Dive Brief:
- ExxonMobil wants to continue its suit against ESG-focused investors Arjuna Capital and Follow This, despite the investors rescinding and promising not to resubmit the climate-focused shareholder proposal at the heart of the case.
- Exxon asked Texas’ Northern District Court to still rule on whether the shareholder proposal — which asked the company to ramp up its scope 1 and scope 2 emissions reductions and set a scope 3 target — is excludable under the ordinary business exclusion and resubmission exclusion rules in opposition to a motion to dismiss it filed on Feb. 21.
- Exxon said a ruling in the case would prevent Arjuna Capital and Follow This from submitting similar versions of this year’s proposal in the future. “Hoping that [Arjuna Capital and Follow This] change their plans is a strategy ExxonMobil cannot accept and the Court should not rely on,” the filing said.
Dive Insight:
Exxon first filed the lawsuit in January, alleging neither ESG-focused investor “wants to improve [Exxon’s] business performance or increase shareholder value” and asked the courts to step in and intervene. In the Feb. 21 filing, Exxon said roughly half of the 141 shareholder proposals it has received since 2014 have come from shareholder activists, and just three were approved.
The Texas-based oil giant said Arjuna Capital and Follow This have, either together or alone, submitted 14 shareholder proposals to the company with none receiving “close to majority support.”
“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,” Exxon said.
The lawsuit sidestepped the Securities and Exchange Commission’s typical process of shareholder proposal exclusion. According to Exxon, this was done because shareholder activists like Arjuna Capital and Follow This own shares “for the sole purpose of attacking Exxon from within,” and the SEC’s rules allow for the tactic, the company said in a Feb. 5 filing.
In an emailed statement to ESG Dive, Follow This founder Mark van Baal said Exxon’s continued suit shows the company’s true goal is to prevent future shareholder proposals asking the company to ramp up its emissions reductions efforts.
“The true goal of Exxon's legal attack is preventing shareholders from voting on its greenhouse gas emissions,” van Baal said. “These emissions, specifically scope 3 emissions, are the concern of more and more investors who want to safeguard the long-term future of the company and the global economy in view of the climate crisis.”
Massachusetts-based Arjuna Capital and Amsterdam-based Follow This officially withdrew the proposals Feb. 5. When the proposal was withdrawn, Arjuna Capital’s Chief Investment Officer Natasha Lamb said in an emailed statement, the oil company now had “no basis to continue this attack.”
On Feb. 2, when the investors notified the court of the impending withdrawal, Judge Mark Pittman appeared open to the argument that the case was moot, given Exxon was initially only looking for the court to give it permission to exclude the proposal from this year’s proxy votes. He requested a status update from Exxon since, as it stood, “the Court struggles to see what the ongoing case or controversy is in this matter,” he wrote.
After the proposal was withdrawn, the energy giant similarly withdrew its request for expedited relief. However, in subsequent filings and most recently in its Feb. 21 opposition, Exxon has asked the court to make a ruling because Arjuna Capital and Follow This have not agreed with the energy company’s assessment that the proposal is excludable nor, in Exxon’s view, “made ‘absolutely clear’ that their conduct will not recur.”
Arjuna Capital and Follow This officially submitted a motion to dismiss the case Feb. 12. Van Baal’s statement said Exxon’s continued lawsuit amounts to “intimidation and bullying.” He said his organization will turn its focus to building support for a climate resolution submitted to Shell’s board focused on getting the United Kingdom-based oil giant to align medium-term emissions reductions targets with the Paris Climate Accord.
ExxonMobil and Arjuna Capital did not respond to requests for comment in time for publication.
