A pair of activist investors have pulled their request for shareholder votes on climate-related proposals after ExxonMobil sued to keep them off the ballot at the company’s upcoming meeting.
But while Arjuna Capital and the environmental group Follow This say they will not refile the proposals, Exxon still wants a U.S. court in Texas to rule on its request, a move that could help it head off similar proposals from other activist groups in the future.
The oil company filed suit in January after Arjuna and Follow filed proposals that called on Exxon to go beyond its current climate targets and accelerate the pace of reducing Scope 1, 2 and 3 greenhouse gas emissions.
Exxon said shareholders both last year and in 2022 overwhelmingly rejected similar proposals by the pair and said holding repeated votes on the questions would be “expensive and time-consuming to address and they are rarely designed to promote overall shareholder value.”
By filing the lawsuit, Exxon avoided having to bring the question of holding the vote to the Securities and Exchange Commission, which under the Biden administration changed its guidance on shareholder submissions to encourage votes on proposals that will have a broad societal impact.
“We’re disappointed that Exxon is circumventing the SEC’s shareholder proposal process by proceeding directly to litigation in federal court which will result in silencing investors that voice climate-risk concerns,” Natasha Lamb, chief investment officer at Arjuna Capital, said in a Monday statement.
“Not only is the company side-stepping a critical corporate accountability mechanism that has upheld shareholder freedoms for decades, this amounts to tactics of intimidation and bullying.”
The two investors also cried foul on Exxon’s request that the U.S. District Court for Northern Texas continue to hear its complaint.
“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,” said Mark van Baal, founder of Follow This.
“Now that we have withdrawn and promised not to refile the proposal with Exxon, the company has no reason to continue the lawsuit.”
Whether the court will agree to hear the complaint is unclear. In an order Friday, Judge Mark Pittman gave Exxon until Monday to file papers explaining why the case should move forward.
“It is the court’s understanding that this action was brought to litigate the very issue that plaintiff now says is resolved: Defendants’ proposal for the annual shareholder meeting,” the order said. “As it stands now, the court struggles to see what the ongoing case or controversy is in this matter.”
No matter what the court decides, the decision by the two investors could have implications for future efforts to pressure companies on climate issues.
Follow This, which says it represents more than 9,000 shareholders with pro-environmental views, has posted resolutions to reduce Scope 3 emissions by 2030 at five of the largest oil companies in the world, which in addition to Exxon, include Shell, BP, TotalEnergies and Chevron.
Those companies could follow Exxon’s lead in an effort to keep climate-related votes from shareholders if they’d already been defeated in the past.
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–Reporting by Steve Cronin, email@example.com; Editing by Jeff Barber, firstname.lastname@example.org