SEC Now asking What #ExxonKnew
September 21, 2016
This seems like a big deal. Official investigations heating up almost as fast as the planet.
The SEC sought information and documents in August from Exxon and the company’s auditor, PricewaterhouseCoopers LLP, according to people familiar with the matter. The federal agency has been receiving documents the company submitted as part of a continuing probe into similar issues begun last year by New York Attorney General Eric Schneiderman, the people said.
The SEC’s probe is homing in on how Exxon calculates the impact to its business from the world’s mounting response to climate change, including what figures the company uses to account for the future costs of complying with regulations to curb greenhouse gases as it evaluates the economic viability of its projects.
The decision to step into an Exxon investigation and seek climate-related information represents a moment in the effort to take climate change more seriously in the financial community, said Andrew Logan, director of the oil and gas program at Ceres, a Boston-based advocacy organization that has pushed for more carbon-related disclosure from companies.
“It’s a potential tipping point not just for Exxon, but for the industry as a whole,” he said.
As part of its probe, the SEC is also examining Exxon’s longstanding practice of not writing down the value of its oil and gas reserves when prices fall, people familiar with the matter said. Exxon is the only major U.S. producer that hasn’t taken a write down or impairment since oil prices plunged two years ago. Peers including Chevron Corp. have lowered valuations by a collective $50 billion.
The Wall Street Journal also reported that the investigation is looking into the company’s accounting practices.
The company is working with the SEC, said Alan Jeffers, a spokesman for Exxon.
“The SEC is the appropriate entity to examine issues related to impairment, reserves and other communications important to investors. We are fully complying with the SEC request for information and are confident our financial reporting meets all legal and accounting requirements,” he said in a statement.
Last week, the Journalciting people familiar with the matter reported that New York Attorney General Eric Schneiderman has been inquiring into why the company has not written down the value of its assets despite a decline in oil prices.
Schneiderman’s office is already looking into whether the oil giant’s past research into climate change, which did not become public until recently, could impact its business and shareholders.