By Karen Savage
Massachusetts Attorney General Maura Healey argues that the Covid-19 crisis has provided a glimpse into the potential effect climate change could have on the fossil fuel industry and accuses ExxonMobil of continuing to deceive its shareholders about future demand for its products. Healey wrote this in her amended complaint filed Friday in her fraud lawsuit against the oil giant.
“The COVID-19 pandemic is giving us a sobering preview of the shocks to financial markets from climate change, and has exposed the massive risk posed to those invested in fossil fuel companies like Exxon by major events that cause global oil demand — and prices — to collapse,” Healey said in a press release.
The Massachusetts AG’s office filed suit against Exxon in November, alleging the company has known for decades its products drive climate change and has misled consumers and investors. The suit says Exxon used deceptive advertising, failed to disclose climate-related risks to its investors and failed to disclose how catastrophic climate impacts from continued fossil fuel burning could threaten the global economy.
Healey is the second attorney general to charge Exxon with fraud. New York Supreme Court Judge Barry Ostrager ruled last year that the New York attorney general failed to prove the company defrauded investors, as alleged in a lawsuit filed in 2018.
Exxon has tried for years to sidestep both AG’s investigations and subsequent lawsuits. It alleged in 2018 that Healey and then-New York Attorney General Eric Schneiderman had abused their power by conducting politically-motivated investigations and violating the company’s First Amendment right to free speech. That charge that was eventually dismissed by a federal judge.
Exxon also tried to delay the filing of Healey’s lawsuit last year by arguing that it was too busy dealing with New York’s suit to meet deadlines in Massachusetts. Once filed, the company moved the suit, which was filed in state court alleging violations of state court, to federal court. A federal court judge in March ruled that the case belongs in state court.
Much has changed since the suit was first filed, according to the amended complaint, which was filed Friday in Suffolk Superior court.
Extreme weather and the failure to address climate change were ranked as the top two global risks in the next 10 years, according to the World Economic Forum’s Global Risks Report for 2020.
J.P. Morgan, the world’s biggest fossil fuel funder, wrote in an internal research note that it could not “rule out catastrophic outcomes where human life as we know it is threatened.”
Global economies ground to a halt this spring, as governments tried to curb the spread of Covid-19. That reduced global oil demand, forcing fossil fuel companies to reduce spending. Exxon announced in April it was reducing capital expenditures by 30 percent this year.
Exxon posted its first quarterly loss in more than 30 years. Market observers recognized weaknesses in the company’s corporate strategy and other experts predicted that oil investments, much like tobacco stock, will soon be shunned by investors.
Through all of this, Exxon has downplayed its exposure to sudden shifts in demand and prices, and forecast an increase in demand for its fossil fuel products, the AG’s office alleged in the new filing.
“ExxonMobil has repeated that message even in recent months, as the coronavirus pandemic substantially lowered global fossil fuel demand virtually overnight,” wrote the AG’s office, adding that the company has failed to adequately address and failed to disclose the “catastrophic risks that climate change presents to its business.”
Exxon spokesman Casey Norton said the company looks forward to “refuting the meritless allegations in court.”
“Amending the complaint is another sign the attorney general’s case is baseless,” Norton said.
Healey said her goal is to hold Exxon accountable for its fraud and to protect Massachusetts from Exxon’s continuing deception.
“Exxon knew about these risks decades ago but kept silent, instead making the calculated decision to mislead Massachusetts investors and consumers, hawking its fossil fuel products as good for the environment, and selling investors snake oil scenarios of ever-growing global demand for fossil fuels,” Healey said.