ExxonMobil accuses California of violating its free speech

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.