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New York Attorney General Eric Schneiderman wants a state court to make oil giant Exxon Mobil turn over more documents in an investigation into whether the company lied to investors about the risks of climate change policy. Schneiderman launched the investigation of Exxon in 2015, claiming that the company was downplaying climate change and the problems that could arise for the company because of it in a way that defrauded investors.
Exxon, one of the top US companies by market capitalization and also one of the top five polluters in the US, has claimed that complying with current subpoenas from the state’s top prosecutor is unduly burdensome.
The court filing today (PDF) claims that New York’s investigation so far “has uncovered significant evidence of potential materially false and misleading statements by Exxon” concerning how the oil giant calculated the cost of greenhouse gas (GHG) emissions in its investment decisions.
According to the attorney general, Exxon was assuring its investors that it was using a “proxy cost” for GHGs, including any fees or penalties that governments might impose to mitigate the impact of climate change, to calculate the viability of certain investments. However, the filing claims the company directed its employees to ignore the proxy cost or apply it in unrealistic ways to make those investments seem better than they were. “Exxon’s own documents suggest that if Exxon had applied the proxy cost it promised to shareholders, at least one substantial oil sands project may have projected a financial loss, rather than a profit, over the course of the project’s original timeline,” the filing claims.
The attorney general also claimed that “Exxon may still be in the midst of perpetrating an ongoing fraudulent scheme on investors and the public.”
In a statement today, Exxon wrote:
For many years, ExxonMobil has applied a proxy cost of carbon to its investment opportunities, where appropriate, in order to anticipate the aggregate financial impact of potential future government policies. ExxonMobil’s external statements have accurately described its use of a proxy cost of carbon, and the documents produced to the Attorney General make this fact unmistakably clear.
We will respond fully to the Attorney General’s inaccurate and irresponsible allegations about proxy cost in our court filings.
The fact that the Attorney General gave its filing to the media before the court illustrates, once again, this investigation is about politics and publicity, not law enforcement.
The new filing from the New York Attorney General comes just a day after President Trump announced his intention to withdraw from the Paris Agreement, which holds nearly 200 countries to pledges to reduce GHGs that influence climate change. Trump’s secretary of state, Rex Tillerson, is Exxon’s former chairman and CEO. According to reports, Tillerson asked Trump to remain in the Paris Agreement, but Tillerson said today that the US would work to reduce greenhouse gases on its own.
On Wednesday, Exxon investors voted on a non-binding resolution asking Exxon to produce an annual report to show how climate policy will affect the company’s many oil and gas investments around the globe. Exxon executives had argued vehemently against the resolution.
Reuters reports that Exxon has already turned over two million documents to the New York Attorney General’s Office, but the office is still concerned that the files may be incomplete. Earlier this year, investigators found that Exxon had not turned over e-mails sent by Tillerson under the alias Wayne Tracker.
In today’s filing, Schneiderman wrote that in recent testimony, Exxon outside counsel Michele Hirshman admitted that “she knew in ‘early 2016’ about the second e-mail address for Rex Tillerson—the Wayne Tracker e-mail address—and that she did not disclose that e-mail address to OAG [Office of the Attorney General], stating that it would ‘be an interesting test of whether the Attorney General’s office is reading the documents.’”
“Ms. Hirshman further testified that neither she nor her firm made any attempt to look further into the preservation, collection or production of documents of the Wayne Tracker e-mail address at that time,” the filing continued. “The consequence of this failure was months of automatic destruction of relevant correspondence involving Mr. Tillerson.”