New York's #ExxonKnew Investigation Takes Another Hit

Tristan R. Brown profile picture
Tristan R. Brown


  • A recent study out of Oxford University illustrates the shortcomings of using petroleum and gas companies' climate policy forecasts as a basis for securities fraud investigations.
  • The Oxford study suggests that the global "carbon budget" will not be exhausted for decades, rather than by the end of this decade as previous models had concluded.
  • This development illustrates the difficulties inherent in the making of convincing, let alone accurate, forecasts about future climate policies, and creates new doubts about the legal implications of such forecasts.

The academic literature giveth and the academic literature taketh away. That, at least, is what the supporters of New York State's Martin Act investigation into Exxon Mobil (NYSE:XOM) must be thinking in the wake of some recent high-profile publications in the academic literature. Last month saw the publication of an op-ed in The New York Times by two Harvard researchers that highlighted what they concluded to be "explicit factual misrepresentation" by the company in the 1990s on the state of climate change research.

Now comes a study published in Nature Geoscience by researchers at Oxford University finding that, in the words of The Economist, "climate researchers have been underestimating the carbon 'budget' compatible with the ambitions expressed in [The Paris Climate Agreement]." While both studies have generated headlines around the world, the latter is the one that Exxon Mobil's investors will want to pay attention to because of its Martin Act investigation implications.

To recap, New York's attorney general launched an investigation in 2015 into Exxon Mobil on the basis that, as the #ExxonKnew hashtag suggests, the company may have covered up the findings of its internal research into the impact of greenhouse gas emissions on the climate in the 1980s and 1990s.

When that line of inquiry revealed that the company had instead published its research results (even if it didn't trumpet them), the investigation shifted to focus on whether or not the company has been accurately valuing the impact that future climate policies will have on its fossil reserves. The investigation's latest iteration has focused on the proxy carbon price that Exxon Mobil shows its investors to simulate the risks to its finances posed by future climate policies.

The study by Harvard researchers would have likely had a bigger impact had it been published at the time of

This article was written by

Tristan R. Brown profile picture
My articles do not represent investment advice. Readers should perform their due diligence before investing in any security or fund that is mentioned by my articles.

Disclosure: I am/we are long XLE. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I am not licensed to practice law in New York State and the above should not be interpreted as legal advice regarding the Martin Act or any other New York State statute.

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