions of their actions.

This lawsuit is not a standalone warning to polluting companies. Studies by the UN and Columbia University show that the number of climate protection-related cases has doubled between 2017 and 2023. Centre for Climate Integrity has tracked around 32 cases filed on this premise around the US!

If this were not enough, California’s state legislature recently approved the Climate Corporate Data Accountability Act which will require companies with more than $1bn in annual revenue to disclose their emission levels. Recently, a judge in Montana also ruled that young people have a ‘right’ to “a clean and healthful environment” giving climate protection a high pedestal it has not received until now. The US is not the only one in the party, the EU is also involved with its own cases against companies such as Shell.

How Does This Impact Law Firms?