American oil giant Exxon Mobil is set to face an unprecedented climate change lawsuit slated o begin in New York.
The case, which has been filed by the New York state, alleged that vital information about the potential costs of climate regulation to its business was withheld by the company – thereby misleading the investors.
While saying that the claims are politically motivated, Exxon claimed that it had shared the necessary information.
This case is one of a number of such cases that are being filed against companies in the oil and gas industry.
It is expected that the trial of fraud against Exxon will last for a period of 15 days. Among those likely to appear in court is former US Secretary of State Rex Tillerson, who led Exxon for a decade.
"It's a major milestone as a part of a growing wave of cases that Exxon and other major oil companies are facing, not only here in the United States, but in fact in jurisdictions around the world," said Carroll Muffett, president of the Center for International Environmental Law.
The state authorities had conducted investigations for years before New York's attorney general decided to file the financial fraud suit in 2018. The costs that were forecast by the company related to climate change and which formed the basis for evaluation of new projects were higher than the value of such costs that the company told its investors about as being used, claimed the state based on information from internal documents of Exxon. Such calculations were done to make investment seem less risky and more valuable.
"By representing that it was applying higher projected carbon costs than it was actually using, ExxonMobil made its assets appear significantly more secure than they really were, which had a material impact on its share price," the state wrote.
At the time when the company was pressed to account for climate change, it was being led by former US Secretary of State Rex Tillerson as its chief executive.
The claims that it used two types of calculation for project cost evaluation have not been disputed by Exxon. But the company claims that investors were not misled and those calculations were "proprietary".
"Reasonable investors who reviewed ExxonMobil's disclosures understood that climate risks factored into ExxonMobil's decision-making, which is all that could have mattered to them," it says.
Exxon has been facing pressures for years from activist investors demanding the company to be more transparent and forthcoming about the impact on its business because of climate change partly in the hope that if companies like Exxon were to come up with accurate evaluation of the financial risks, investments would shift towards more eco-friendly alternatives.
The case filed by the New York state shows the type of experiments that are being carried out by governments to increase accountability of companies for climate change, analysts said.
"Regardless of the outcome [of the New York case] the reality that is clear and not inescapable is that the future of Exxon and [other fossil fuel] companies is filled with litigation and it's only going to grow." Muffett said.
(Source:bbc.com)
The case, which has been filed by the New York state, alleged that vital information about the potential costs of climate regulation to its business was withheld by the company – thereby misleading the investors.
While saying that the claims are politically motivated, Exxon claimed that it had shared the necessary information.
This case is one of a number of such cases that are being filed against companies in the oil and gas industry.
It is expected that the trial of fraud against Exxon will last for a period of 15 days. Among those likely to appear in court is former US Secretary of State Rex Tillerson, who led Exxon for a decade.
"It's a major milestone as a part of a growing wave of cases that Exxon and other major oil companies are facing, not only here in the United States, but in fact in jurisdictions around the world," said Carroll Muffett, president of the Center for International Environmental Law.
The state authorities had conducted investigations for years before New York's attorney general decided to file the financial fraud suit in 2018. The costs that were forecast by the company related to climate change and which formed the basis for evaluation of new projects were higher than the value of such costs that the company told its investors about as being used, claimed the state based on information from internal documents of Exxon. Such calculations were done to make investment seem less risky and more valuable.
"By representing that it was applying higher projected carbon costs than it was actually using, ExxonMobil made its assets appear significantly more secure than they really were, which had a material impact on its share price," the state wrote.
At the time when the company was pressed to account for climate change, it was being led by former US Secretary of State Rex Tillerson as its chief executive.
The claims that it used two types of calculation for project cost evaluation have not been disputed by Exxon. But the company claims that investors were not misled and those calculations were "proprietary".
"Reasonable investors who reviewed ExxonMobil's disclosures understood that climate risks factored into ExxonMobil's decision-making, which is all that could have mattered to them," it says.
Exxon has been facing pressures for years from activist investors demanding the company to be more transparent and forthcoming about the impact on its business because of climate change partly in the hope that if companies like Exxon were to come up with accurate evaluation of the financial risks, investments would shift towards more eco-friendly alternatives.
The case filed by the New York state shows the type of experiments that are being carried out by governments to increase accountability of companies for climate change, analysts said.
"Regardless of the outcome [of the New York case] the reality that is clear and not inescapable is that the future of Exxon and [other fossil fuel] companies is filled with litigation and it's only going to grow." Muffett said.
(Source:bbc.com)