In only the second climate change trial in the U.S., Exxon Mobil goes to court Tuesday accused of defrauding shareholders and the public. New York’s attorney general brought the suit, which alleges that the oil giant misrepresented how carbon regulation would affect the company’s financial outlook.
The case goes back to 2015, when stories by InsideClimate News and the Los Angeles Times found that while Exxon’s scientists were inwardly researching climate change to plan its operations, the company was outwardly casting doubt on global warming.
Those reports spurred investigations in New York and Massachusetts, which may file its own suit. “There’s nothing wrong with advocating for your own company. What you’re not allowed to do is commit fraud,” then-New York Attorney General Eric Schneiderman told PBS NewsHour.
The case is before the New York state Supreme Court in Manhattan and is being prosecuted by Letitia James, who was elected state attorney general last year.
New York argues that Exxon used two different ways to calculate carbon costs and wasn’t clear when it was using one or the other.
“Exxon provided false and misleading assurances that it is effectively managing the economic risks posed to its business by the increasingly stringent policies and regulations that it expects governments to adopt to address climate change,” the state wrote in a complaint last year.
“Instead of managing those risks in the manner it represented to investors,” it says, “Exxon employed internal practices that were inconsistent with its representations, were undisclosed to investors, and exposed the company to greater risk from climate change regulation than investors were led to believe.”
The lawsuit claims that this had the effect of making Exxon’s assets appear more secure than they really were, which in turn affected its share price and defrauded investors.