ClientEarth has written to BP, Glencore and investors warning of the risk of investor law suits based on statements about future fossil fuel demand in their reporting.
Both companies publish scenarios for future commodity demand in official reporting documents that paint a picture at odds with expert analysis, ClientEarth said.
ClientEarth senior lawyer Alice Garton said: “Fossil fuel majors are facing unprecedented disruption to their business models. By continuing to offer bullish forecasts, BP and Glencore could be setting themselves up for future problems.
“We wrote these letters to warn the two companies of the potential for future claims but also to encourage investors to engage with the companies and encourage them to move away from self-serving scenarios when reporting on likely future trends for their business.”
BP’s statement in its annual report about its ‘base case’ being “the most likely path for energy to 2035” does not tally with multiple independent analyses of future oil demand – including some of BP’s industry peers, according to ClientEarth.
In ClientEarth’s opinion, Glencore’s annual report risks future investor action because it relies on assumptions about the future for coal markets that have been challenged by independent expert analysis and does not address significant market trends that may depress coal demand. This could provide investors with a misleading impression of the business’ future viability.
Alice Garton added: “It matters to all of us that fossil fuel companies are realistic about the risks facing their business models. If BP and Glencore persist with bullish forecasts, and these are found to be fraudulent in the future, the only ones who will profit are the class action lawyers”.
BP replied to ClientEarth’s letter and said: “BP considers that our disclosures regarding the matters discussed in your letter are appropriate.”