Exxon faces trial for defrauding investors over climate change

This is the first of several climate-related lawsuits pending against major oil companies slated to go to trial.

Exxon Climate
The lawsuit claimed Exxon falsely told investors it had properly evaluated the impact of future climate regulations on its business [File: Jennifer Hiller/Reuters]

Exxon Mobil Corp on Tuesday was due to go on trial in the United States, facing a lawsuit by New York State’s attorney general accusing the energy giant of misleading investors about the risks of climate change regulations to its business.

The trial, which is expected to begin before Justice Barry Ostrager in Manhattan Supreme Court and which could last up to three weeks, may feature testimony from Rex Tillerson, who was Exxon’s chief executive before serving as US Secretary of State under President Donald Trump.

It is the first of several lawsuits currently pending against major oil companies related to climate change to go to trial.

“The New York Attorney General’s allegations are false,” Exxon said in a statement. “We tell investors through regular disclosures how the company accounts for risks associated with climate change. We are confident in the facts and look forward to seeing our company exonerated in court.”

The New York attorney general’s office had no immediate comment on Monday.

The attorney general sued Exxon in October 2018 under the Martin Act, a New York State law that had been used primarily to go after financial fraud.

The lawsuit claimed Exxon falsely told investors it had properly evaluated the impact of future climate regulations on its business using a “proxy cost” of up to $80 per tonne of carbon emissions.

However, these proxy figures frequently were not used in its internal planning or cost assumptions, according to the lawsuit.

The attorney general also accused the company of failing to account properly for the costs of potential regulation in determining the value of its oil and gas reserves.

The state of Massachusetts is separately investigating whether Exxon concealed its knowledge of the role that fossil fuels play in climate change.

Both Massachusetts and New York states began investigating Exxon after news outlets reported in 2015 that the company’s own scientists had determined that fossil fuel combustion must be reduced to mitigate the impact of climate change.

Those reports, by InsideClimate News and the Los Angeles Times, were based on documents from the 1970s and 1980s. Exxon said the documents were not inconsistent with its public positions.

Exxon and other oil companies including BP Plc, Chevron Corp and Royal Dutch Shell Plc face lawsuits by cities and counties across the US seeking funds to pay for seawalls and other infrastructure to guard against rising sea levels brought on by climate change.  

Source: Reuters