Exxon Mobil Corporation XOM is at the center of a legal battle as California Attorney General Rob Bonta announced a lawsuit against the company, accusing it of misleading the public about the impact of plastic recycling. The lawsuit, unveiled during New York City's Climate Week, stated that ExxonMobil is engaged in a decades-long campaign to downplay the limitations of plastic recycling, contributing to the global plastic waste crisis.
XOM Defends Advanced Recycling Amid California's Claims
Per a Reuters report, Bonta claimed that ExxonMobil is engaged in a decades-long campaign of deception by promoting its "advanced recycling" technology while downplaying the limitations of traditional recycling. According to Bonta, this contributed to the exacerbation of the global plastic crisis. He further argued that ExxonMobil’s technology, which uses pyrolysis to convert plastic waste into fuel, has made slow progress, raising doubts about its effectiveness.
However, the company has firmly rejected the accusations, stating that its recycling efforts, which processed more than 60 million pounds of plastic waste, are a positive step toward reducing landfill waste. A spokesperson for ExxonMobil, Lauren Kight, criticized California for resorting to legal action rather than collaborating to address the problem.
XOM Faces Growing Scrutiny From Environmental Groups
The lawsuit has garnered support from several environmental groups, including the Sierra Club and Oceana, which argue that ExxonMobil's recycling narrative has slowed progress on meaningful plastic waste solutions. Environmental advocates are calling for increased accountability from ExxonMobil and other petrochemical giants as negotiations for a global plastic treaty approach.
Legal Challenges for XOM Amid Public Nuisance Claims
Despite the lawsuit's high-profile nature, legal experts predict that California could face significant challenges. Notre Dame Law Professor Bruce Huber pointed out that the state's reliance on public nuisance law may complicate the case, given its broad legal implications. The lawsuit highlights ongoing tensions between environmental advocates, state governments and major oil companies over the environmental impact of plastic production and waste.
XOM’s Zacks Rank & Key Picks
ExxonMobil currently carries a Zack Rank #3 (Hold).
Investors interested in the energy sector may look at some better-ranked stocks like TechnipFMC plc FTI, Core Laboratories Inc. CLB and VAALCO Energy, Inc. EGY, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
TechnipFMC is a leading manufacturer and supplier of products, services and fully integrated technology solutions for the energy industry, with a focus on the subsea segment in offshore basins worldwide. FTI’s growing backlog ensures strong revenue visibility and supports margin improvements.
The Zacks Consensus Estimate for FTI’s 2024 EPS is pegged at $1.34. The company has a Zacks Style Score of B for Value and A for Growth. It has witnessed upward earnings estimate revisions for 2025 in the past 30 days.
Core Laboratories, an oilfield services company, has a deep portfolio of sophisticated, proprietary products and services that positions it to take advantage of the growing maturity in the global hydrocarbon reserve base. CLB’s expanding international upstream projects indicate a positive trajectory for revenues and profitability, especially as oil demand continues to rise globally.
The Zacks Consensus Estimate for CLB’s 2024 EPS is pegged at $0.95. The company has a Value Score of B. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.
VAALCO Energy is an independent energy company involved in upstream business operations, with a diversified presence in Africa and Canada. Having a large inventory of drilling locations in premium Canadian Acreage, the company’s production outlook seems bright.
The Zacks Consensus Estimate for EGY’s 2024 EPS is pegged at $0.65. The company has a Value Score of A. It has witnessed upward earnings estimate revisions for 2024 in the past 30 days.
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