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Nov 11, 2015

Peabody Energy agrees to strengthen climate change disclosure

Agreement comes after two-year probe finds Peabody misled investors

Peabody Energy, the world’s largest publicly traded coal producer, misled shareholders and investors about the financial risks it faces related to climate change and possible regulatory responses to it, according to a two-year investigation by the New York attorney general.

Peabody has agreed to change how it discloses financial risks related to climate change but faces no fine because investigators could not concretely establish that investors suffered financial damage due to the company’s disclosure failures, says New York Attorney General Eric Schneiderman in a press release.

According to investigators, Peabody repeatedly denied in filings to the SEC that potential regulations regarding climate change would have a financial impact on the company, even though its internal projections predicted dramatic effects. In one example, Peabody’s projections predicted aggressive regulation would lower the dollar value of coal by at least 33 percent and a potential $20 per ton carbon tax would lower demand for coal in the US by as much as 53 percent.

‘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 says. ‘I believe full and fair disclosure by Peabody and other fossil fuel companies will lead investors to think long and hard about the damage these companies are doing to our planet.’

Schneiderman says Peabody has agreed to disclose internal projections regarding the impact of climate change regulations on its finances, avoid telling shareholders and the public that it cannot predict a range of impacts of such regulation, and include in its projections all scenarios issued by the International Energy Agency regarding possible climate change regulation, and not just the association’s most optimistic scenarios.

The agreement comes as authorities investigate ExxonMobil on accusations the company has lied to investors about risks to its business and the oil industry since the 1970s, when its own research revealed the climate-changing effects of burning fossil fuels.