After years of intense drama and suspense, American multinational oil and gas giant ExxonMobil is finally to court to face charges.
Many state attorneys general have been scrutinizing the oil giant for years over claims that the firm is deliberately misleading investors over its climate change threat. Everything Exxon said to its shareholders is in conflict with what it actually reported.
The Attorney General of New York charges that the oil company realized secretly that its climate change threat was much higher than it publicly disclosed. The problem is whether this difference leads to disappointed investors.
"Exxon actually built a Potemkin village to create the illusion that it fully considered the risks of future climate change regulation," reads last year's complaint from the attorney general. Exxon, based on the complaint, "has been involved in a long-standing fraudulent scheme to deceive investors."
For years, Exxon has told shareholders that its oil and gas reserves will remain profitable to sell when environmental control is possible. After 2007, the organization has reported having implemented a carbon proxy price and its plans could bear the expense.
As a result, there was little cause for concern. However, internally, the New York attorney general claims that the standard was not applied by Exxon and either used a lower proxy cost or none.
The oil sands reserves of ExxonMobil in Canada were particularly noteworthy, both because they were costly and because they are rich in coal. The lawsuit states that understating the weather threat has indicated that Exxon has failed to disclose expenses worth $25 billion.
Exxon underreported $11 billion in expenses for its Kearl oil sands venture in one specific example. Last week, InsideClimate News published a full backstory on the case.
If valid, the result is that Exxon actively sits on resources that could be trapped in a carbon-constrained environment, and at the same time manipulating shareholders about that fact.
In other terms, according to the charges, Exxon had two sets of books that covered billions of dollars in potential costs.
The attorney general claims the "fraud" has been prosecuted "at the company's highest level," including the former chief executive officer, Rex Tillerson. Exxon has denied any misconduct and suspects state prosecutors of being politically swayed.
The company has been actively fighting to steer off the litigation process. Meantime, Massachusetts is lobbying against ExxonMobil in a similar charge.
The company has been against this case for many years, but it was allowed by state and federal courts to proceed with the lawsuit.
