Exxon plays hardball against climate NGOs. Will investors care? May 29, 2024
- Ana Cunha-Busch
- May 28, 2024
- 2 min read
By AFP - Agence France Presse
Exxon plays hardball against climate NGOs. Will investors care?
At Wednesday's annual meeting, ExxonMobil investors will have a chance to weigh in on the company's tough approach to the latest shareholder challenge from environmentalists on climate change.
The US oil giant, which unapologetically favors investing in oil despite its negative impacts on the climate, adopted a more aggressive stance towards activists at this year's virtual meeting compared to previous years.
ExxonMobil sued two shareholder groups, the NGO Follow This and the activist fund Arjuna Capital, seeking an investor vote on a measure to limit emissions.
Their lawsuit, which includes seeking legal fees, drew criticism from shareholders such as Norway's sovereign wealth fund and the California Public Employees' Retirement System (CalPERS).
A large number of votes against ExxonMobil's board nominees would signify shareholder dissatisfaction with the company's tactics.
CalPERS called climate change “a serious threat to long-term investment returns” and argued that ExxonMobil's litigious tactics could have “devastating” consequences for corporate governance.
“If ExxonMobil succeeds in silencing voices and overturning the rules of shareholder democracy, what other issues will the leaders of any company leave off limits? Worker safety? Excessive executive pay?”
CalPERS said it would vote against all 12 board nominees “to send a message that our voices will not be silenced.”
The move came after Arjuna and Follow This demanded a shareholder vote in December on a plan directing ExxonMobil to accelerate emissions reductions by requiring targets and timelines for lowering “Scope 3” emissions.
The category of emissions includes those created by consumers using a company's product, such as the CO2 released by burning oil and gas produced by a fossil fuel company.
ExxonMobil argued that the proposal was the same one rejected by almost 90% of the company's shareholders at the 2023 meeting.
Such proposals are “expensive and time-consuming to address,” ExxonMobil said, adding that the proposal “does not seek to improve ExxonMobil's economic performance or create shareholder value,” according to the lawsuit.
“Defendants' primary objective is to force ExxonMobil to change the nature of its normal business or to shut down its activities altogether,” the lawsuit said.
Shortly after ExxonMobil filed the lawsuit in Texas federal court in January, Arjuna and Follow This withdrew their proposal.
However, ExxonMobil continued with the litigation, asking a federal judge to declare that the measure could be omitted from the company's proxy statement.
Last week, U.S. District Judge Mark Pittman approved a motion to dismiss the lawsuit against Netherlands-based Follow This, ruling that the court does not have personal jurisdiction over the group. But Pittman allowed the lawsuit to proceed against Arjuna.
In a May 27 letter to ExxonMobil, Arjuna's managing partner, Natasha Lamb, rejected the oil giant's characterization, saying that her company's focus on climate change “is consistent and, in fact, necessary to ensure future financial success”.
Lamb pledged to refrain from further climate proposals at ExxonMobil, adding, “I hope Exxon will now, albeit belatedly, do what justice and respect for shareholder rights demand and withdraw its lawsuit.”
By John BIERS
jmb/bfm
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