A pair of activist investors, Arjuna Capital and environmental group Follow This, have decided not to refile their climate-related proposals for shareholder votes at ExxonMobil’s upcoming meeting. This decision comes after ExxonMobil filed a lawsuit in January to prevent the proposals from appearing on the ballot. However, ExxonMobil still seeks a ruling from a U.S. court in Texas regarding its request, possibly setting a precedent for future challenges by activist groups.
The lawsuit was initiated by ExxonMobil in response to proposals by Arjuna and Follow This, which demanded that the company go beyond its current climate targets and accelerate the reduction of Scope 1, 2, and 3 greenhouse gas emissions. Citing overwhelming rejections of similar proposals in previous years, ExxonMobil expressed concerns about the cost and time-consuming nature of frequent votes on such matters, arguing that these proposals do not contribute to the overall shareholder value.
ExxonMobil’s decision to pursue legal action bypasses involvement with the Securities and Exchange Commission (SEC), as the Biden administration’s recent guidance encouraged votes on proposals with significant societal impact. Natasha Lamb, Chief Investment Officer at Arjuna Capital, criticized ExxonMobil’s strategy, stating that it undermines the SEC’s shareholder proposal process and suppresses investor concerns about climate risks. Lamb further condemned ExxonMobil’s approach as an act of intimidation and bullying.
Arjuna Capital and Follow This also expressed their objection to ExxonMobil’s request to have the U.S. District Court for Northern Texas continue hearing its complaint, considering it unjust.
Exxon Drops Lawsuit After Climate Proposal Is Withdrawn
Exxon has decided to drop its lawsuit against climate proposal advocates after the group withdrew its proposal. The decision by the investors to withdraw could have far-reaching implications for future efforts to pressure oil companies on climate issues.
The climate proposal was put forward by Follow This, an organization that represents over 9,000 pro-environmental shareholders. The proposal aimed to reduce Scope 3 emissions by 2030 at Exxon and four other major oil companies, including Shell, BP, TotalEnergies, and Chevron.
Mark van Baal, the founder of Follow This, explained the reason behind their withdrawal: “Given Exxon’s preference to fight a battle in court rather than allow shareholders the freedom of a vote at its annual meeting, we decided to withdraw the climate proposal.” He added, “Now that we have withdrawn and promised not to refile the proposal with Exxon, the company has no reason to continue the lawsuit.”
The court’s decision on whether to hear the complaint remains uncertain. Judge Mark Pittman gave Exxon until Monday to submit papers justifying why the case should proceed. However, the court expressed confusion over the ongoing case or controversy, as the plaintiff claimed that the issue had been resolved through withdrawal of the proposal.
It is worth noting that if other oil companies, such as Shell, BP, TotalEnergies, and Chevron, face similar climate-related votes in the future that have previously been defeated, they may follow Exxon’s example in order to prevent such proposals from reaching shareholders.
Reporting by Steve Cronin; Editing by Jeff Barber