New York Climate Change lawsuit against ExxonMobil for trial this week

Oct 20, 2019 News

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A lawsuit brought against ExxonMobil is set to go to trial this week, beginning October 23, 2019.

It was a three-year investigation which led the State of New York to file the lawsuit against the oil giant. The New York Attorney General, Barbara Underwood, announced the lawsuit on October 24 last year, stating that an “Investigation into Exxon’s business practices uncovered an alleged fraudulent scheme to systematically and repeatedly deceive investors about the significant impact that future climate change regulations could have on the company’s assets and value.”
In the summons, it is stated that Exxon made specific representations about its application of a proxy cost in reports. The summons stated that in its 2013 Outlook for Energy report, the company noted that for purposes of its projections through 2040, “ExxonMobil assumes a cost of carbon as a proxy for a wide variety of potential policies that might be adopted by governments over time to help stem GHG (Greenhouse Gas) emissions.”
Simply put, ExxonMobil devised for its investors a tool to take into account the social, ecological and economic costs of its GHG emissions, but the lawsuit claims that the oil company did not follow the system through.
A 2014 report titled Energy and Climate, and another report titled Energy and Carbon – Managing The Risks were, according to the State of New York, published in exchange for the withdrawal of shareholder resolutions by two shareholder groups, Arjuna Capital and Christopher Reynolds Foundation.
The suit went on to state that by not following its public representations regarding the application of proxy costs to its projected GHG emissions in non-OECD countries, “Exxon substantially understated its projected costs when making investment decisions and conducting business planning in those countries.”
The summons also alleged that even after Exxon increased its internal proxy cost guidance to conform with public representations, the company’s planners realized that the application of the higher publicly disclosed proxy costs would result in “massive GHG costs,” “large write-downs,” and shorter asset lives.
So it alleges that instead of accepting the consequences of incorporating the risks of climate change in its estimations, the company used an “alternate methodology” which was not disclosed to investors. That plan, the summons stated, involved applying lower proxy costs than the company publicly said it would, or no proxy cost at all to projected emissions in certain important areas of business.
And for major projects, the State of New York said that instead of applying a proxy cost, contrary to its regulations, the company assumed that existing climate regulation would remain in place indefinitely, thereby applying a lower cost to a small percentage of emissions.
The summons states, “This deviation from Exxon’s public representations was willful, and it was directed by Exxon management.”
Did ExxonMobil lie about its operational costs in Guyana’s Stabroek Block?
The case that is before the New York Supreme Court has alleged that ExxonMobil lied to investors about the effect future climate change regulations would have on its operational costs in Guyana’s oil rich Stabroek Block.
The summons states that the company estimated costs per ton of GHG emissions to reach $20-$40 in mostly non-OECD (Organisation for Economic Co-operation and Development) countries, in a 2014 report titled Energy and Climate.
New York’s lawsuit alleges that Exxon did not apply proxy costs to its GHG emissions for major investments in non-OECD countries, a deviation from its public representations.
It states, “For example, despite Exxon’s public representations in 2013 and 2014 in the color-coded map, it included in multiple reports that it applied a proxy cost in Guyana of $20-$40 per ton in 2040, Exxon did not incorporate proxy costs into its economic analysis for a multibillion dollar project in Guyana until after June 2016.”
Exxon struck oil in Guyana in 2015 and it was in 2016 that its Production Sharing Agreement (PSA) for the Stabroek Block was reviewed.
But it has been operating in the country for much longer; as a contract was signed by the Janet Jagan led Government in 1999 for that block. The company has since benefitted from several other concessions.
Even then, Guyana is only one of several other countries mentioned in the company’s alleged deception in the massive report.
Exxon Knew
The lawsuit is just one of several legal actions that have been brought against the oil company across several American states. Supporters of action against the oil major are aligned with #ExxonKnew – a campaign which states that Exxon knew about the danger of climate change and the impact of its operations on the crisis decades ago.
The campaign purports that the oil company deceived the public, misled its shareholders, and robbed humanity of a generation’s worth of time to reverse climate change.
Exxon’s Response
In a statement made a day after the filing of the lawsuit, Exxon dismissed what it deemed a “meritless investigation… [which] has uncovered no wrongdoing.”
“These baseless allegations are a product of closed-door lobbying by special interests [and] political opportunism,” Exxon had said.
The company added that it is eager to refute the claims as soon as possible, and condemned “a discredited media campaign and lobbying by anti-fossil fuel activists.”
ExxonMobil has also resorted to launching a counter-campaign against the #ExxonKnew campaign.
On its website, Exxon states that “#ExxonKnew is an orchestrated campaign that seeks to delegitimize ExxonMobil by misrepresenting our position on climate change and related research to the public.”
The company claims that it is actively working to mitigate the risks posed by climate change.

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