Should Exxon Disclose More Information Regarding Risks Related to Climate Change

BlackRock Inc is the largest asset manager in the world and on Friday, the firm urged for Exxon Mobil Corp to “enhance its disclosures” in regards to its risks in relation to climate change.

It was not even two weeks ago that shareholders approved a measure that called for more transparency on the matter of climate change. This is a resolution that is definitely supported by BlackRock, as well as several other institutional funds.

In the filing, the company said that various carbon regulation cost estimates, also known as “proxy costs,” had been appropriately used in different calculations. At the same time, Exxon insisted that these numbers were never altered or adjusted to mislead investors in any way. The largest publicly traded oil company in the world declined to make the directors available for comment, exercising a non-engagement policy that prevents this type of disclosure between board members and the shareholders.

The United States attorney general made the suggestion that accounting rules—the Generally Accepted Accounting Principles (GAAP)–and US Securities and Exchange Commission regulations make the requirement this company to use just one formula for estimating carbon pricing in the evaluation impairment or in the estimation of reserves.

In the brief, the attorney general states, “ExxonMobil’s use of different metrics, in different circumstances, to accomplish different goals evinces prudent financial stewardship, applying appropriate assumptions in appropriate cases. There is nothing untoward or surprising about any of this.”

The brief continues, “It is an abuse of the powers of his office and the court system itself, furthering only the attorney general’s transparent political ambitions and ultimately bound to taint a prospective jury pool.”

Finally, the brief adds, “This is just another example of the ‘heads I win, tails you lose’ approach to investigating employed by the attorney general. While it might be too much to expect consistency from the attorney general, his failure to present a coherent rationale for further investigations is fatal to his current plea to his court.”

In response, ExxonMobile attests that the AG office offers “one justification” for this new subpoena. They say that “rank speculation that ExxonMobil’s public statements about a proxy cost of carbon were false or misleading,” even though there are 2.8 million pages of documents and only one 18 month period in which to review them.


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