ExxonMobil Did Not Mislead Shareholders About Climate Risks, Rules New York Court

New York Attorney General Letitia James loses a trumped up fraud lawsuit against the oil company.


Grandstanding New York state Attorney General Eric T. Schneiderman began a case in 2015 against ExxonMobil in which he accused the company of lying to its shareholders about what it knew of the risks of climate change to its future profits. The attorney general's office calculated that the damage to shareholders could be as high as $1.6 billion.

After a three-week civil trial, state Supreme Court Justice Barry Ostrager today ruled, "The Office of the Attorney General failed to prove, by a preponderance of the evidence, that ExxonMobil made any material misstatements or omissions about its practices and procedures that misled any reasonable investor."

Basically Justice Ostrager reached the same conclusion I did four years ago about what reasonable investors could surmise from ExxonMobil disclosures. Back then I reported:

"Over the decades, company executives did frequently point to uncertainties in the developing climate science. But this seems have changed after the IPCC issued its Fourth Assessment of climate science in 2006 which stated:

'Most of the observed increase in global average temperatures since the mid-20th century is very likely due to the observed increase in anthropogenic greenhouse gas concentrations.'

After that report, for the first time (that I could find at least), the company's 2006 annual report noted the risks of climate change to its business:

'Political and Legal Factors: The operations and earnings of the Corporation and its affiliates throughout the world have been, and may in the future be, affected from time to time in varying degree by political and legal factors including … laws and regulations related to environmental or energy security matters, including those addressing alternative energy sources and the risks of global climate change…'"

Justice Ostrager additionally pointed out, "Nothing in this opinion is intended to absolve ExxonMobil from responsibility for contributing to climate change through the emission of greenhouse gases in the production of its fossil fuel products. ExxonMobil is in the business of producing energy, and this is a securities fraud case, not a climate change case."

According to CNBC, the case against ExxonMobil was dismissed "with prejudice" which means that it is unlikely Letitia James, the state's current attorney general, will seek to file another lawsuit against the company. Similar shareholder fraud lawsuits have been filed in Massachusetts, Texas, and New Jersey.

For what it's worth, since ExxonMobil began noting the risks of climate change in its annual reports, its share price has hovered between $56 to $102 and is currently trading at around $69.