ExxonMobil Cleared of Climate Change Fraud Charges
ExxonMobil has been cleared of fraud charges in New York State relating to how it informed investors about accounting for the cost of future climate change regulation.
In his 55-page ruling, New York State Supreme Court Justice Barry Ostrager said the Attorney General’s office didn’t prove that the company had violated the Martin Act, a anti-fraud statute. Ostrager wrote, “What the evidence at trial revealed is that ExxonMobil executives and employees were uniformly committed to rigorously discharging their duties in the most comprehensive and meticulous manner possible….The testimony of these witnesses demonstrated that ExxonMobil has a culture of disciplined analysis, planning, accounting and reporting.”
ExxonMobil has issued a statement saying: “We provided our investors with accurate information on the risks of climate change. The court agreed that the Attorney General failed to make a case, even with the extremely low threshold of the Martin Act in its favor.
“Lawsuits that waste millions of dollars of taxpayer money do nothing to advance meaningful actions that reduce the risks of climate change. ExxonMobil will continue to invest in researching breakthrough technologies to reduce emissions while meeting society’s growing demand for energy.”
However, New York Attorney General Letitia James said in a statement: “As Rex Tillerson admitted at trial, all investors are entitled to the truth. For the first time in history, ExxonMobil was compelled to answer publicly for their internal decisions that misled investors. The oil giant never took seriously the severe economic impact that climate change regulations would have on the company, contrary to what they were telling the public. Throughout this case, we laid out how Exxon made materially false, misleading and confusing representations to the American people about the company’s response to climate change regulations.” James says that despite this decision, the Office will “continue to fight to ensure companies are held responsible for actions that undermine and jeopardize the financial health and safety of Americans across our country, and we will continue to fight to end climate change.”
“The judge’s ruling is inexplicable,” said Andrew Behar, CEO of As You Sow. “When a company says one thing and does another, red flags should be flying in the investment community and in the courts. Discounting the critical importance of providing clear, accurate, and reliable material information to investors sends a very dangerous signal to companies and the investing community at large.”
In 2014, As You Sow and Arjuna Capital Management filed a shareholder resolution at ExxonMobil asking the company for a report on the risk of stranded assets due to climate change related factors. In the negotiations following, ExxonMobil agreed to provide a report which formed part of the basis of the lawsuit by the New York Attorney General’s Office. The report concluded that, “We are confident that none of our hydrocarbon reserves are now or will become ‘stranded.’” This was prior to ExxonMobil writing down 19.3 percent of its oil reserves in high-carbon tar sands in Canada.
In November, ExxonMobil announced estimated third quarter 2019 earnings of $3.2 billion. The company continues to face similar climate change related fraud accusations in other U.S. states.