Quantcast

Will This Case Finally Bring Down ExxonMobil’s Culture of Climate Deception?

Popular
On Oct. 24, New York Attorney General Barbara Underwood filed lawsuit against ExxonMobil for defrauding investors regarding the financial risks the company faces from climate change regulations. New York Attorney General's Office

By Elliott Negin

New York State Attorney General Barbara Underwood recently filed what could be an enormously consequential securities fraud lawsuit against ExxonMobil, exposing in great detail the company's long history of lying about issues related to climate change.


According to the findings of the AG's investigation, ExxonMobil kept one set of numbers internally about the likely future costs of carbon-emission rules while using another set for its shareholders that it knew to be false. For internal planning purposes, the company low-balled estimates for the cost per ton of carbon that would likely be imposed by regulation to make its projects appear to be more profitable. Meanwhile, the company told its shareholders it was using a higher, more plausible, price when determining its projects' long-term economic viability. By doing so, the complaint charges, ExxonMobil deceived its investors, falsely assuring them that its oil and gas reserves would not become unusable for economic reasons—what the industry refers to as "stranded assets."

The 97-page legal complaint is chock-full of examples of ExxonMobil reports and statements that deceived shareholders about the likely cost of carbon-emission standards. It charges the company with "a longstanding fraudulent scheme" that "was sanctioned at the highest levels of the company."

Just as the notorious Prohibition-era gangster Al Capone was ultimately brought down on tax fraud charges despite a long rap sheet of murder and mayhem, the case raises the prospect that New York's unique securities fraud law, the Martin Act, could be the legal tool that holds the company accountable for a culture of deception about climate change that spans decades.

The legal complaint cites one notable corporate statement titled "ExxonMobil and the carbon tax" in which the company reiterated its dubious contention that it supports a carbon tax. In fact, ExxonMobil has never publicly supported an actual carbon tax bill and has consistently funded members of Congress who oppose the idea. The company did get some positive press recently for pledging to donate $1 million to Americans for Carbon Dividends, a new lobby group promoting a revenue-neutral carbon tax, but the group's plan would pre-empt climate-related lawsuits against fossil fuel companies and eliminate federal regulations curbing carbon emissions.

ExxonMobil also has long lied about its ongoing support for climate science denier groups. In 2007, a company vice president claimed it stopped funding them after the Union of Concerned Scientists revealed that ExxonMobil had spent millions of dollars on dozens of groups to sow doubt about the reality and seriousness of climate change. The company's own corporate giving reports show that it continues to fund them to this day. From 1998 through last year, ExxonMobil spent at least $36 million on climate science disinformation groups, more than any other funder besides Charles and David Koch, the multibillionaire owners of Koch Industries.

The bottom line of the New York AG's complaint is that, when calculating costs for major projects, ExxonMobil "assumed, contrary to its representations [to investors], that existing climate regulation would remain in place, unchanged, indefinitely into the future."

What would make ExxonMobil so confident that currently weak-to-nonexistent carbon-emission standards would remain the same? Likely its success over the past 20 years in stifling meaningful government action. After all, ExxonMobil and the rest of the US fossil fuel industry have spent enough money on their friends in Congress that a critical mass of them deny the reality of human-driven climate change. So, as long as fossil fuel industry-funded groups continue to provide lawmakers with bogus studies and ply the news media with industry mouthpieces, it is not surprising that ExxonMobil believed it could maintain the status quo.

As the New York AG complaint shows, however, ExxonMobil's strategy relied on the belief that it could get away with privately counting on business as usual while telling investors it was taking into full consideration the risks to its business posed by the global effort to dramatically curb carbon emissions. When it comes to defrauding investors in New York state, this looming court battle may prove the company wrong.

Elliott Negin is a senior writer in the Communications Department at the Union of Concerned Scientists.

EcoWatch Daily Newsletter

Pixabay

By Lisa Wartenberg, MFA, RD, LD

Pears are sweet, bell-shaped fruits that have been enjoyed since ancient times. They can be eaten crisp or soft.

Read More Show Less
Photon-Photos / iStock / Getty Images Plus

The desert of Australia's Northern Territory has the iconic Ayers Rock, but not much else. Soon, it may be known as home to the world's largest solar farm, according to the Guardian.

Read More Show Less
Sponsored
Golde Wallingford submitted this photo of "Pure Joy" to EcoWatch's first photo contest. Golde Wallingford

EcoWatch is pleased to announce our third photo contest!

Read More Show Less
A Boeing 737-800 BCF (Boeing Converted Freighter) is marked "Prime Air" as part of Amazon Prime's freight aircraft during the 53rd International Paris Air Show at Le Bourget Airport near Paris, France on June 22. Mustafa Yalcin / Anadolu Agency / Getty Images

It's Prime Day! The day when thousands of increasingly absurd items are discounted so deeply that you suddenly need items you never knew existed. Yes, I do need a hotdog shaped toaster next to me while I watch this Fast & Furious seven movie box set! And I need it in my house today!

Read More Show Less

By Peter Sinclair

The weather in many areas across the U.S. has been – and certainly throughout America's heartland was for much of the past winter and spring – frightful.

Read More Show Less
Sponsored
There's a short window between when a tick bites and when it passes on bacteria or virus. MSU Ag Communications, Courtesy Dr. Tina Nations, CC BY-ND

By Jerome Goddard

When it comes to problems caused by ticks, Lyme disease hogs a lot of the limelight. But various tick species carry and transmit a collection of other pathogens, some of which cause serious, even fatal, conditions.

Read More Show Less
tomosang / Moment / Getty Images

By Jessica A. Knoblauch

Say goodbye to one of the dreamiest things about childhood. In the Midwest, fireflies are dying off.

Read More Show Less
A new Climate Emergency Fund contains more than $625,000 which will go to grassroots climate action groups like Extinction Rebellion and students who have organized weekly climate strikes all over the world. @ExtinctionR / Twitter

By Julia Conley

Heeding the call of grassroots campaigners, several wealthy philanthropists announced Friday a new fund that will raise money for climate action groups around the world.

Read More Show Less