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Exxon Mobil sues activist investors to stop shareholder proposals

by SuperiorInvest

ExxonMobil CEO Darren Woods speaks at the Asia-Pacific Economic Cooperation (APEC) Leaders Week in San Francisco, California, on November 15, 2023.

Andrew Caballero-reynolds | afp | fake images

Exxon Mobile filed a lawsuit against American and Dutch activist investors in a bid to prevent them from presenting climate proposals during the oil giant’s annual shareholder meeting.

This is a first for the American oil major and is the latest step in an increasingly intense battle between companies and environmental defenders.

The complaint was filed Sunday in the U.S. District Court for the Northern District of Texas against Massachusetts-based investment firm Arjuna Capital and Follow This, an Amsterdam-based activist investment group.

A victory for Exxon Mobil in the lawsuit could have a chilling impact on future shareholder petitions.

The Securities and Exchange Commission, the U.S. financial regulator, has overseen a growing number of environmental and social shareholder proposals over the past two proxy seasons.

In an emailed statement, Exxon Mobil said that “breaking down the shareholder proposal process, which allows proponents to advance their agendas through an avalanche of proposals, does not serve the interests of investors.”

The company added: “We are simply asking the court to apply the SEC’s representation rules as written to stop this abuse and eliminate the important remedies needed to address them.”

Climate activists hold an Exxon Mobil Corp. logo during a protest against the East African Crude Oil Pipeline (EACOP) project on the sidelines of the World Climate Summit in Paris, France, Friday, June 23, 2023.

Bloomberg | Bloomberg | fake images

The oil major accused Arjuna Capital and Follow This of being driven by an “extreme agenda” and said both are submitting shareholder proposals to undermine the company’s business.

In its filing, Exxon Mobil said it needs help from the court by March 19, because it must file its proxy statement by April 11. The Houston-based firm plans to hold its annual shareholder meeting on May 29.

“With this notable step, ExxonMobil clearly wants to prevent shareholders from using their rights,” Follow This’s Mark van Baal said in a statement. “Apparently the board fears that shareholders will vote in favor of emissions reduction targets.”

He added: “Maybe they’ll see the writing on the wall.”

Follow This said it and Arjuna Capital submitted a proposal, commonly known as a climate resolution, to Exxon Mobil’s upcoming annual meeting in compliance with its shareholder rights and SEC regulations.

Arjuna Capital did not immediately respond to a request for comment from CNBC.

Exxon Mobil says it supports measures to reduce emissions and that the lawsuit is not specific to environmental, social and corporate governance. He adds that the lawsuit aims to fix what the oil company describes as a broken process that the company says is being abused.

Scope 3 emissions

Arjuna Capital and Follow This have tried to pressure Big Oil to set so-called Scope 3 targets to reduce greenhouse gas emissions produced by burning oil and gas.

Scope 3 refers to emissions produced throughout a company’s value chain and often accounts for the majority of a company’s carbon footprint.

Meanwhile, Scope 1 emissions refer to a company’s direct greenhouse gas emissions, while Scope 2 emissions are indirect emissions that result from the production of energy used on behalf of a company.

Exxon Mobil has announced plans to reach net zero emissions by 2050 for Scope 1 and Scope 2 emissions. This goal does not include Scope 3 emissions, and the company’s shareholders voted overwhelmingly to reject calls for further action. strict measures to mitigate climate change last year.

— CNBC’s Spencer Kimball contributed to this report.

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