Exxon Mobil is vigorously denying that it misled investors for years about about the potential impact of climate change on its business, as New York State attorney general Barbara Underwood charged in a lawsuit filed in state Supreme Court in Manhattan yesterday.
“Exxon marketed the company as a secure long-term investment and courted long-term investors such as institutional shareholders, life insurance companies, and pension funds,” the state charges in a statement announcing the action. “… These investors depend on companies to provide complete, accurate information about the value of their assets to make informed investment decisions.”
Besides asking the court to award damages and to order a comprehensive review of Exxon Mobil’s actions, the suit asks for an order prohibiting the company from “continuing to misrepresent its practices in this area, and requiring it to correct its past misrepresentations; in other words, to tell investors the truth.”
Exxon spokesman Scott Silvestri called the lawsuit “tainted” and meritless in an email to the Dallas News’ Jeff Mosier. The company is based in nearby Irving, Tex. “These baseless allegations are a 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,” Silvestri said.
“The U.S. Securities and Exchange Commission also looked into whether the oil giant misled investors about its accounting practices and climate-change risks, but ended the probe earlier this year without penalizing the company,” Corinne Ramey and Bradley Olson report for the Wall Street Journal.
“The New York suit alleges Exxon executives, including former chairman and chief executive Rex Tillerson, knew for years that the company was using a second set of proxy costs, from undisclosed internal guidance, that were lower than the ones publicly disclosed,” they continue.
Yesterday’s litigation “represents the most significant legal effort yet to establish that a fossil fuel company misled the public on climate change and to hold it responsible. Not only does it pose a financial threat to Exxon that could run into the hundreds of millions of dollars or more, but it could also strike a blow to the reputation of a company that has worked to rehabilitate its image, framing itself as a leader on global warming," writes John Schwartz for the New York Times.
“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,” AG Underwood claims.
“This is a very significant lawsuit,” Ken Kimmell, president of the Union of Concerned Scientists, tells Reuters’ John Benny and Gary McWilliams. “The New York state attorney general has gotten a lot of documents and we should assume they filed the suit based on the information received during that process.”
But Lisa Rickard, president of the U.S. Chamber of Commerce’s Institute for Legal Reform, tells the Reuters reporters that the case is “nothing more than a contortion of the securities litigation system.” The organization claims that New York prosecutors have a penchant for using the state’s Martin Act as a political weapon and maintains in a release that “litigation will not help us confront the challenge of climate change.”
But it may force investor relations department to think twice about how it handles potentially adverse information.
“Exxon’s role in covering up the impact of climate change has come to light in the recent years, with the company aware for decades about the consequences of burning fossil fuels only to downplay this in public. The company now says it accepts climate change is real and a threat, even pledging $1 million toward a campaign to put a price on carbon,” The Guardian’s Oliver Milman writes in a piece that was also published elsewhere as part of the Climate Desk journalistic collaboration.
“This support comes with the caveat that mounting lawsuits aimed at making Exxon pay for damage wrought by climate change are dismissed. In July, a federal judge kicked out a lawsuit lodged by New York City that took aim at the five major oil producers, including Exxon,” Milman adds.
Meanwhile, the tweet of the day goes to Milman’s colleague, Guardian technology editor Alex Hern. Linking to the New York Times’ story, he writes: “Who are the real victims of climate change? Why, of course, Exxon shareholders!”