Dive Brief:
- ESG-focused investors Arjuna Capital and Follow This announced Friday they rescinded their shareholder proposal to ExxonMobil, after the natural gas giant filed a lawsuit last month to get it excluded from its annual proxy ballot.
- The proposal — which requested Exxon ramp up its greenhouse gas emissions reduction efforts for scope 1 and scope 2 and set a scope 3 target — was withdrawn due to “Exxon’s preference to fight a battle in court rather than allow shareholders the freedom of a vote at its annual meeting,” Follow This Founder Mark van Baal said in a statement to Reuters Friday.
- Exxon going directly to the courts was considered a “remarkable” step by van Baal at the time, as businesses typically go to the Securities and Exchange Commission to have proposals excluded. Arjuna Capital’s Chief Investment Officer Natasha Lamb said in an emailed statement the litigation will lead to “silencing investors that voice climate-risk concerns.”
Dive Insight:
Exxon filed the lawsuit Jan. 21 alleging Arjuna Capital and Follow This — who both hold enough Exxon shares to hold voting power — asking the Northern Texas District Court to intervene by March 19. Lamb said now that the investors have withdrawn their proposal, Exxon has “no basis” to continue the lawsuit.
It was the first time Exxon bypassed the SEC and went straight to court action to exclude a shareholder proposal, Reuters reported at the time. The agency recently issued no action notices to Disney and Apple, ruling it must allow votes on artificial intelligence-related shareholder proposals the American Federation of Labor and Congress of Industrial Organizations submitted to each of the companies’ boards.
“Not only is the company side-stepping a critical corporate accountability mechanism that has upheld shareholder freedoms for decades, this amounts to tactics of intimidation and bullying,” Lamb said.
Both investors had submitted similar proposals to the company in 2022 and 2023. The proposal was opposed by 89.5% of investors last year, and Exxon called the groups’ proposals “expensive and time-consuming to address,” in the suit.
The proposal from the Massachusetts-based Arjuna Capital and Amsterdam-based Follow This noted that Exxon’s current targets for its scope 1 and scope 2 greenhouse gas emissions reductions are beneath the levels recommended by the Intergovernmental Panel on Climate Change.
Exxon also lags behind industry peers who have set scope 3 targets, including BP, Repsol, Eni, Total Energy, Chevron, Equinor, Shell and Suncor.
