New York Sues Exxon Mobil over Alleged Climate Change Disinformation

State AG accuses oil giant of ‘fraudulent scheme’ to deceive investors.

New York Attorney General Barbara Underwood has filed a lawsuit against Exxon Mobil Corp., alleging  the oil company systematically misled investors regarding the risk that climate change regulations posed to its business. 

The complaint accuses Exxon of perpetrating a “longstanding fraudulent scheme” to deceive investors and the investment community by providing “false and misleading assurances that it is effectively managing the economic risks posed to its business” by climate change, said the lawsuit.

“Instead of managing those risks in the manner it represented to investors,” said the lawsuit, “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.”

Underwood alleges that for years, Exxon assured investors that it was accounting for the likelihood of increasingly strict regulation of greenhouse gas emissions by rigorously and consistently applying an escalating cost of those emissions to its business planning, investment decisions, company valuations, and the amount and value of company reserves and resources.

However, according to the lawsuit, Exxon did not abide by these representations, and instead did much less than it claimed, which misled investors as to the company’s real financial exposure to the effects of climate change.

“Investors put their money and their trust in Exxon –which assured them of the long-term value of their shares, as the company claimed to be factoring the risk of increasing climate change regulation into its business decisions,” Underwood said in a release.

“Instead, 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.”

The complaint also alleges that Exxon’s fraud was “sanctioned at the highest levels of the company.” In one example, it said former Exxon CEO and former US Secretary of State Rex Tillerson knew for years that the company’s representations concerning proxy costs were misleading.

Tillerson allegedly knew that the company was using lower, undisclosed proxy cost figures in its internal guidance, rather than the higher, publicly disclosed proxy costs it used in its public representations, investment decisions, and business planning.

Trevor Neilson, co-founder and CEO of investment firm i(x) investments, welcomed the lawsuit.

“Exxon Mobil engaged in a decades-long scheme to obfuscate clear scientific findings about their impact, fueling climate change denial which has no basis in scientific fact,” said Neilson in a release. “This lawsuit shows they followed the playbook of the tobacco industry, deceiving investors and other stakeholders.”

And the Union of Concerned Scientists, which has issued  reports on oil companies’ practice of disinformation for years, said the lawsuit was a significant step toward holding fossil fuel companies accountable for distorting climate science and misleading investors and the public about climate change.

“Exxon Mobil has a long track record of acknowledging facts about climate change privately and spreading disinformation publicly, and continues to do so today,” Peter Frumhoff, the Union of Concerned Scientists’ director of science and policy, said in a release. “Cities and counties across the country are filing lawsuits to seek compensation from Exxon Mobil for the costs of climate damages and adaptation. Now we’ll learn whether and how the company defrauded shareholders.”

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