A New York state court has dismissed the city’s lawsuit against major oil companies, marking a significant setback for climate accountability efforts. The suit, filed in 2021, accused ExxonMobil XOM, BP plc BP and Shell SHEL of misleading the public about the environmental impact of their products. The city alleged that these companies used deceptive marketing tactics to portray themselves as climate-friendly while continuing to invest heavily in fossil fuel production.
Investors should know that the companies at the center of the case were facing allegations of "greenwashing" their practices. New York City claimed that these oil giants marketed their products as cleaner alternatives, emphasizing reduced emissions and sustainability while downplaying their contributions to climate change. Additionally, the lawsuit called out statements like “drive cleaner, smarter, and longer,” which the court ultimately ruled as subjective and non-specific.
Justice Anar Patel dismissed the lawsuit, citing contradictions in the city’s arguments. Patel noted that New York City could not simultaneously claim that consumers were aware of fossil fuels' environmental risks and accuse the companies of misleading those same consumers. The court also found the allegations of “greenwashing” insufficient, with Patel stating that vague advertising slogans and general claims about sustainability were inactionable under consumer protection laws.
The energy operators that were sued include the following biggies:
ExxonMobil: It is one of the largest publicly traded oil and gas companies in the world with operations that span almost every corner of the globe. Spring, TX-based ExxonMobil is fully integrated, meaning it participates in every aspect related to energy — from oil production, to refining and marketing.
BP: Based in London and established in 1866, BP is a global energy leader. The Zacks Rank #3 (Hold) company operates across oil production, natural gas, refining and low-carbon energy. With refineries handling 1.6 million barrels daily, BP also markets energy products worldwide through its integrated operations.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Shell: London-based Shell’s long-term strategy revolves around liquefied natural gas (“LNG”), considering the secular shift to the cleaner burning fuel for power generation worldwide and in the Asia-Pacific region in particular.
For the Oil – Energy industry, the ruling represents a robust defense against a wave of climate liability lawsuits. It sets a precedent that vague claims in marketing are not grounds for legal action. Industry representatives, including the Manufacturers’ Accountability Project, praised the decision, asserting that such lawsuits undermine energy policy and economic stability by shifting policy debates into the courtroom.
Critics argue that the dismissal undermines efforts to hold corporations accountable for their environmental impact. New York City officials expressed disappointment, emphasizing the importance of corporate responsibility in addressing climate change. Environmental advocates worry that the ruling could slow the momentum for similar lawsuits, potentially allowing companies to avoid accountability for practices that exacerbate climate crises.
This decision joins other recent dismissals of climate lawsuits in Maryland and Delaware, signaling a challenging legal environment for municipalities seeking damages from the fossil fuel industry. However, with approximately 30 similar cases still pending in state courts, including in New Jersey and Pennsylvania, the legal battles are far from over. Proponents of climate accountability remain hopeful, viewing this ruling as a temporary setback rather than a definitive end.
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