(ExxonMobil refinery, Baytown, TX. Credit: Roy Luck, Flickr Creative Commons)By failing to accurately inform shareholders about the financial risks it faces from climate change, a company could face significant financial risks of a different kind. Case in point: Exxon Mobil Corp. will go to court next week regarding allegations that it has underreported how the threat of both rising temperatures and changing public policies could affect its bottom line. If the company loses, it could potentially owe millions or even billions of dollars in damages to investors, writes E+E News.
New York Attorney General Letitia James says that, by failing to accurately report the costs it could face from climate change and increased governmental oversight, the company inflated its financial value, violating the state’s strict anti-fraud statute, the Martin Act. ExxonMobil has fought back by claiming James is attacking the company in an effort to drum up attention for climate action.
ExxonMobil investors began pressuring the company to disclose more information about climate change risks as far back as 2013. ExxonMobil had been long been using a projected cost of carbon to estimate how stricter climate policies might affect its finances, but an internal presentation brought to light the fact that the company was actually using two different versions of the projected cost - a “conservative” and a “non-conservative” view. James contends that Exxon has used one set of projected carbon costs to present to investors, while internal planners used a different set for evaluating its own investments, according to Inside Climate News.
James’ office is asking for the company to be held liable for between $476 million and $1.6 billion in shareholder losses. Additionally, Exxon may be required to undergo an examination of its accounting methods, which could lead to additional civil suits being brought against the company, points out Climate Liability News.
