ExxonMobil Corporation Files Complaint to Block Climate Proposal by Activist Investors
Oil giant ExxonMobil Corporation has taken legal action to prevent climate activist investors from bringing a climate proposal to a vote during the company’s upcoming shareholder meeting. This is the first time Exxon has sought to block a shareholder proposal through a court complaint. The case has been assigned to a judge appointed by former President Donald Trump.
Exxon argues that the investors are driven by an extreme agenda that does not align with shareholder interests or promote long-term shareholder value. The complaint specifically targets activist investor firm Arjuna Capital and shareholder activist group Follow This. Both organizations have urged Exxon and other oil majors to adopt stricter climate targets, including setting scope 3 targets to reduce emissions produced by users of their products. Exxon is the only one of the five Western oil majors that does not have such targets.
Follow This has previously proposed similar targets at shareholder meetings of other oil majors, but received only 10 percent approval from Exxon shareholders last year, compared to 28 percent approval in 2022. As scope 3 targets have already been rejected by Exxon shareholders, the company wants to completely remove the proposal from its proxy statement. Exxon argues that the proposal only serves the activists’ strategy of diminishing the company’s existing business.
Follow This believes that shareholders should have the right to vote on Exxon’s emissions reductions and their alignment with the Paris Climate Agreement through any chosen strategy. The group asserts that these goals would increase long-term value for shareholders by preventing loss of access to capital markets, policy interventions, and losses associated with stranded assets. Follow This founder Mark Van Baal emphasizes that the board has full discretion in determining how to achieve emissions reductions.
Natasha Lamb, Chief Investment Officer of Arjuna, justifies concern over climate change and its impact on the global economy and shareholder value.
Court Case Details
The case was initially assigned to U.S. Judge Reed O’Connor, but he recused himself from the case. The recusal may be related to a conflict of interest, as Judge O’Connor’s financial disclosure report showed he held Exxon stock and his spouse had non-investment income from the company. The case has now been assigned to U.S. Judge Mark Pittman.
Exxon is seeking a ruling by March 19 to remove the proposal from its proxy statement, which needs to be filed by April 11 for the annual shareholder meeting in May.
(Reuters contributed to this article.)
