Exxon blames 'special interests' for NY AG's lawsuit over climate-change costs
ExxonMobil (XOM) is accused of deceiving investors by using inconsistent cost projections to account for tightening regulations on greenhouse gas emissions.
In a lawsuit filed Wednesday by the New York Attorney General, Exxon is accused of representing materially false “proxy costs,” projections that factor in risk carried by companies whose assets and business strategies are likely to be impacted by limits on (GHG) greenhouse gas emissions.
Exxon is said to have under-represented future expenses tied to several Canadian oil sands projects by more than $25 billion.
“Exxon built a facade to deceive investors into believing that the company was managing the risks of climate change regulation to its business when, in fact, it was intentionally and systematically underestimating or ignoring them, contrary to its public representations,” New York State Attorney General Barbara Underwood claimed in a press release.
In a statement, Exxon responded to the allegations, calling them “baseless” and “the product of closed-door lobbying by special interests, political opportunism and the attorney general’s inability to admit that a three-year investigation has uncovered no wrongdoing.”
An investigation into Exxon was launched in 2015 by former New York State Attorney General Eric Schneiderman. The initial scope of the probe was to question whether Exxon’s internal research on climate change matched the risk representations it made to its investors.
“There is no evidence to support these allegations,” Exxon said, “which come after a 2016 press conference by former New York Attorney General Eric Schneiderman, Al Gore and other Democrat attorneys general, a discredited media campaign and lobbying by anti-fossil fuel activists.”
Schneiderman is one of several New York attorneys general who aggressively pursed claims of securities fraud under a broad New York statute called the Martin Act. The Act, often referred to as the toughest for defendants in the nation, predates the Securities and Exchange Commission and permits the AG to investigate, prosecute and recover damages in civil fraud actions without proving fraudulent intent.
Rex Tillerson cited in the complaint
Former Exxon CEO and former U.S Secretary of State, Rex Tillerson, is specifically mentioned in the lawsuit, though he is not named as a defendant. The suit claims Tillerson “knew for years that the company was deviating from its public representations by using a second set of proxy costs from undisclosed internal guidance that were lower than the publicly disclosed proxy costs.”
According to the complaint, “Exxon employed internal practices that were inconsistent with its representations, were undisclosed to investors, and exposed the company to greater risk from climate change regulation than investors were led to believe.”
The complaint emphasizes Exxon’s continued responsibility to apply carbon proxy costs, despite President Donald Trump’s June 1, 2017 announcement withdrawing the U.S. from the Paris Agreement. It adds that emission regulations remain in place for governments around the world, as well as for a bipartisan coalition of U.S. states that sidestepped Trump’s action by making independent commitments to low GHG emissions.
The lawsuit seeks a stop to the alleged misrepresentation and a review of Exxon practices, as well as an unspecified amount in damages.
Alexis Keenan is a New York-based reporter for Yahoo Finance. She previously produced live news for CNN and MSNBC and is a former litigation attorney.
Read more:
Why 9 people are suing the e-scooter industry
Winning the Mega Millions is sweeter in some states than others
Big Pharma might fight Trump’s proposed rule mandating drug prices in TV ads
