New York State Sues Exxon for Fraud Over Climate Change Disclosures

In the Trump era, attempts at fighting climate change are getting more and more creative. As the federal government abrogates all climate change responsibility, some cities and states are taking it into their own hands — like New York.

The state†just announced that it’s suing oil and gas giant Exxon for fraud,†claiming the company misled shareholders about the dangers of climate change.

This creative approach to getting traction on the climate change issue isn’t new. New York City actually filed a similar suit in the past, as have†Oakland, San Francisco, Baltimore†and other cities, along with the state of Rhode Island.

The problem is that it’s really hard to get these lawsuits to stick, with judge after judge throwing them out. Not because they think climate change isn’t real, but because the mechanism for legal redress, in their opinion, is unclear.

The latest case is another attempt at testing the — rapidly rising and warming — waters. In this instance, the state isn’t wading into the question of whether Exxon itself is responsible for climate change, and if the company should be held accountable for that. Instead, New York is focusing on a topic that’s more capitalist and concrete: The state is arguing that by failing to acknowledge climate change risks in business planning and disclosures to shareholders, it committed fraud.

This isn’t an entirely new subject of discussion. In 2016, Exxon slapped down shareholder activists who demanded more transparency on climate change, only to reverse course in 2017 when the Securities and Exchange Commission got involved. And even earlier than that, you may have heard rumblings in 2015 about an investigation into this very issue, which is actually the investigation that led to this suit.

Yes, sometimes it takes three years to gather enough material to feel confident about filing suit.

Exxon has made a public face of being concerned about climate change risks and taking steps to mitigate them. However, the state maintains that the company was misleading in communications†with shareholders, underwriters and other financial stakeholders.

Setting aside the question of whether oil and gas sales contribute to climate change, Exxon itself is exposed to significant risk†byclimate change, from storm damage to refineries to weather patterns that disrupt the flow of its products. The duty of fiscal care involved would require an honest assessment and discussion of these issues in annual reports and other documentation, something the state says is lacking.

It’s too early to tell whether this case will eventually be struck down by a judge. The shift in focus to the company’s clear fiduciary duty may help, especially since the state has spent the last three years gathering material to bolster its case.

“Exxon built a facade to deceive investors into believing that the company was managing the risks of climate change regulation to its business when, in fact, it was intentionally and systematically underestimating or ignoring them, contrary to its public representations,” Attorney General Barbara Underwood said in a press release.

Of note: Justices in the New York State Supreme Court, which will be hearing the case, are elected officials — which is an excellent reminder to participate in local elections. Local voters can have tremendous impact on legislation that will affect their lives and those of many Americans outside their home district by showing up — and it pays to take time to research local and state judiciary races.

Photo credit: Backbone Campaign/Creative Commons

48 comments

Sue H
Sue H1 months ago

May they Prevail.

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hELEN hEARFIELD
hELEN h1 months ago

tyfs

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Lisa M
Lisa M1 months ago

Thanks.

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Lisa M
Lisa M1 months ago

Thanks.

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Joan E
Joan E1 months ago

Republicans and polluters, often one and the same, are not leaders. They are greed-ers, imperiling all of us by lying about climate change and destroying crucial ecosystems. This can't go on. We can't withstand this.

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Clare O
Clare O'Beara1 months ago

go for it

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Clare O
Clare O'Beara1 months ago

th

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Louise R
Past Member 1 months ago

Thanks

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Carole R
Carole R2 months ago

I hope it goes well.

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Daniel N
Daniel N2 months ago

Thank you for posting

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