U.S. oil giant Exxon Mobil sues activist investors to prevent climate proposals

Key Points

• Exxon Mobil Lawsuit Against Activist Investors:
  • Exxon Mobil has filed a lawsuit against activist investors from the U.S. and the Netherlands, aiming to prevent them from submitting climate proposals during the company’s annual shareholder meeting.
  • The lawsuit, a first for the U.S. oil major, targets Arjuna Capital, a Massachusetts-based investment firm, and Follow This, an Amsterdam-based activist investor group.
  • An Exxon Mobil win in the proceedings could set a precedent impacting future shareholder petitions and reflects the intensifying battle between companies and environmental campaigners.
• SEC Oversight and Company Perspective:
  • The lawsuit was filed in the U.S. District Court for the Northern District of Texas, accusing the activists of having an “extreme agenda” and submitting shareholder proposals to undermine Exxon Mobil’s business.
  • Exxon Mobil contends that the breakdown of the shareholder proposal process, allowing proponents to flood proposals, does not serve the interests of investors. The company seeks relief from the court by March 19, as the proxy statement must be filed by April 11, with the annual shareholder meeting scheduled for May 29.
  • The oil major accuses Arjuna Capital and Follow This of abusing the process, and the lawsuit aims to apply the SEC’s proxy rules to address what Exxon Mobil perceives as abuse, eliminating the significant resources required to deal with such proposals.
• Climate Resolutions and Scope 3 Emissions:
  • Arjuna Capital and Follow This have been advocating for climate resolutions, specifically urging oil majors to establish Scope 3 targets to reduce greenhouse gas emissions produced when burning oil and gas.
  • Scope 3 emissions encompass a company’s entire value chain and often contribute significantly to its carbon footprint. Exxon Mobil, in response, has announced plans to reach net zero by 2050 for Scope 1 and Scope 2 emissions but excludes Scope 3 emissions from this target.
  • The activists argue for stronger measures to mitigate climate change, but Exxon Mobil’s shareholders overwhelmingly rejected such calls last year. The lawsuit reflects the ongoing tension between corporate interests and environmental concerns in the context of climate change mitigation efforts.