US oil producer Exxon Mobil is facing a New York lawsuit accusing the company of misleading investors about the potential costs of climate regulation to its business.
The state of New York has filed a lawsuit against Exxon for misleading investors about how climate change regulation could potentially affect its business. According to Exxon, it provided investors with the necessary information and that the accusations are politically motivated.
Exxon's fraud claims trial will begin on Tuesday and is expected to run for 15 days. Among those expected to appear in court is former US Secretary of State Rex Tillerson, who led Exxon for 10 years.
Carroll Muffett, president of the Center for International Environmental Law, said: "It's a major milestone as a part of a growing wave of cases that Exxon and other major oil companies are facing, not only here in the United States, but in fact in jurisdictions around the world."
The financial fraud suit was filed by New York's attorney general in 2018 following years of investigation conducted by state authorities. In the court filings, the state claimed that internal documents reveal that Exxon made evaluations of new projects based on forecasts for costs associated with climate change that were lower than those it told investors it was using, making the investments appear less risky and more valuable.
The state wrote in the filings: "By representing that it was applying higher projected carbon costs than it was actually using, ExxonMobil made its assets appear significantly more secure than they really were, which had a material impact on its share price."
While Exxon does not contest the claims that it used two calculations for the evaluation of costs, it argues that those calculations were "proprietary" and the investors were not misled.
The company claimed: "Reasonable investors who reviewed ExxonMobil's disclosures understood that climate risks factored into ExxonMobil's decision-making, which is all that could have mattered to them."
