Oil giant ExxonMobil Corporation filed a complaint in a Fort Worth, Texas court on Jan. 21 in an effort to prevent climate activist investors from bringing a climate proposal up for a vote during the company’s shareholder meeting in May.
The move marks the first time Exxon has sought to block a shareholder proposal by filing a complaint in court. The case has been assigned to a judge appointed by former President Donald Trump.
According to Exxon, the investors are motivated by an extreme agenda that neither reflects shareholder interests nor serves to promote long-term shareholder value.
In particular, the complaint pertains to activist investor firm Arjuna Capital and shareholder activist group Follow This, both of which have asked Exxon and other oil majors to adopt tighter climate targets, including setting so-called 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.
In the past two years, Follow This has proposed similar targets at the shareholder meetings of different oil majors, but while this was received with 28 percent approval by Exxon’s shareholders in 2022, it only received 10 percent approval last year.
Since scope 3 targets have already been rejected by Exxon shareholders, the company wants to remove the proposal entirely from its proxy statement. Exxon says the proposal only serves the activists’ strategy, which is to “become shareholders solely to campaign” for changes Exxon says are “calculated to diminish the company’s existing business.”
Follow This claimed shareholders should have a right to vote on Exxon’s emissions reductions—and whether these align with the Paris Climate Agreement—by any strategy of its choosing, arguing this would be in the shareholders’ best interest.
The activist group holds that long-term value for shareholders would increase as a result of these goals, as it would prevent loss of access to capital markets, policy interventions, and losses associated with stranded assets, according to Follow This founder Mark Van Baal, who added that strategies on how to achieve emissions reductions are left entirely up to the board.
Court Case
The case was assigned to U.S. Judge Mark Pittman on Jan. 22, after first landing with U.S. Judge Reed O‘Connor, an appointee of the second George W. Bush administration. However, Judge O’Connor recused himself from the case on Jan. 22.No reasons for the recusal were provided but it could be related to a conflict of interest, as his most recent publicly available financial disclosure report showed he held Exxon stock, while his spouse had non-investment income from the company.
Exxon is seeking a ruling by March 19. Its proxy statement needs to be filed by April 11, in time for its annual shareholder meeting in May.
