Former US secretary of state Rex Tillerson denied in court Wednesday that oil and gas giant ExxonMobil had downplayed the financial costs of mitigating climate change to mislead investors.
Tillerson, a former chief executive of ExxonMobil, gave evidence in an unprecedented lawsuit against the American multinational that is being closely watched by energy companies and environmental activists.
ExxonMobil is accused of defrauding shareholders by underestimating the financial risks associated with governments moving to tighten legislation to limit greenhouse gas emissions.
“We recognized the risk of climate change,” said Tillerson, who headed the company from 2006 until becoming President Donald Trump’s top diplomat in January 2017.
“We recognized it was becoming increasingly important to society more broadly, and that legislators would begin to want ways to mitigate the effect,” the 67-year-old added.
The case was brought by the New York attorney general on behalf of investors victimized by the alleged fraud. The trial started on October 23.
Prosecutors allege that in recent years, ExxonMobil used two different projections of greenhouse gas costs, thus misleading investors about its expected profitability.
As a result, the group’s shares would have ended up being overvalued, costing shareholders anywhere between $416 million to over $1.16 billion.
During around three hours of testimony, Tillerson explained that under his stewardship, ExxonMobil introduced a system of projecting costs for 2030 and 2040.
“Once we came to the conclusion there was a serious risk from this (carbon taxes) it was our responsibility to understand how it could affect the business. That really began with my tenure,” he said.
“The question was how are you accommodating it in your long term planning? So this was a fundamental tool in helping us understand the long-term implications of the climate change issue,” Tillerson told the Manhattan court.
Tillerson admitted that ExxonMobil used two different types of forecasts but insisted neither were intended to deceive investors.
He said they were “different levels.” One was the “macro-economic and strategic” level and the other was the “micro-economic” and was applied only to choose between unrealized investments.
Tillerson, who appeared relaxed throughout his testimony, is the star witness in the trial, which is scheduled to end no later than November 12.
There is no jury and state Judge Barry Ostrager will rule alone.
The lawsuit does not specify damages sought but seeks to force ExxonMobil to cease the alleged fraudulent statements and requires it to pay back amounts wrongly acquired.
Massachusetts state is pursing similar litigation against the company. Experts expect to see further lawsuits against ExxonMobil and other energy companies over their activities related to the environment.