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New York AG: Exxon misled investors about climate risks

The potential victims include the state and teachers pension systems, which have a combined $1.5 billion in Exxon stock, the attorney general said.

New York State's lawsuit against ExxonMobil says the

New York State's lawsuit against ExxonMobil says the company told its investors it included a "proxy cost" to account for the potential damage to assets by global warming, but in many cases executives used a lower proxy cost or none at all. Photo Credit: AP / Mark Humphrey

ALBANY — State Attorney General Barbara Underwood on Wednesday sued ExxonMobil, claiming the energy company defrauded its investors by playing down the threat that global warming poses to its business.

The civil lawsuit accuses the company and its top executives, including former CEO Rex Tillerson, the former secretary of state appointed by President Donald Trump, of failing to reveal inside information about the risks to the company posed by climate change while publicly opposing advocates of such change.

Specifically, the company told investors that it was accounting for the likelihood of greater regulation of greenhouse gas emissions by applying an escalating cost to these emissions in its business plans, including the projections for future gas and oil as fossil fuels become more expensive for consumers.

"However, Exxon did not abide by these representations and instead did much less than it claimed," the lawsuit charges.

A spokesman for ExxonMobil said the lawsuit is more of a “tainted, meritless investigation” by the attorney general into the role of energy companies in the face of the threat of global warming.

“These 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,” said ExxonMobil spokesman Scott J. Silvestri. “There is no evidence to support these allegations.”

The novel approach to hold ExxonMobil accountable for its contributions to global warming came in a summons Wednesday. The Texas-based company must respond to Underwood’s claim within 20 days, according to the court filing.

“Exxon made material misrepresentations and omitted to disclose material facts,” Underwood stated in the lawsuit. She said that’s a violation of state law designed to protect investors from companies acting in such a way — in this case promoting fossil fuels — when company executives knew there was a threat to the company’s value because of global warming.

The crux of the complaint is that ExxonMobil told its investors it included a “proxy cost” to account for the potential damage to assets by global warming, but in many cases executives used a lower proxy cost or none at all, according to the lawsuit.

If successful, the company would have to compensate investors for the deception and pay any state fines or penalties.

The potential victims include millions of New Yorkers. The state pension system for local and state government workers and the state teachers’ pension system have a combined $1.5 billion in Exxon stock, Underwood said.

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