ExxonMobil has won a case brought against it by the US state of New York, which had charged that the energy group’s carbon accounting downplayed the financial risk of future climate regulations, thereby misleading investors.

Had it lost the state Supreme Court trial, the Houston, Texas-based multinational could have faced penalties of up to $1.6 billion, US press reports said.

By downplaying risks, New York’s attorney general Letitia James said Exxon made its assets appear more secure than they really were, and that this in turn this artificially boosted its share price.   Rex Tillerson, CEO from 2006 to 2017 and US Secretary of State from Feb. 1, 2017 to Mar. 31, 2018, testified, however, that management uses different carbon accounting methods appropriately.

The widely publicized three-week trial was touted by environmental advocates as a landmark case for climate change, but in his ruling State Supreme Court Justice Barry Ostrager insisted it was a securities fraud case.

 For Ostrager, there was insufficient evidence that Exxon had made any material misrepresentations that “would have been viewed by a reasonable investor as having significantly altered the total mix of information made available.”

At the same time, the justice warned that “nothing in the court’s opinion is intended to absolve ExxonMobil from responsibility for contributing to climate change through the emission of greenhouse gasses in the production of its fossil fuel products."

New York has been investigating Exxon’s accounting practices for four years, with three different state attorneys general involved. Following the verdict, James said the open trial, which played to full courtroom audiences, at least had compelled executives "to answer publicly” for the internal decisions she said misled investors.

“Throughout this case we laid out how ExxonMobil made materially false, misleading and confusing representations” about its response to climate change regulations,” she said.                                                                                                                                            

In its defense, the Texas oil major said that in the absence of a uniform, globally accepted cost of carbon, it uses “two distinct metrics,” a proxy cost, intended to reflect the impact of all climate policies that could reduce demand for oil and gas globally, and a greenhouse gas cost that reflects actual costs that might be imposed directly on emissions.

Making its case, ExxonMobil argued also that since 2000 it has invested around $10 billion in projects to develop lower-emission technologies, including energy efficiency initiatives, biofuels, flare reduction and carbon capture and storage.

Before the litigation got under way, the group commented that the investigation and lawsuit were “politically motivated and resulted from a coordinated effort by anti-fossil fuel groups and contingency fee lawyers involved in other lawsuits against industry.”

Various US states are pursuing lawsuits against ExxonMobil and other energy sector companies, including one recently brought by Massachusetts, in which attorney general Maura Healey charges that Exxon systematically misled investors about the impact climate change on the economy and its own business.