Risk Management

New York A.G. Sues Exxon Over Misstating Climate Risks

The suit alleges the oil giant did not adequately address the costs of climate regulations.
William SprouseOctober 25, 2018
New York A.G. Sues Exxon Over Misstating Climate Risks

The New York Attorney General has filed a lawsuit in New York Supreme Court, New York County, against Exxon Mobil, the world’s largest oil company, alleging it misled investors about the risks of climate change regulations on its business.

A complaint filed in New York’s Supreme Court said Exxon Mobil assured investors it had properly evaluated the impact of climate regulations, using a “proxy cost” for the likely effects of future events. However, according to the complaint, the proxy numbers were frequently not used in planning. The complaint also alleges that Exxon did not account for such costs in determining its volume of oil and gas reserves, or whether to write down the value of its assets.

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The suit seeks undisclosed damages and a court order for a review of the company’s representations. It is also seeking that the company correct “numerous misrepresentations” to investors.

The complain alleges that high-ranking executives, including former Chief Executive Rex Tillerson, knew about the alleged fraud.

“The company claimed to be factoring the risk of increasing climate change regulation into its business decisions,” Attorney General Barbara Underwood said in a statement. “Yet, as our investigation found, Exxon often did no such thing.”

“This is a very significant lawsuit,” Ken Kimmell, president of the Union of Concerned Scientists, said. “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.”

Oil companies including Exxon, BP, Chevron, and Royal Dutch Shell are facing lawsuits by cities and counties across the United States seeking funds to pay for seawalls and other infrastructure to guard against rising sea-levels brought on by climate change.

In a statement, a spokesperson for Exxon Mobil said the company “looks forward to refuting these claims as soon as possible and getting this meritless civil lawsuit dismissed.”

Lisa Rickard, president of the U.S. Chamber Institute for Legal Reform, said the case was a contortion of the securities litigation system. ““In bringing this case, the state is yet again using the Martin Act as a political weapon,” she said.

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