Houston (Reuters) – New York Attorney General Sues Exxon Mobil Corp.XOM.N) on Wednesday said that the world's largest oil company has been misleading investors about the risks of climate change regulations for their business for years.
FILE PHOTO: A logo from Exxon Mobil will be displayed shortly after the opening bell in New York, USA, on December 5, 2017 on a monitor above the floor of the New York Stock Exchange. REUTERS / Lucas Jackson / File Photo
The lawsuit, which was filed with the New York Supreme Court in New York County, requires unresolved claims for damages, a court order to review the corporate representation, and that the company corrects "numerous misrepresentations" to investors.
It claims that Exxon has assured investors that they have properly assessed the impact of climate regulations on their business by using "proxy costs" for the likely impact of future events on their business. However, these proxy numbers were often not used in internal planning or cost assumptions, the lawsuit says.
The company has also failed to adequately consider such costs when determining its volume of oil and gas reserves, or to depreciate the value of its assets, an important indicator for investors, the claims.
"The company claimed to include the risk of increasing climate change regulation in its business decisions," said Attorney General Barbara Underwood in a statement. "As our research has shown, Exxon often did not do that."
Exxon "looks forward to refuting these claims as soon as possible and dismissing this honorable civil action," spokesman Scott Silvestri said in a statement.
He continued to describe the lawsuit as "a product of closed-door lobbying by special interests, political opportunism, and the inability of the Justice Minister to admit that a three-year investigation has revealed no wrongdoing."
The lawsuit was filed under the Martin Act, a civil code used by New York prosecutors to prosecute fraudulent investments and other financial companies.
"In that case, the state re-uses the Martin Act as a political weapon," said Lisa Rickard, president of the US Chamber of Law Institute, calling the case "nothing more than a distortion of securities litigation."
Exxon fought unsuccessfully to stop the New York investigation and a similar investigation by the state of Massachusetts claiming that Exxon misleaded consumers with its statements about climate change.
"This is a very significant process," said Ken Kimmell, president of the Union of Concerned Scientists. "The Attorney General of the State of New York has received a lot of documents, and we should assume that they have filed the lawsuit, based on the information obtained during this process."
Exxon and other oil companies including BP Plc (BP.L), Chevron Corp. (CVX.N) and Royal Dutch Shell (RDSa.AS) Lawsuits against cities and districts in the United States seeking funds to pay for banks and other infrastructures against sea-level rise due to climate change.
Reporting by John Benny in Bengaluru and Gary McWilliams in Houston; Editing by Marguerita Choy and Diane Craft