ExxonMobil is being accused of using “sham” accounting to “mislead” investors about the likely financial risks posed by climate change, which New York Attorney General Eric Schneiderman said was evidence of potentially “wide-ranging fraud” executed under the direction of former CEO and current U.S. Secretary of State Rex Tillerson.
In a court filing with the New York state Supreme Court on Friday, Schneiderman’s office said that the oil giant had used “secret, internal figures [that] understated the degree to which Exxon was taking into account the risks of climate change regulations.” These figures “were not as conservative” as the so-called “proxy costs” that the company provided to investors.
According to the filing,
However,
Further, documents provided to the Office of the Attorney General (OAG) “show that former chairman and CEO Rex Tillerson was specifically informed of, and approved of, this inconsistency,” according to the filing, which is the latest development in an ongoing investigation into the company’s decades-long suppression of climate science.
SCROLL TO CONTINUE WITH CONTENT
“These allegations reveal what many of us already claimed: Exxon has been deceiving the public and its own investors on climate change for years,” said Naomi Ages, who heads Greenpeace’s Climate Liability Project. “If Exxon was saying one thing to the public and its shareholders about climate risk while basing its internal decisions on entirely different information, it could certainly amount to fraud.”
The OAG’s accusation also follows the recent discovery that while serving as CEO, Tillerson used an alternate email and alias “Wayne Tracker”to discuss climate-related matters. On May 22, a New York state appeals court ordered Exxon to hand over those emails, which Exxon continues to claim are lost.
Friday’s filing includes a request for witness testimony, which the OAG said is “critical to understanding and potential remedying Exxon’s still-unaccounted-for destruction of documents from key custodians,” referring to the Wayne Tracker emails.
Ages said the charges were “Exxon’s second embarrassment this week,” referring to the passage of a shareholder resolution on Wednesday ordering the company to publish an annual report detailing the risks of climate policies and technological advances to its oil and gas holdings.
Ages described the surprise vote as “public rebuke…for willfully ignoring technological advances and the risk of climate change.”
The resolution specifically states that the assessment must “analyze the impacts on ExxonMobil’s oil and gas reserves and resources under a scenario in which reduction in demand results from carbon restrictions and related rules or commitments adopted by governments consistent with the globally agreed upon 2 degree target,” giving the company less individual discretion over how to account for the risks.
As Greenpeace’s Kelly Mitchell noted, the fact that “large institutional investors” also backed the activist resolution shows that the issue of climate risk is now widely seen as having “deep financial implications.”
Our work is licensed under a Creative Commons Attribution-Share Alike 3.0 License. Feel free to republish and share widely.