The Attorney General of the State of New York has taken legal action against Exxon Mobil, accusing it of deceiving investors about the financial risk that the company runs by the policies adopted globally to mitigate the effects of the changing climate. The litigation may expose the oil company to other causes for reducing the consequences of these measures.
“The investors deposited their money and trust in Exxon,” says prosecutor Barbara Underwood, “because it guaranteed the long-term value of their shares, claiming that they took into account in their decisions the growing risk of changes in regulation.” But after three years of research, he determines that he “built a façade” to conceal reality in an intentional and systematic way.
Exxon Mobil has been trying to present itself as an energy company aware of the challenge of climate change for the environment, the economy and society as a whole. This outcome, therefore, torpedoes that campaign of image washing. The risks, the prosecutor assures, were underestimated or even ignored despite the fact that he made the opposite known in public.
— NY AG Underwood (@NewYorkStateAG) 24 October 2018
Specifically, it refers to the calculation of costs derived from regulation to restrict greenhouse gas emissions, as well as investment planning, the management of energy reserves and future projections of demand. “They did a lot less than they proclaimed,” insists Underwood, who decides to act less than two weeks before the legislative elections in the United States.
The New York State Attorney’s Office acts because there are two public funds that invest in Exxon Mobil, which manage the retirement plans of more than one and a half million employees.
The approximate value of the shares they have in the oil company is 1,500 million. “The decisions of these investors depend on complete and reliable information about the value of the assets,” he says.
The lawsuit alleges that the company’s top executives were aware of the fraud. He specifically quotes Rex Tillerson, who directed Exxon Mobil until he was nominated two years ago by President Donald Trump as secretary of state. “I knew that the company was deviating from public representation using internal guidelines that were inferior,” he says.
This situation made the oil company’s business more vulnerable to changes in environmental regulation. If the internal cost guide had been higher, he explains, the company should have reduced the value of its assets in a “massive” manner. “The impact of the fraud is significant both for the scale and for the purpose,” he concludes, which is why he demands that these practices be prohibited.