Suit claims the oil giant misled investors on climate change risk by abusing 'proxy cost' statements, but Exxon responds suit is 'meritless.'
New York’s attorney general has sued Exxon Mobil Corp, alleging that the world’s largest oil company for years misled investors about the risks of climate change regulations on its business.
‘Proxy cost’ abuse
The suit has been filed in New York Supreme Court seeking undisclosed damages, a court order for a review of the company’s representations, and that the company corrects numerous misrepresentations’ to investors. It is alleged Exxon assured investors 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. However, the suit claims these proxy figures frequently were not used in its internal planning or cost assumptions. Furthermore, the suits states the oil giant failed to account for such costs in determining its volume of oil and gas reserves. The suit comes under the Martin Act, a civil statute used by New York prosecutors to pursue fraud claims against investment and other financial companies, but also experts say is used as a political weapon. Attorney general Barbara Underwood said in a statement, ‘the company claimed to be factoring the risk of increasing climate change regulation into its business decisions,’ and ‘yet as our investigation found, Exxon often did no such thing.’
Exxon spokesman Scott Silvestri said in a statement, said the firm ‘looks forward to refuting these claims as soon as possible and getting this meritless civil lawsuit dismissed.’ He stated the suit is 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 follows an unsuccessful attempt by Exxon to stop the New York investigation and a similar probe by the state of Massachusetts claiming Exxon misled consumers with statements on climate change.