The state of California brought a lawsuit against Exxon alleging the company’s false claims about recycling led to a plastic pollution crisis. In the 1970s and 1980s, public outcry over plastic pollution was growing and many in the petrochemical industry foresaw government regulations limiting the use of plastics. Exxon and other petrochemical companies advanced plastic recycling as a solution, quelling opposition to new production. However, according to the lawsuit, Exxon had internal knowledge that the technology and processes were not feasibly scalable. The lawsuit alleges that:
“For decades, ExxonMobil aggressively touted mechanical recycling – recovering plastic waste by mechanical processes such as sorting, washing, drying, grinding, heating, re-granulating and compounding – to calm public and legislative pressure against the plastic waste and pollution crisis. ExxonMobil promoted mechanical recycling through its predecessors Exxon Chemical and Mobil Chemical, and through activities of its agents, servants, alter-egos and/or abettors. Meanwhile, internal discussions paint a vastly different picture – ExxonMobil always knew that recycling would never solve the plastic waste and pollution crisis and never intended to fund long-term recycling projects.”
There are significant parallels between this case and other ESG cases currently in the works. The case is similar in structure to California’s ongoing litigation against major oil companies (including ExxonMobil) arguing that they knew the effects of burning fossil fuels and purposefully misled the public. Like the climate case, the plastics lawsuit also seeks to create an abatement fund forcing Exxon to pay the cost of solving the plastic pollution crisis.
Core claims of the case are similar to those in the SEC’s recent enforcement action against Keurig, though on a significantly larger scale. In its response, Exxon heavily relies on its new research into “advanced recycling,” though California argues that the program is a similar distraction to its precursors and that Exxon is concealing technical limitations. Akin to Keurig, Exxon lists “advanced recycling” under its “Key Recent Events” in its 2023 10-K, stating:
“ExxonMobil started up one of North America’s largest advanced recycling units at our integrated manufacturing complex in Baytown, Texas. This facility uses proprietary technology to break down hard-to-recycle plastics and transform them into raw materials for new products. It is capable of processing more than 80 million pounds of plastic waste per year, supporting a circular economy for post-use plastics and helping divert plastic waste currently sent to landfills.”
If California is right and Exxon is misrepresenting the abilities of its “advanced recycling” program, the company could see SEC enforcement similar to Keurig.
Our members can learn more about ESG regulatory enforcement here.
If you aren’t already subscribed to our complimentary ESG blog, sign up here for daily updates delivered right to you.
Photo credit: Robert – stock.adobe.com
