We recently wrote about a Complaint (the Complaint) brought by the
Background
In 2013,
The reports were published in 2014. The
The Decision
The Court dismissed the Complaint on
In particular, the Court:
- Rejected the
State of New York's contention that reasonable investors would attach material significance to the fact thatExxonMobil internally determines when it is appropriate to apply the cost of greenhouse gas emissions with respect to specific projects; -
Found that there was no allegation and no proof that anything
ExxonMobil was alleged to have done or failed to do affectedExxonMobil's balance sheet, income statement or any other financial disclosure; -
Found that the
State of New York's case was largely premised on projections of proxy costs and greenhouse gas emissions costs in 2030 and 2040, and "[n]o reasonable investor during the period from 2013 to 2016 would make investment decisions based on speculative assumptions of costs that may be incurred 20+ or 30+ years in the future with respect to unidentified future projects"; and -
Held that
ExxonMobil's disclosures with respect to climate change regulation were not intended to enable investors to conduct meaningful economic analyses ofExxonMobil's internal planning assumptions, and no reasonable investor would have viewed "speculative assumptions about hypothetical regulatory costs projected decades into the future as significantly altering the total mix of information" made available to the public.
Takeaways
Market participants can expect to face a range of proceedings relating to their approach to climate change and environmental regulation styled as securities claims. The dismissal in New York v.
The case also reinforces the importance of material climate change-related risk disclosure. As we recently wrote, the Canadian Securities Administrators (CSA) has released a Staff Notice on such disclosure and identified specific issues and questions corporations should consider when preparing the risk sections in their MD&As and AIFs.
The author would like to thank
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