Climate activist investors have levied accusations against ExxonMobil, alleging the company’s utilization of “bullying” tactics and undermining shareholders’ rights by pursuing legal action against them.
According to the group this is despite their withdrawal of a resolution urging the oil giant to intensify efforts in reducing greenhouse gas emissions before its general meeting.
A report by Financial Times said the condemnation from Follow This surfaced as the Dutch shareholder group revealed on Tuesday its filing of a motion to dismiss Exxon’s legal proceedings, in collaboration with investment advisor Arjuna Capital, which is also embroiled in the lawsuit.
Attempt to block the petition
Exxon sued the shareholders last month in an attempt to block the petition from going to a vote, alleging that the resolution breached US securities rules, marking the first time the Houston-based energy group has sought to prevent such a vote by using the courts.
Earlier this month, Exxon said it would maintain the lawsuit despite the two investors’ decision to abandon their resolution.
Follow This said on Tuesday there was no “case” or “controversy” against the pair because they had withdrawn the resolution and agreed not to refile it.
- Mark van Baal, founder of Follow This, said the activists had been forced to withdraw the resolution because of “Exxon’s preference to fight a battle in court instead of giving shareholders their right to vote in the annual meeting”.
- “Exxon’s legal action amounts to tactics of intimidation and bullying to silence our fair ask to tackle the climate crisis,” said van Baal, adding that “shareholders’ rights are under attack”.
Van Baal said Exxon “may vastly prefer litigation against parties like Arjuna and Follow This”, two groups that had far “fewer resources and who Exxon can unfairly malign in its complaint”, over asking the Securities and Exchange Commission to block it.
The SEC has the ability to refuse shareholder resolutions but decided in 2021 to allow more petitions to go to a vote.
On Tuesday, Exxon said the current process to get proposals excluded from annual meetings was “flawed” and permitted activists with minimal shares to “bring an increasing number of repeat proposals that do nothing to grow long-term shareholder value”.
- “The intent of our lawsuit is simple — we want clarity on a process that has become ripe for abuse. We hope our suit motivates the SEC to go back to applying the proxy rules as they were written, not as they’ve been interpreting them over the last few years,” added Exxon.
- The company’s lawsuit was filed in a US district court in Texas and alleges that the proposal by Follow This and Arjuna violated SEC rules for such investor petitions. Exxon has accused the groups of being “driven by an extreme agenda”.
Manipulated of shareholder activism
Earlier this month, lawyers for Exxon told a federal judge that the case was not moot, arguing that Follow This and Arjuna had manipulated shareholder activism “for the sole purpose of attacking ExxonMobil from within”.
Follow This, backed by thousands of small investors, has used shareholdings in oil and gas companies to file climate resolutions at oil companies in Europe and the US for years. The burning of fossil fuels is by far the largest contributor to global warming.
In the statement, van Baal said the proposal from Follow This and Arjuna asked “for a shareholder vote to encourage the company to come up with a plan and targets to accelerate greenhouse gas reduction efforts”.
According to the report, Exxon has faced heavy criticism, including from Norway’s oil fund, over its decision to sue its shareholders.
Similar climate motions have failed to reach majority support at previous Exxon annual meetings, with the vote in favour from shareholders slipping from 27.1 per cent in 2022 to 10.5 per cent in 2023.
Goal to reduce emissions
Exxon has set a goal to reduce emissions from its own operations to net zero by 2050. But the bulk of its emissions are so-called scope 3, which come from the burning of the oil and gas it produces and sells, rather than energy used in its own operations.
Follow This said it would instead refocus its efforts on a resolution it had co-filed with 27 big investors, including Amundi, at Shell’s annual meeting later this year.
What you should know
Nairametrics reported recently that the oil giant, ExxonMobil has filed a lawsuit seeking to prevent a shareholder-proposed climate resolution from reaching a vote at its annual investor meeting.
- This unprecedented move marks a significant escalation in the ongoing battle between corporations and environmental activists.
- According to a Financial Times report, the lawsuit targets Follow This, an Amsterdam-based investor activist group, and Arjuna Capital, a registered investment adviser.
- Both are behind a proposed resolution urging ExxonMobil to accelerate its greenhouse gas emissions reductions.
- Companies rarely go to court to block shareholder motions, and Exxon’s case marks the first time it has done so.
It highlights a growing sense of frustration in some corporate circles with the Securities and Exchange Commission, the US financial regulator, which has been criticized for allowing too many motions by environmental activists to be voted on at annual meetings.
