Did California Municipalities’ Debt Disclosures Contrast with Climate Warnings?
Seeking Alpha, a crowd-sourced content service for financial markets, reports this morning that municipalities may have misled investors and bond insurers about climate risk. There are at least seven local governments in California that are suing the oil and gas industry in an effort to hold them financially responsible for rising sea levels. However, when they sold debt to investors in the form of bonds, the same communities indicated they were entirely unsure whether they are vulnerable to the effects of climate change. The report highlights the climate hypocrisy coming from the local governments’ lawsuit.
It appears that some California communities are eager to point out the costs of climate change when it’s politically convenient, but they are apparently willing to ignore the issue when it’s financially expedient. The disparity between what these local governments alleged in their lawsuits against the energy industry and what they disclosed to investors in their bond offerings can lead some to believe that these governments may have committed fraud.
The National Association of Manufacturers (NAM) weighed in on the report with a statement, and an portion of the statement reads:
The level of potential coordination is suspect and the conflicting representations the parties appear to have made suggest two possible conclusions: either the claims against energy manufacturers are frivolous, or the municipalities have made misleading, and perhaps fraudulent, statements to investors. Either way, the integrity of the lawsuits and the government officials and lawyers behind them has been called into question.
It is going to be interesting to see what happens as a result of this revelation.