The New York state administration in the US has filed a lawsuit against Exxon Mobil, which is accusing of defrauding its investors by significantly understating the potential risks of climate change regulations to its business.
Filed by New York Attorney General Barbara Underwood, the lawsuit comes after years of investigation by state authorities into the company’s public disclosures about climate change.
The litigation alleged that Exxon Mobil gave assurances to investors that it had fully accounted for the risks associated with new greenhouse gas regulations.
However, in reality, the company wilfully ignored the potential costs of these regulations.
The complaint accused the company of using different cost figures internally for the impact on its business from future regulations than those disclosed to investors.
In a statement, Underwood said: “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, contrary to its public representations.”
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below formBy GlobalData
Underwood went ahead in claiming that the company’s former CEO Rex Tillerson was aware of the misrepresentations for years.
The suit said: “Tillerson allowed the significant deviation to continue uncorrected for years.”
In response to the legal action, Exxon Mobil spokesperson Scott Silvestri issued a statement, denying the charges and calling the suit as politically-motivated.
Silvestri said: “The baseless allegations are a 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 company looks forward to refuting these claims as soon as possible and getting this meritless civil lawsuit dismissed.”
The lawsuit was brought under the Martin Act, a state law that allows prosecutors to investigate and prosecute securities fraud.
Last month, Exxon Mobil announced that it will join a global climate change programme, known as the Oil and Gas Climate Initiative (OGCI), which aims to mitigate the risks of climate change.