Cities across the U.S. as well as countries are suing oil companies for misleading investors for years on the risks posed by climate change on their businesses.
The state of New York has sued Exxon Mobil Corp alleging that it misled investors for years on the risks posed by climate change regulations on its business.
The suit, filed in New York Supreme Court, New York County, seeks undisclosed damages, seeks a court order for a review of the company’s representations; it also seeks that Exxon corrects its “numerous misrepresentations” to investors.
The suit alleges that although Exxon had assured investors that it had properly evaluated the impact of climate regulations on its business using a “proxy cost” for the likely effects of future events on its business, they were however frequently not used in its internal planning or cost assumptions.
Further, Exxon also failed to properly account for such costs in determining its volume of oil and gas reserves, or whether to write down the value of its assets, a metric important to investors, claims the suit.
“The company claimed to be factoring the risk of increasing climate change regulation into its business decisions,” said Attorney General Barbara Underwood in a statement. “Yet as our investigation found, Exxon often did no such thing.”
In a statement, Exxon’s spokesman Scott Silvestri stated, the company “looks forward to refuting these claims as soon as possible and getting this meritless civil lawsuit dismissed”.
Silvestri described the suit as the “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.”
The suit has been filed under the Martin Act, a civil statute that has been used by New York prosecutors to pursue fraud claims against investment and other financial companies.
“In bringing this case, the state is yet again using the Martin Act as a political weapon,” said Lisa Rickard, president of the U.S. Chamber Institute for Legal Reform, calling the case “nothing more than a contortion of the securities litigation system.”
Incidentally, Exxon has failed earlier to halt the investigation by New York; it had also failed to halt a similar probe by the state of Massachusetts that claims that Exxon misled consumers with its statements on climate change.
“This is a very significant lawsuit,” said Ken Kimmell, president of the Union of Concerned Scientists. “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 Plc, Chevron Corp, and Royal Dutch Shell are facing a slew of lawsuits by cities and counties across the United States.