U.S. oil corporation ExxonMobil is suing a group of “activist investors” to block them from bringing forth an “extreme” proposal for greater reductions in emissions to its annual shareholder meeting.
The defendants are the Massachusetts-based Arjuna Capital and Amsterdam-based “green shareholder” group Follow This. Both are named in the lawsuit that was filed in the Northern District of Texas on Sunday, reports CNBC.
The investors plan to propose a so-called “climate resolution” as part of an “extreme agenda” at ExxonMobil’s May shareholder meeting, a statement from the oil and gas giant said.
The plaintiff, ExxonMobil, said it aims to set a legal precedent to push the U.S. Securities and Exchange Commission (SEC) to stop agenda-driven investors from hijacking companies.
In an emailed statement obtained by CNBC, the gas company said, “The breakdown of the shareholder proposal process, one that allows proponents to advance their agendas through a flood of proposals, does not serve the interests of investors.”
“We are simply asking the court to apply the SEC’s proxy rules as written to stop this abuse and eliminate the significant resources required to address them,” company officials added.
Follow This is openly an activist group, stating on its website that “shareholders can be a force for good, as they ultimately decide on a company’s course and hold [it] accountable for future progress.”
“Follow This changes the system by entering it,” the Dutch group states. “We empower shareholders to vote for change at Big Oil shareholders’ [annual general meetings (AGM)]. We do so by filing AGM resolutions that put climate action on the ballot.”
The website’s mission statement says the group aims to get “Big Oil” to focus on clean energy to tackle the “climate crisis.”
In a statement responding to ExxonMobil’s lawsuit to block the upcoming proposal, Follow This founder Mark van Baal said that the suit revealed the corporation’s intentions to deny shareholders their rights.
“With this remarkable step, ExxonMobil clearly wants to prevent shareholders [from] using their voting rights,” van Baal said. “Apparently, the board fears investors will vote in favor of emissions reduction targets. It seems that ExxonMobil is afraid of its shareholders.”
According to van Baal, the decision to sue shareholders was puzzling, given that ExxonMobil had successfully defeated the same resolution when it was brought up at the past two AGMs.
“Maybe they see the writing on the wall. More and more institutional investors want to achieve Paris, like the 27 institutional investors who recently co-filed a similar climate resolution at Shell alongside Follow This,” he said.
Arjuna Capital appears to possess similar green-energy values, with its website stating that “economic vitality, environmental responsibility, and social justice are all bottom-line concerns.”
Arjuna Capital and Follow This seek to pressure oil and gas companies to adopt “Scope 3 targets” to reduce greenhouse gas emissions, reports CNBC.
Scope 3 refers to the emissions produced across a company’s entire value chain and “often account for the lion’s share of a firm’s carbon footprint.”
Scope 1 emissions cover a company’s direct greenhouse gas emissions, and Scope 2 refers to indirect emissions that stem from the production of the energy used on a company’s behalf.
ExxonMobil announced plans in 2022 to reach net zero for Scope 1 and Scope 2 emissions by 2050, though it has ignored calls to reduce its Scope 3 emissions so far.
The activist shareholders’ resolution aims to commit the company to Scope 3 emissions reduction targets in line with the 2015 Paris Climate Agreement.
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