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A new and potentially potent weapon is being unleashed in the climate wars. Yesterday, three major international environmental organizations warned the corporate executives of some of the largest fossil fuel companies that they could be personally liable for damages for funding climate change denialists and working against efforts to slow climate change. Ad Policy

The notice came in the form of a letter, signed by Greenpeace, the World Wildlife Fund and the Center for International Environmental Law, that was sent to the directors and officers of thirty-two of the “carbon majors”—the ninety companies that a recent groundbreaking study (see “Paying the Price,” The Nation, May 12, 2014) demonstrated may be responsible for some two-thirds of the world’s greenhouse gas emissions. Forty-four of the insurance companies that underwrite the carbon majors also received letters.

Those receiving letters include petroleum giants ExxonMobil, Chevron, ConocoPhillips, plus most of the world’s largest coal companies, including Peabody Energy, Murray Energy and Arch Coal—all investor-owned firms. Insurers included American International Group, Berkshire Hathaway, Prudential Financial and The Hartford.

The letters ask whether Big Carbon’s corporate officers are covered in the event they are found to have misled regulators or the public about the inherent climate risks of their fossil fuel products—liabilities some experts think could amount to many billions of dollars that have gone unmentioned in the energy industry’s annual reports, SEC statements and other filings. The three NGOs warn that “dissemination of false, misleading or intentionally incomplete information about the climate risks associated with fossil fuel products and services to regulators, shareholders and insurers could pose a risk to directors and officers personally.”

Carroll Muffett, president of the Center for International Environmental Law, said the letter campaign is intended both to elicit information and to “start a conversation about climate inside the companies, and with the public and investors.”

That conversation is already well underway in the insurance industry and among the law firms specializing in coverage issues. “Corporations and their management and directors are facing more risks in connection with climate change-related financial disclosures and the potential for shareholder and derivative suits based on alleged climate change-related financial nondisclosures,” wrote two lawyers with Anderson Kill & Olick, an American law firm specializing in insurance issues, in a 2011 article.

So-called directors and officers’ insurance, or D&O policies, which are designed to insulate high-level executives from liability for corporate wrongdoing, usually include exceptions both for misconduct and for pollution, Muffett noted. And many insurers are acutely aware Big Carbon may be courting disaster by denying or minimizing climate risks.

Some eight years ago, Christopher Walker, who headed the greenhouse gas risk solutions unit at Swiss Re, a “reinsurer” that, in essence, insures insurance companies, envisioned a scenario where Swiss Re would tell ExxonMobil that “since you don’t think climate change is a problem, and you’re betting your stockholders’ assets on that, we’re sure you won’t mind if we exclude climate-related lawsuits from your D&O insurance.”

A key element in the liability picture is the fact that 80 percent of the fuel reserves held by Big Carbon can’t be burned without pushing global temperatures well beyond the tipping point for climate catastrophe—yet stock markets use those reserves in valuing energy companies. But if legal action—or the threat of it—suddenly makes clear that hidden costs negate much or all of the value of these energy assets, then capital—especially pension funds and other institutional investors—may migrate to greener pastures.

All of which could be a big part of the answer to the question, raised by Chris Hayes in The Nation in “The New Abolitionism,” as to how Big Carbon might give up its trillions in fuel reserves.

One way of understanding how much global liability Big Carbon might face is the heated struggle in this country over the “social cost of carbon” (or SCC) an estimate of climate-change related economic damages per ton of carbon emissions. The SCC, which puts a price on the impact of sea level rise, flooding, crop damage, increases in wildfires and infectious disease, among other consequences, plays a central role in the Environmental Protection Agency’s regulations on domestic carbon emissions, which are to be unveiled Monday.

Despite a furious counter-offensive by the fossil fuel industry, the federal Office of Management and Budget late last year cited improved scientific modeling in a drastic upward revision of the social cost of carbon to $12 per ton of emissions from $7 in the most optimistic climate model and to $129 from $81 in the most pessimistic scenario. These numbers will play directly into everything from new efficiency standards for microwave ovens to how much carbon coal-fired power plants can emit.

Indeed, coal has become the most urgent target for lawsuits or regulation. Far and away the most destructive fossil fuel, coal accounts for 43 percent of greenhouse gas emissions. Yet the industry is growing with astronomical speed, with the capacity of coal-fired plants increasing by 35 percent since the 2005 Kyoto Protocol, while financing for coal mining has tripled since 2008.

But there is a thin end to the coal wedge: Recent research found that since 2005, this wrongheaded expansion has been funded almost entirely by a group of twenty banks, the top four of which are America’s biggest commercial banks.

Not surprisingly, coal companies, which by and large do nothing but mine coal, see any reliance on the social cost of carbon as a direct threat to their existence and have led the fight against it. But for the banks, coal is just an investment, one their research departments have long warned has dangers. All of which may leave the industry isolated and highly vulnerable.

Some legal theorists say if legal action does come, a revised SCC may become a worldwide metric for just how much Big Carbon has hidden from investors and the public. And how vulnerable it may be to a sudden change of fortune in the courts—and in the court of public opinion.