Exxon denies that it misled investors on climate risks

Exxon denies that it misled investors on climate risks

NEW YORK — Climate change may be the defining risk for oil and gas companies in coming decades, and attorneys for New York state are saying Exxon Mobil misled investors about how it was handling that risk.

The state made closing arguments Thursday in a case that accused the energy giant of downplaying the impact of stricter climate regulations in a warming world.

Exxon countered that the company has been taking climate change risks seriously and its executives did nothing wrong.

The lawsuit, brought by New York State Attorney General Letitia James, says Exxon Mobil used two sets of books to account for how potential regulations would impact its business.

“The question in this case is whether Exxon’s disclosures were accurate, and the evidence shows they were not,” said attorney Jonathan Zweig, arguing for the state.

In shareholder meetings and reports, Exxon was using two different metrics to account for stricter climate regulations: greenhouse gas costs, which measure how local regulators may tax emissions, and proxy costs, which aim to predict how demand for oil and gas may change around the world due to regulations. Exxon attorneys and executives have said the company applied appropriate costs depending on the situation.

But the state says Exxon was conflating these concepts, leading investors to believe the company was applying a projected cost of $80 per ton for its emissions when it was not, and making some oil and gas development projects look more attractive to investors, Zweig said.

“Exxon applied much lower costs or no costs at all,” Zweig said.

For example, Exxon made an $850 million investment into a chemical facility in Beaumont, Texas, but didn’t apply the appropriate greenhouse gas costs in its projections, Zweig said. Instead, “Exxon was making a business as usual assumption that existing law would be frozen in place forever,” Zweig said.

In assessing an oil sands project in Alberta, Canada, Exxon assumed costs would remain flat through 2030 and 2040, instead of applying escalating costs for the likelihood of increasingly stringent climate regulation, Zweig said.

“The reality is that many investors, including some of the largest financial firms in the world, believe there is a real likelihood that governments will rise to the challenge of climate change,” Zweig said.

Exxon Mobil denied the charges, saying the energy giant developed internal metrics to determine how future climate regulations would impact its business.

“Exxon Mobil took climate risk seriously,” said Ted Wells, an attorney from law firm Paul, Weiss, Rifkind, Wharton & Garrison who represented Exxon. “This is not a case where we said one thing to the public externally and ignored it internally. We did what we said, and we showed you the model so you could see it.”

Exxon denied using two sets of books and said its executives made it clear they were applying greenhouse gas costs or proxy costs where appropriate, because each situation is different.

In Alberta, Exxon executives drilled down on the greenhouse gas issue and decided to use existing local regulations in their projections because they did not think politicians would escalate their policies, Wells said.

New York failed to prove investors were harmed because none of the state’s witnesses were investors who read Exxon’s reports and later said they felt misled, he said.

“I’m not saying they have to bring hundreds of investors into the courtroom, but they’ve got to bring somebody,” Wells said.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Red Deer Rebels forward Ethan Rowland battles with Medicine Hat Tigers forward Brett Kemp during WHL action at the Centrium Saturday night. (Photo by ROB WALLATOR/Red Deer Rebels)
Tigers claw back, hand Rebels 11th straight loss

Tigers 5 Rebels 2 The same old issues continue to plague the… Continue reading

There were six additional deaths across Alberta reported over the past 24 hours, bringing the death toll to 1,926 since the beginning of the pandemic. (File photo)
AstraZeneca vaccine is ready to be used at a homeless shelter in Romford, east London, Wednesday, Feb. 3, 2021. THE CANADIAN PRESS/AP-Frank Augstein
AstraZeneca-linked blood clot confirmed in Alberta

A case of an AstraZeneca-linked blood clot has been confirmed in Alberta,… Continue reading

The Red Deer Catholic Regional Schools Board of Trustees selected the name St. Lorenzo Ruiz Middle School to be built in the north end of Red Deer. (Photo Courtesy of  Red Deer Catholic Regional Schools)
Red Deer Catholic Regional Schools raises about $8,720 for Terry Fox Foundation

Red Deer Catholic Regional Schools raised about $8,720 for the Terry Fox… Continue reading

A nurse gets a swab ready at a temporary COVID-19 test clinic in Montreal, on Friday, May 15, 2020. Health Canada has reversed course on home test kits for COVID-19, saying it will now review applications for such devices. THE CANADIAN PRESS/Paul Chiasson
Alberta declines Ontario’s request to send health-care workers

Alberta is “not in a position” to send health-care workers out of… Continue reading

Red Deer Public Schools will not pilot the new draft curriculum at its elementary schools. (File photo contributed by Red Deer Public Schools)
UPDATED: Red Deer Public Schools says no to piloting new curriculum

Alberta Teachers’ Association support school boards

Ontario Premier Doug Ford points on a COVID-19 caseload projection model graph during a press conference at Queen's Park, in Toronto, Friday, April 16, 2021. Ontario was set to backtrack on controversial new police powers to enforce stay-at-home orders implemented in the battle against COVID-19.THE CANADIAN PRESS/Frank Gunn
Ford backtracks on new police COVID-19 powers amid intense backlash

TORONTO — Furious criticism of new anti-pandemic powers that allow police in… Continue reading

The official program for the National Commemorative Ceremony in honour of Prince Philip, The Duke of Edinburgh, sits on an empty pew prior to the ceremony at Christ Church Cathedral in Ottawa on Saturday, April 17, 2021. THE CANADIAN PRESS/Sean Kilpatrick
Prince Philip remembered as ‘a man of great service’ during Canada’s memorial service

Canada’s commemorative ceremony in honour of the late Prince Philip offered a… Continue reading

CF Montreal head coach Wilfried Nancy speaks to his players during the team's practice Tuesday, March 16, 2021 in Montreal. THE CANADIAN PRESS/Ryan Remiorz
CF Montreal puts on a show, defeating Toronto FC 4-2 in MLS season opener

FORT LAUDERDALE, Fla. — CF Montreal, carving open Toronto FC’s defence, cruised… Continue reading

Demonstrators using umbrellas as shields approach a point in a perimeter security fence during a protest over the fatal shooting of Daunte Wright during traffic stop, outside the Brooklyn Center Police Department, Friday, April 16, 2021, in Brooklyn Center, Minn. (AP Photo/John Minchillo)
Journalists allege police harassment at Minnesota protests

Some journalists covering protests over the police fatal shooting of Daunte Wright,… Continue reading

A container ship is docked in the Port of Montreal, Wednesday, February 17, 2021 in Montreal.THE CANADIAN PRESS/Ryan Remiorz
Montreal dockworkers begin weekend strikes as talks drag on

MONTREAL — Dockworkers at the Port of Montreal kicked off a series… Continue reading

Brad Dahr, 53, is facing numerous charges. (Photo contributed by Alberta RCMP)
Alberta man charged for alleged sexual offences against children

An Edmonton man has been charged for alleged sexual offences against children… Continue reading

A person walks past a COVID-19 mural designed by artist Emily May Rose on a rainy day during the COVID-19 pandemic in Toronto on Monday, April 12, 2021. Employment lawyers say flouting COVID-19 public health orders when off the job or coming into work while knowingly sick could warrant discipline in the workplace. THE CANADIAN PRESS/Nathan Denette
Risky pandemic behaviour off the clock could mean workplace discipline: lawyers

CALGARY — Employment lawyers say flouting COVID-19 public health orders when off… Continue reading

Vials containing Russia's Sputnik V vaccine for COVID-19 are seen at the San Marino State Hospital, in San Marino, Friday, April 9, 2021.  THE CANADIAN PRESS/AP-Antonio Calanni
China, Russia using their COVID-19 vaccines to gain political influence

OTTAWA — China and Russia have been using their locally produced COVID-19… Continue reading

Most Read