ExxonMobile may have materially misled its investors on the potential costs of climate change, according to the attorney general of New York. The attorney general of Massachusetts is also investigating the company. In a separate case, the Securities and Exchange Commission is looking into whether the company’s oil and gas reserves are over-valued, considering the market and potential restrictions on their use that could arise due to climate change.
The oil giant has commented that it believes the New York probe is politically motivated and called the allegations “inaccurate and irresponsible.”
The New York AG said in a court filing that he has found “potentially materially false and misleading statements by Exxon” in its own documents. These statements tend to show that Exxon may have properly determined the risks of climate change but apparently did not use its own assessments when communicating to investors. Making false or misleading statements to investors violates federal law and the law of most states.
What the AG specifically alleges is this. After estimating the potential risks and costs of a changing climate, Exxon developed what is called a “proxy cost” to take those risks and costs into account. An appropriate proxy cost would be used as a factor in determining whether future projects were likely to be profitable in different circumstances.
Exxon developed the proxy cost, the AG claims, but perhaps only as a sham. If the company had actually applied it in their calculations, the AG says, “at least one substantial oil sands project may have projected a financial loss, rather than a profit.”
AG’s public statements may be meant to pressure Exxon
His court filing came just a day after President Trump announced he was going to renege on the Paris climate accord. Any U.S. withdrawal from that treaty, however, is unlikely to have a positive impact on Exxon’s defense.
As Reuters notes, it is unusual for the public to have this much information about specific allegations in a white collar crime case like this one. More typically, prosecutors complete an exhaustive investigation before revealing information publicly.
In this case, however, Exxon has been fighting the New York AG’s requests for information in both state and federal court. On May 23, a New York appellate court ruled that Exxon should turn over the records requested. Even before that ruling, Exxon had turned over some 2 million documents to the AGs.
Under investigation? Now is the time to hire an attorney
When a company is accused of wrongdoing, both individuals and the company itself can be prosecuted. The most effective time to hire dedicated defense counsel is during the investigation stage, when charges may still be avoided.