Late in the year 2013, ExxonMobil had faced a lot of pressure from its investors for the disclosures of the risks which the company was facing due to the restrictions on greenhouse gas emissions. Out of the many costs which change in climate is going to impose, the oil companies are facing an especially acute one which is that the demand for their product is going to lessen.
For many years the company had been using something which is known as a proxy cost of carbon for estimating what the strict climate policies are going to mean for their bottom line. However, as the pressure grew from shareholders, a problem came into focus majorly. A presentation internally had been warning the top executives that the manner in which the company had been applying this cost had potentially been misleading because Exxon did not just have one projected cost of carbon and instead had two.
The contents of this presentation are at the center of a trial which is set to begin next week in a civil case which was brought against Exxon by the attorney general of New York. The company has been accused of disclosing the projection of carbon costs to the investors while it was using an entirely different set for evaluation of investments internally. The set which was disclosed had been more conservative and it’s projections were that the climate policies are going to be more stringent while the ones which were used internally had assumed that the attempts to limit the emissions are going to be more modest.
The attorney general has said that this resulted in the hiding of potential costs of billions of dollars.