The WSJ writes, ExxonMobil is suing two sustainable investment firms in a bid to block them from putting forward a shareholder proposal that would commit the oil company to further curb its greenhouse
Our Take, with Doug Sheridan
Our Take, with Doug Sheridan
The WSJ writes, ExxonMobil is suing two sustainable investment firms in a bid to block them from putting forward a shareholder proposal that would commit the oil company to further curb its greenhouse-gas emissions and target its customers’ emissions.
In a federal lawsuit filed in Texas, the oil giant said investment Arjuna Capital and Follow This | Shareholders change the world became Exxon shareholders only to put forward proposals that would “diminish the company’s existing business.” Arjuna submitted a proposal in December asking shareholders to pass resolutions committing Exxon “to go beyond current plans, further accelerating the pace of emission reductions in the medium-term.” Follow This joined the proposal the following day.
In a departure from Exxon’s current policy, they advise the oil company to target the emissions of its suppliers and customers in addition to its own. “Defendants are asking Exxon Mobil to change its day-to-day business by altering the mix of—or even eliminating—certain of the products that it sells,” the oil company said in the lawsuit. Their goal, it alleged, is “to force Exxon to change the nature of its ordinary business or to go out of business entirely.”
Arjuna Capital and Follow This have put forward investor proposals for more than a decade at Exxon and other oil-and-gas companies. The lawsuit comes amid mounting political opposition to some investors’ recent emphasis on ESG issues at public companies.
Under SEC rules, Exxon said, a company can exclude a shareholder proposal from its proxy statement if it “deals with a matter relating to the company’s ordinary business operations” and if it is substantially the same as previous proposals included in a company’s proxy materials within the five prior years and doesn’t meet criteria to be resubmitted.
Exxon argued that the proposal was similar to one put forward in 2022 and 2023. Last year, 10.5% of shareholders voted in favor of the proposal, a result that failed to reach a 15% threshold that a proposal needs to be resubmitted.
Last year, efforts by investors to push Exxon and Chevron on climate change fizzled out as shareholders struck down numerous proposals to cut GHG emissions and report on climate benchmarks, among other initiatives. Almost all failed to garner more than 25% of the shareholder votes, and some received far less support than similar ones had the year before.
Our Take: At some point these proposals reach the point of petty heckling from the bleachers by desperate special interest groups. The good news is leaders at Exxon and other oil and gas companies—after enduring the wildly misguided pile-on we saw a few years ago from groups ranging from The Business Roundtable to BlackRock to industry participants themselves—continue to find their sea legs. And they are confidently fighting back. Good on them.