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An Exxon station in Florida remains open despite losing its roof during Hurricane Katrina on Aug. 29, 2005. Florida Air National Guard photo by Master Sgt. Shaun Withers
The country’s largest fossil fuel company goes on trial today to face charges that it lied to investors about the safety of its assets in the face of the climate crisis and potential legislation to fight it, as the AP reported.
The lawsuit against ExxonMobil, the country’s second largest emitter of greenhouse gasses after Chevron, accuses the oil behemoth of using fuzzy math to assess its readiness for government regulations to combat the climate crisis. It valued its readiness at two different prices: a high number to investors, but a lower number in internal documents, according to CBS News.
This practice, which Exxon Mobil insists is perfectly legitimate, created the appearance that its oil investments would be more profitable than the company actually thinks they will be. Additionally, the numbers made renewable energy appear like a less attractive investment, as CBS News explained.
New York calls that fraud.
“Exxon in effect erected a Potemkin village to create the illusion that it had fully considered the risks of future climate change regulation and had factored those risks into its business operations,” the lawsuit claims, as CBS News reported. “As a result of Exxon’s fraud, the company was exposed to far greater risk from climate change regulations than investors were led to believe.”
The lawsuit contends that the revenue the company reported to investors should have been billions of dollars lower, alleging that the difference in numbers cost shareholders between 6 million and .6 billion, as CBS News reported.
“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, as the BBC reported.
“It’s a big no-no to tell your investors one thing and do another,” said Pat Tomaino, director of socially responsible investing at Zevin Asset Management, to CBS News.
ExxonMobil says its numbers were truthful and the lawsuit is politically motivated, according to the AP.
“The New York Attorney General’s allegations are false,” Exxon said in a statement, as Reuters reported. “We tell investors through regular disclosures how the company accounts for risks associated with climate change. We are confident in the facts and look forward to seeing our company exonerated in court.”
The trial kicks off in Manhattan today and is expected to last a couple of weeks. It is also expected to hear testimony from former CEO and former U.S. Secretary of State Rex Tillerson, who the suit alleges knowingly ignored the alleged fraud. The trial is at the forefront of a number of cases brought against fossil fuel firms.
“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, to the BBC.
Two weeks ago, Massachusetts filed suit against ExxonMobil for violating the state’s Consumer Protection Act — “by engaging in unfair or deceptive acts” regarding the sale and branding of fossil fuel products, according to the Los Angeles Times. Rhode Island has filed claims against Exxon and BP for damage to its coastline. Investigators in Canada and the Philippines are also exploring legal avenues for holding fossil fuel companies accountable for their role in the climate crisis, according to the BBC.
“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,” said Muffet to the BBC.