The world’s largest publicly-traded coal company has agreed to make fuller public disclosures about the risks climate change poses to its business in a settlement of charges that it misled investors and the public.
Peabody Energy (BTU) reached the settlement after a two-year investigation found the St. Louis-based company’s public statements about the potential economic impact of climate change didn’t always square with the firm’s internal financial projections, the New York Attorney General Eric Schneiderman said Monday.
Peabody shares were up 4.7 percent at $US15.28 in Monday trading after the announcement. The coal giant’s stock has lost nearly 88 percent of its value this year since a February 25 high of $US118.95 a share amid a global plummet of energy prices.
The agreement comes four days after Schneiderman opened a similar investigation of Exxon Mobil.
Peabody has agreed to file revised Securities and Exchange Commission disclosures affirming that “concerns about the environmental impacts of coal combustion … could significantly affect demand for our products or our securities,” said Schneiderman, who characterised the agreement as the first of its kind.
“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,” said Schneiderman in a statement announcing the agreement.
“I believe that full and fair disclosures 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.”
The coal giant in a statement stressed that “there is no other action associated with this settlement, no admission or denial of wrongdoing and no financial penalty.” Peabody also said “the company has always sought to make appropriate disclosures.”
However, Peabody’s past SEC filings regularly denied the company had the ability to predict the impact that potential regulation of climate change pollution would have on the firm’s operations. The investigation found that Peabody and its consultants in fact “made projections that such regulation would have severe impacts on the company,” Schneiderman’s office said.
For instance, Peabody’s internal calculations projected a 33 percent or more reduction in the dollar value of coal sales in the company’s primary US markets if aggressive regulatory action were imposed on existing power plants and future electricity generation, the state investigation showed.
An outside consultant in March 2014 projected that enactment of a $US20 per ton carbon tax would cut the US demand for coal-generated electricity between 38 percent and 53 percent in comparison to 2013 levels, the investigation found.
Additionally, Peabody’s SEC filings and other public communications “provided incomplete and one-sided discussions” of the International Energy Agency’s projections related to future world coal demand, the investigation showed. As a result of the findings, the coal giant agreed to:
- Provide SEC disclosures showing the projections the company has been able to make regarding the business impact of laws, regulations and policies related to climate change. The disclosures will start with Monday’s quarterly filing, and will also include projections about different scenarios used by the IEA to calculate expected coal demand.
- Avoid any public statements that claim Peabody cannot reasonably project the potential impact of future climate-change-related laws and regulations.
- Accurately describe IEA’s scenarios projecting global demand for coal.
Schneiderman’s office subpoenaed Texas-based Exxon Mobil on Wednesday, seeking statements, emails, financial projections and other records related to the company’s climate-change research. The oil-and-gas giant said it has publicly disclosed the business risk of potential climate-change regulations for many years.
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