Long-time Alaskans – those who were in Alaska in 1989 – know better than to trust anything Exxon Mobil says. Now it turns out Exxon Mobil will even lie to its own investors. WC isn’t even slightly surprised.
The public has known for a few years that Exxon Mobil has been lying to the general public about the dangers of greenhouse gas emissions and the risks of catastrophic climate change. Exxon’s own scientists had warned of the risks, even as Exxon funded disinformation campaigns denying what their own scientists had shown.
Now it turns out that Exxon lied to its own shareholders about the risks and Exxon’s actions in response to the risks.
The New York Attorney General has filed a lawsuit accusing Exxon Mobil and its CEO, Rex Tillerson – yes, that Rex Tillerson – committed fraud in its proxy statements and public statements to shareholders. Specifically, Exxon claimed to have used a “proxy cost” for the economic risk of greenhouse gas emissions. That was a lie.
A “proxy cost” is when you include a cost that has not yet been imposed but you suspect my be imposed in the future, for the period of your economic projections. If you think, for example, that the European Union might impose a tax on greenhouse gas emissions, which would affect your company’s profitability, then you include an estimate of that cost, a “proxy” for that possible cost, in your projection of future profits. Exxon Mobil told its investors it has included such a cost. In fact, it had promised to include such a proxy cost after it settled two different investor lawsuits complaining Exxon Mobil had improperly failed to include those proxy costs. Despite those promises, despite the claim it had included the proxy cost, Exxon Mobil hadn’t and didn’t.
Since Exxon Mobil is in the business of greenhouse gas emissions, the failure to include the proxy cost was material.
The New York AG’s complaint relies on Exxon Mobil’s own published reports and documents to establish the pattern of deceit. Where Exxon Mobil did apply a proxy cost, it was at a significantly lower rate than what the company had told investors it would use. The complaint claims that Rex Tillerson and the senior management team at Exxon specifically knew of and approved the deception. And includes quotes and specific document proving that claim.
For example, Exxon Mobil is a big player in the Alberta Sands tar sands projects. Exxon’s public position was that it imposed an $80 per ton proxy cost for revenue and profit projections for 2040. In fact, Exxon used a proxy cost of less than $5 per ton. And did so because of “massive GHG costs,” “large write-downs,” and other significant impacts on the company’s bottom line.
Closer to home, Exxon did not apply a proxy cost with respect to an investment of over $1 billion in its Point Thomson gas field in Alaska in 2012 on the ground that “it had received the necessary permit to emit a substantial quantity of GHGs.” It did not have such permits – they did not exist. More lies.
Exxon operate a number of refineries. Exxon’s own internal documents show the refineries become unprofitable if a carbon tax of $30 per ton was imposed. But Exxon didn’t disclose that to its investors; instead, it lied and said it had and represented the refineries would still be profitable.
So now we know that Exxon Mobil will lie to its own shareholders. You think Exxon Mobil won’t lie to Alaska? You think Alaska can do business with a multi-national corporation that lies? You think Alaska can believe anything Exxon Mobil says?