Exxon is suing to prevent shareholders from voting on the climate proposal
Exxon Mobil is suing two activist investors to prevent their proposal calling for emissions cuts at the oil giant from coming to a shareholder vote.
In a complaint filed Sunday in the U.S. District Court for the Northern District of Texas, Exxon accused its investors, Arjuna Capital and Follow This, of abusing the shareholder vote proposal process to advance their priorities with votes “intended to downsize the company's existing operations. .”
Arjuna filed a proposed non-binding resolution in December urging Exxon to accelerate its plans to reduce its carbon emissions and expand the scope of emissions it measures to its suppliers and customers. Follow This joined shortly thereafter in support of the proposal, the complaint said.
The proposal “is not intended to improve ExxonMobil's economic performance or create shareholder value,” Exxon said in the complaint, but instead “constrains and micromanages” the company's operations.
Exxon said it already planned to exclude the proposal from the shareholder vote at the company's annual meeting in May, arguing that U.S. securities laws allow the company to file petitions that “address matters related to the normal business activities of the company.” In an unusual twist, the company also sued the investors in an attempt to obtain a “declaration” from a judge supporting his decision to rule out the proposal.
The company said the guidance from Securities and Exchange Commission staff was informal and subject to interpretation. A court ruling in favor of Exxon could lead to stricter scrutiny of the type of shareholder proposals that companies put to the vote in the future.
Exxon noted in its lawsuit that similar proposals submitted by Follow This in 2022 and by Follow This and Arjuna in 2023 were rejected by a large majority of shareholders.
Mark van Baal, founder of Follow This, said in a statement on the company's website that the move shows that Exxon “wants to prevent shareholders from exercising their rights.” Ajuna did not immediately respond to a request for comment.
Exxon's complaint comes amid a backlash against climate and related measures, with some companies and investors beginning to move away from environmental, social and governance (or ESG) initiatives.
Investors have withdrawn more than $13 billion from ESG funds in the past year. This is evident from a recent report from Morningstar. That shift occurred amid a broader market rally in 2023.
ESG issues have also become a major political topic on Capitol Hill and on the campaign trail. Republicans in Congress have proposed measures to restrict investments that take ESG factors into account, and some presidential candidates have vowed to crack down on the move.