Ronn Torossian, CEO, 5WPR
The New York Attorney General has dropped the hammer on ExxonMobil. A recently-filed lawsuit accuses the company of “duping” shareholders for years about the “serious threat faced by the global crackdown on fossil fuels.”
Descriptive terms being used include “fraud” and “scheme to mislead” through which, according to the lawsuit, ExxonMobil offered “materially false” information related to the company’s “exposure to climate change regulations.”
To be clear, this lawsuit is not about the company’s statements directly about climate change. The issue here is strictly how the company communicated with shareholders about the risk climate change regulations would have on those shareholders. The lawsuit implied a company-wide cover-up, saying top executives knew and “sanctioned” the “fraud,” implicating even former CEO Rex Tillerson.
New York Attorney General Barbara Underwood pulled no punches when speaking to the media about the suit. “Exxon built a facade to deceive investors into believing that the company was managing the risks of climate change regulation to its business… it was intentionally and systematically underestimating or ignoring them, contrary to its public representations…”
Mistakes made on several different projections reportedly cost the company about $25 billion and caused other projects to have to be much more limited than expected. These issues, according to the suit, can be tied back to Exxon’s attempts to “reassure” investors that the company was accounting for potential regulations.
When informed of the suit, Exxon, as expected, came out swinging, offering an aggressive counter-messaging campaign that accused the NY Attorney General of a “tainted investigation.”
In a statement, the company said: “These baseless allegations are a product of closed-door lobbying by special interests, political opportunism and the attorney general’s inability to admit that a three-year investigation has uncovered no wrongdoing…”
Climate activists were encouraged by the lawsuit, and energy companies are watching both the suit and the war of words in the media very closely. Based on the rhetoric around the story, it’s clear that sides – and related messaging – are shaping up around how people feel about climate change, not necessarily about how Exxon’s investors may feel. Given that, this story has the potential to be misunderstood by the general public, especially when it lands on social media.
To that end, both parties have their work cut out for them. They will have to argue their case without confusing the issue, while still tapping in to energy and enthusiasm from partisans on their side of that divisive political issue. It’s a compelling campaign of messaging and counter-messaging that will be interesting to watch play out.
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