In an unprecedented move, ExxonMobil has filed a lawsuit against climate activist investors Follow This and Arjuna Capital, seeking to block their climate proposal from reaching a vote at the upcoming annual investor meeting. The legal complaint accuses US and Dutch investors of pursuing an “extreme agenda,” marking a rare instance of a company taking legal action to thwart shareholder motions, a tactic not previously employed by Exxon.
If successful, Exxon’s legal action could set a precedent affecting future shareholder petitions. Typically, listed companies engage with the Securities and Exchange Commission (SEC) to discuss the merits of individual proposals. However, critics argue that the SEC’s advice tends to vary depending on the political administration.
Follow This and Arjuna Capital are urging Exxon to enhance its commitment to reducing greenhouse gas emissions by implementing Scope 3 targets, specifically focusing on emissions generated by end-users of the company’s oil and gas products. While Exxon currently aims for net-zero emissions by 2050 for Scope 1 and Scope 2 (production processes and energy consumption), it lacks Scope 3 targets, distinguishing it from other major Western oil companies.
Exxon contends that the proposal from the activist investors violates SEC rules governing investor petitions. The company asserts that the current shareholder proposal process allows proponents to push their agendas through a multitude of proposals, emphasising that this approach does not align with the interests of investors.
ExxonMobil has taken its legal battle to the US district court in Texas, requesting the exclusion of the Scope 3 proposal from its proxy statement. The company is aiming for a court decision by March 19, in preparation for its annual shareholder meeting scheduled for March 29. This legal confrontation underscores the intensifying clash between major corporations and activist investors over climate-related policies and commitments.