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.
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The NY attorney general’s office found that Peabody violated NY laws that prohibit false and misleading conducts in the company’s statements to the public and investors.
Attorney General Schneiderman said in the press release that Peabody has a responsibility with its investors and the public to be honest about the “risks posed by climate change, now and in the future”.
The Peabody investigation was only publicly announced by Schneiderman last week, when it was reported that he is also investigating Exxon Mobil Corp. for similar allegations that it misled about climate change. “And you add this to all the other things that are happening across the country, with states leading on climate change, the Keystone decision, Peabody having to be forthright with investors, there’s a critical mass building”.
He said those statements downplayed the financial risks of climate change and potential regulatory responses.
Schneiderman’s office began investigating Peabody two years ago.
“Shares of Peabody, which is based in St. Louis, have lost more than 90 percent of their value over the previous year as the entire industry has been overwhelmed by crippling debts and more stringent regulations on coal burning by electric utilities”.
An outside consultant in March 2014 projected that enactment of a $US20 per ton carbon tax would cut the USA demand for coal-generated electricity between 38 per cent and 53 per cent in comparison to 2013 levels, the investigation found.
The company had stated it could not make such predictions because of the uncertainty surrounding proposed laws.
Through its subsidiaries, Peabody has majority interests in 26 coal operations located throughout all major US coal-producing regions and in Australia. And while Peabody escaped financial penalties this time around, it could still face litigation from aggrieved shareholders, Logan said. In doing so, Peabody failed to disclose the IEA’s other two scenarios, which are much less favorable projections of world coal demand by the IEA.
Schneiderman’s office subpoenaed Texas-based Exxon Mobil late November 4, seeking statements, emails, financial records, and other documents that might reveal the company lied about the effects of global warming.
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The economics are changing, too, as oil remains under $50 per barrel and as stricter regulations on coal make cleaner fuel options more attractive.
