Exxon Pushes Back Against Investor Activists in Climate Bid Case - Bloomberg Law

Exxon Pushes Back Against Investor Activists in Climate Bid Case

The Houston oil company sued Arjuna Capital and Follow This in the US District Court for the Northern District of Texas in January hoping to shut down their proposal that asked the company to speed up its greenhouse gas emissions reductions. The lawsuit prompted the shareholders to drop the proposal, but Exxon is persisting with its legal action and asked the court to block the investors from presenting future climate proposals.

The suit stands out because companies typically ask the US Securities and Exchange Commission to block proposals from going to a shareholder vote before going to the courts.

Exxon said the investors “hijack the shareholder proposal process to advance their social causes with serial filings each year at the expense of investors who focus on generating returns.”

The oil giant said it has received 141 shareholder proposals since 2014 (an average of about 14 per year) compared to “the fewer than three proposals received annually by the average S&P 500 company that receives any proposals at all.”

Arjuna and Follow This did not immediately respond to requests for comment. Arjuna said in its motion to dismiss last week that the lawsuit isn’t necessary because the proposal has been withdrawn. The investors “have agreed not to resubmit the proposal or present it at any future Exxon shareholder meeting,” Arjuna said.

But Exxon said that it’s not enough that the shareholder activists have dropped the proposal, as they could resubmit a substantially similar proposal in the future on their own or with other activists. “Hoping that Defendants change their plans is a strategy ExxonMobil cannot accept and the Court should not rely on,” the company said.

The lawsuit has ruffled feathers in the investor activist community. Shareholder activists at the Interfaith Center on Corporate Responsibility sent a letter to Exxon’s board earlier this month asking members to convince the company’s management to end the lawsuit. The letter warned that the suit could set a dangerous precedent for future climate proposals.

The case is Exxon Mobil Corporation v. Arjuna Capital, N.D. Tex., No. 24-cv-00069, 2/21/24

To contact the reporter on this story: chudson@bloombergindustry.com

To contact the editors responsible for this story: jharrington@bloombergindustry.com; agrubercohn@bloombergindustry.com

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