After a 12-day trial, a New York court found that the New York Office of the Attorney General failed to establish by a preponderance of the evidence that Exxon Mobil Corporation (Exxon) made any material misstatements or omissions that misled any reasonable investor about its practices or procedures for accounting for climate risk. The court therefore denied claims asserted under the Martin Act—New York’s securities fraud statute—and Executive Law § 63(12), which prohibits repeated or persistent fraudulent acts. Although the court granted the attorney general’s request to discontinue its common law and equitable fraud claims with prejudice, the court also said its decision established that Exxon would not have been held liable on any fraud-related claims since the attorney general failed to establish Exxon’s liability even for causes of action that did not require proof of the scienter and reliance elements of fraud. The court found that Exxon’s public disclosures in the 2013 to 2016 time period at issue in the case—including Form 10-K disclosures and March 2014 reports specifically addressing climate change risk and regulations that were prepared in consideration for withdrawal of shareholder proposals—were not misleading. The court said one of the March 2014 reports identified proxy costs of carbon and GHG costs as “distinct and separate metrics,” one of the factors leading the court to reject the premise of the attorney general’s case that Exxon’s disclosures “led the public to believe that its GHG cost assumptions for future projects had the same values assigned to its proxy cost of carbon.” The court also found that an analyst’s testimony undercut the attorney general’s assertion that information in the March 2014 reports was material to investors and found the attorney general’s expert testimony on materiality to be unpersuasive, “flatly contradicted by the weight of the evidence,” and “fundamentally flawed.”

Action alleging fraudulent scheme by Exxon Mobil Corporation to deceive investors about the company's management of risks posed by climate change regulation.

People of the State of New York v. Exxon Mobil Corp.

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Trial Court Ruled for Exxon in New York’s Climate Change Securities Fraud Case

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An aim to achieve a quantifiable outcome within a given time-frame, set by an institution such as a national government.

Policy instruments are techniques or tools used by governing authorities to promote certain policies in order to achieve predetermined goals. Put simply, instruments are how a government tries to achieve its goals, with this taxonomy being focused on national policy instruments.

Risk is the potential for adverse consequences resulting from the dynamic interplay between (climate-related) hazards, exposure, and vulnerability of affected human or ecological systems.

Groups  of people who are adversely affected by climate change or the response to it

A set of principles, processes, and practices that build economic and political power to shift from an extractive economy to a regenerative economy.

Justice is the ethical and political framework that addresses fairness, including issues of responsibility, rights, and structural inequity.

Renewable energy means all forms of energy produced from renewable sources in a sustainable manner.

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Molecules in the atmosphere that play a key role in the greenhouse effect by trapping heat radiating from Earth’s surface.

Area of the economy in which actors engage in identical or related activities.

In human systems, the process of adjustment to actual or expected climate change and its effects, in order to moderate harm, increase resilience or exploit beneficial opportunities. In natural systems, the process of adjustment to actual climate change and its effects; human intervention may facilitate adjustment to expected climate change and its effects.

The management and allocation of funds, assets and investments to meet various objectives

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Tradable permits are market-based tools that grant permission for specific activities, frequently used to regulate emissions. These permits can be issued within a trading system to manage environmental impacts.

Codes and standards are regulatory instruments that specify minimum standards to protect health and safety. This ranges from performance standards, which prescribe outcomes while allowing flexibility to achieve compliance, to the more prescriptive approach of technology-specific standards.

Either money or something of monetary value is transferred between two or more organisations, people or countries.

The release of heat-trapping gases, primarily from human activities such as burning fossil fuels, agriculture and industry.

A long-lived, colourless gas, chiefly emitted from fossil fuel combustion, deforestation and cement production.

Actions to reduce emissions in energy generation and supply.

Technologies that capture and hold energy in reserve for later use.

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Oil is a combustible liquid fossil fuel composed mainly of hydrocarbons, occurring as crude oil and refined into petroleum products such as petrol, diesel and kerosene.

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Coal is a combustible sedimentary rock formed from carbonised plant matter, rich in carbon and hydrocarbons, and occurring in several main types including hard coal and brown coal.

Any compulsory, unrequited payment to the government levied on corporations or individuals. This can be for environmental reasons, such as introducing a Carbon tax to set a price that emitters must pay for the greenhouse gases they emit.

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Trial Court Ruled for Exxon in New York’s Climate Change Securities Fraud Case

Policy instrument

Risk

Renewable energy

Fossil fuel

Greenhouse gas

Economic sector

Adaptation/resilience

Finance