Dive Brief:
- A federal judge from Texas’ Northern District Court ruled in favor of ExxonMobil Thursday, allowing the oil major to forge ahead with its lawsuit against activist shareholders that asked the company to ramp up its emissions reduction efforts.
- Judge Mark Pittman denied Arjuna Capital’s request to dismiss Exxon’s lawsuit, but dismissed Follow This — who the oil company also sued — as a defendant, noting the latter fell outside the court’s jurisdiction as it was a Dutch organization.
- The ruling comes days before Exxon’s May 29 annual shareholder meeting, which has had an increasing focus from company investors who take issue with how the oil major legally pursued the activist investors over their climate-focused proposal.
Dive Insight:
Arjuna Capital and Follow This withdrew their proposal — which requested the company to ramp up its scope 1 and scope 2 greenhouse gas emissions reduction efforts and set scope 3 targets similar to its peers in the oil and gas industry — in February after Exxon filed the lawsuit. However, they continued to face legal action from the oil major.
Exxon, which filed the suit with Texas’ Northern District Court in January, asked the court to still rule on the case, contending that a ruling would prevent the ESG-focused shareholders from submitting a similar proposal in the future.
Pittman said in his decision that Arjuna Capital and Follow This’ decision to backtrack on their proposal did not make “absolutely clear” that such “offending conduct will not recur.”
“Exxon can hardly be faulted for distrusting organizations devoted to shareholder activism,” Pittman wrote. “Considering Defendants’ core mission … the company’s position is a rational response to entities [that are] categorically opposed to Big Oil.”
The judge’s decision comes the same week a group of 13 state finance officials and pension fund trustees wrote a letter to major asset managers, asking them to vote against ExxonMobil’s slate of board directors and CEO at its annual shareholder meeting, citing the oil company’s ongoing lawsuit against Arjuna Capital and Follow This.
The letter, which was also submitted as a securities filing, came a day after the California Public Employees’ Retirement System, the country’s largest pension fund, announced it would vote against all 12 members of Exxon’s board of directors and CEO during the company’s annual shareholder meeting. The fund also criticized the Texas-based oil giant for waging a “reckless” lawsuit against its shareholders in court, despite the pair withdrawing their climate-focused proposal earlier this year.
