ExxonMobil Takes Unprecedented Legal Action, Sues Climate Activist Investors Over Emission Reduction Proposal
In a rare move, oil giant ExxonMobil has filed a lawsuit against climate activist investors, seeking to block their proposed climate resolution from reaching a vote at the upcoming annual investor meeting. The legal action targets Follow This and Arjuna Capital, two entities advocating for an acceleration of greenhouse gas emission reductions by Exxon.
Exxon accuses the US and Dutch investors of pursuing an “extreme agenda” in their push for more aggressive emission reduction measures. This legal challenge marks a departure from the customary practice of listed firms engaging in debates over shareholder proposals with the Securities and Exchange Commission (SEC), making it the first time Exxon has taken such legal action.
If successful, Exxon’s lawsuit could set a precedent impacting future shareholder petitions. Typically, SEC advice guides discussions on the merits of individual proposals, but critics argue that this guidance may vary based on the prevailing political administration.
Follow This and Arjuna Capital are urging Exxon to establish Scope 3 targets, focusing on reducing emissions associated with the use of its oil and gas. Currently, Exxon aims for net-zero emissions by 2050 for Scope 1 and Scope 2 emissions, encompassing pollution from production processes and energy consumption. Notably, Exxon is the sole Western oil major lacking Scope 3 targets among the top five companies in the sector.
Exxon contends that the proposal from Follow This and Arjuna violates SEC rules governing investor petitions. The company asserts that the shareholder proposal process has broken down, allowing proponents to advance their agendas through an overwhelming influx of proposals, contrary to the best interests of investors.
To address this, Exxon is seeking legal intervention, asking a judge in the US district court in Texas to exclude the Scope 3 proposal from its proxy statement. The company aims for a decision by March 19, just in time for its annual shareholder meeting scheduled for March 29. The outcome of this legal battle could have significant implications for the dynamics between major corporations and climate-focused investor initiatives.
