The US Securities and Exchange Commission has launched an investigation into ExxonMobil over how the fossil fuel giant has valued its assets in the wake of falling oil prices and increasing climate change-related regulations.
The company has confirmed that the US’s top financial watchdog is seeking information on its financial reporting. Documents have been sought from Exxon as well as its auditor, PricewaterhouseCoopers.
“We are fully complying with the SEC request for information and are confident our financial reporting meets all legal and accounting requirements,” said an Exxon spokesman.
According to the Wall Street Journal, Exxon is the only major energy producer that hasn’t lowered its valuations since oil prices fell two years ago. Shares in Exxon fell by 1.5% to $82.54 on Tuesday, before rallying slightly on Wednesday morning.
The SEC investigation will also look at what Exxon has told investors about its assets in the context of growing international action on climate change. Last year, it was revealed that Exxon knew about climate change as early as 1981, only to spend millions of dollars in the following decades to deny its existence. Its intervention on the issue extended into the early days of the George W Bush presidency.
The attorney generals of New York and Massachusetts have both opened investigations into whether Exxon misled investors. They have, in turn, been subpoenaed by Lamar Smith, chairman of Congress’ science committee, to hand over details of their investigations.
Smith, a climate change sceptic who has also subpoenaed government scientists’ communications, has accused the attorney generals of a political witch-hunt and for causing a “chilling impact on scientific research and development”. The office of New York attorney general Eric Schneiderman has called Smith’s intervention “remarkable” and an overreach of federal authority.
“This is a remarkably important development - the federal government is joining the courageous state attorneys general, and they’re all following the trail of clues that began with powerful investigative journalism,” said Bill McKibben, co-founder of climate group 350.org.
“Before they’re done we’ll understand considerably more about how the world overheated. But in the meantime, every institution that invests in Exxon should take real note of who you’re keeping company with.”
Exxon is also being investigated by Nigeria’s economic and financial crimes commission after it secured oil rights in the African nation despite apparently underbidding a Chinese rival bid by $2.25bn.
The oil industry’s knowledge of dangerous climate change stretches back to the 1960s, with unearthed documents showing that it was warned of “serious worldwide environmental changes” more than 45 years ago.
The Stanford Research Institute presented a report to the American Petroleum Institute in 1968 that warned the release of carbon dioxide from burning fossil fuels could carry an array of harmful consequences for the planet.
