ExxonMobil is taking two activist investors to court to block a climate-related shareholder proposal from getting a vote at this year's general meeting.
A lawsuit filed by the top US oil producer against investment company Arjuna Capital and Dutch activist group Follow This seeks a declaratory judgment in order to exclude the groups' latest motion from the ballot. The proposal calls on ExxonMobil to speed up plans to slash emissions in line with the goals of the Paris Agreement, including from those of its customers.
In a filing in US District Court, Northern District of Texas, ExxonMobil accused the two of being driven by an "extreme agenda" to push shareholder proposals intended to "diminish" the company's existing business. In these efforts, the company said they are being helped by a "flawed shareholder proposal and proxy voting process that does not serve investors' interests and has become ripe for abuse by activists with minimal shares and no interest in growing long-term shareholder value."
The lawsuit claims US Securities and Exchange Commission staff have interpreted rules for governing whether proposals can be included for shareholder vote in conflicting ways, and that there are multiple grounds under which the proposal can be rejected.
Similar proposals have been overwhelmingly rejected by shareholders in previous years and are "expensive and time-consuming" to address and at odds with the interests of other investors, the filing said.
Supporters of the climate-related measures criticized the lawsuit. ExxonMobil "clearly wants to prevent shareholders using their voting rights," said Mark van Baal, founder of Follow This.
And sustainability non-profit group Ceres accused ExxonMobil of attempting to subvert oversight from both shareholders and the Securities and Exchange Commission with its lawsuit.
"The company has learned that their investors support stronger action to address the impacts of the climate crisis, and rather than follow their investors' wishes it is trying instead to silence their voice," said Andrew Logan, Ceres' senior director for oil and gas.
As recently as 2021 a tiny hedge fund succeeded in overthrowing a quarter of ExxonMobil's board with the argument its continued focus on fossil fuels created an "existential business risk".
But shareholder support for climate proposals has waned since the war in Ukraine broke out in early 2022 and sent oil prices soaring.
While ExxonMobil is targeting net zero emissions from its operations by 2050, it has so far resisted calls to set goals for emissions reductions from customer use of its products, which make up the bulk of emissions. Chief executive Darren Woods has described such Scope 3 goals as a "useful metric" when looking at economy-wide emissions, but with limited use beyond that.
ExxonMobil has scheduled its annual meeting for 29 May.
