Exxon Mobil is asking a federal court to continue its lawsuit against activist shareholders that sought a vote on the company’s climate policy, even after the investors withdrew the resolution at issue, arguing the lawsuit could prevent similar proposals from being considered in the future.
Last month, Exxon Mobil sued investment firm Arjuna Capital and Follow This, a Dutch investor group, to prevent them from filing a climate shareholder proposal that would’ve demanded a vote on the company establishing targets to reduce indirect emissions produced up and down its value chain, otherwise known as Scope 3 emissions.
The lawsuit is a first-time effort by the oil major to exclude shareholders’ proposals through the courts instead of through the Securities and Exchange Commission, which is the common route for companies. The legal effort prompted the two investor groups to rescind their shareholder proposal.
But even after the resolution was withdrawn, Exxon maintains the lawsuit is necessary to prevent the investors from simply tweaking the proposal and resubmitting a similar one in the next year, according to a motion filed late Wednesday.
“Defendants Arjuna Capital and Follow This hijack the shareholder proposal process to advance their social causes with serial filings each year at the expense of investors who focus on generating returns,” the lawsuit reads. “None of those proposals received close to majority support; the most recent was rejected by almost 90 percent of voting shareholders. ExxonMobil filed suit to stop Defendants’ cycle of shareholder activism that burdens it each proxy season.”
According to the filing, the oil major has received 141 shareholder proposals since 2014, an average of 14 per year, with only three proposals approved by Exxon Mobil shareholders since then. The company argues that shareholder activism offers benefits such as name recognition, fundraising opportunities, and a “free platform” to highlight a proponent’s issue or agenda.
Both Arjuna Capital and Follow This did not respond to a request for comment from the Washington Examiner.
In its motion to dismiss the lawsuit, Arjuna Capital argued the lawsuit was not necessary since the shareholder proposal was withdrawn.
“In refusing to dismiss the case following the withdrawal, Exxon has laid bare its true intention — to challenge how the SEC interprets and applies its own proxy proposal rules, without actually confronting the SEC itself,” the motion reads, which was filed earlier this month.
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Follow This founder Mark van Baal stated that Exxon’s legal tactics amounted to “tactics of intimidation and bullying to silence our fair ask to tackle the climate crisis.”
“Shareholders’ rights are under attack,” van Baal told the Financial Times. “[Exxon] may vastly prefer litigation against parties like Arjuna and Follow This,” two groups he says have fewer resources and that “Exxon can unfairly malign in its complaint.”
