Exxon Mobil, an American multinational oil giant, filed a lawsuit in a court in Texas on Sunday, January 21, trying to block a climate proposal by activist investors from being put to a vote at the shareholder meeting that will happen in May.
For the first time ever, Exxon has taken legal action by suing to thwart a shareholder proposal, according to Reuters. Meanwhile, the judge who was given the case has a history of siding with conservative causes.
Exxon believes that an "extreme agenda" motivates the investors and that their repeated suggestions fail to improve long-term shareholder value or serve the interests of investors.
Pushing for 'Scope 3' Goals
A coalition of activist investors, including the American activist investment company Arjuna Capital and the shareholder activism organization Follow This, has pushed for more stringent climate objectives from oil giants like Exxon and others. They are pushing for Exxon to establish so-called "Scope 3" goals to lower emissions from its customers.
The New York Post said that among the five main Western oil companies, only Exxon reportedly does not have these objectives.
Follow This has presented comparable recommendations at shareholder meetings of many oil giants throughout the previous two years. Last year, it garnered 10% approval, and in 2022, it got 28%. Exxon wants to drop the Scope 3 objectives out of its proxy statement since, according to the oil giant, shareholders have already rejected them.
Exxon vs. Activist Investors
In their proxy statement, Exxon is requesting that the Scope 3 plan be excluded by the court in the United States District Court for the Northern District of Texas.
This court often handles cases originating from the Southern District, which includes Spring, Texas, the location of Exxon's headquarters. Around 5 o'clock on Sunday afternoon, the Northern court received the complaint.
US District Judge Reed O'Connor of Fort Worth will be hearing the case. He has a history of siding with conservative plaintiffs who challenge regulations and legislation related to healthcare, LGBTQ rights, and weapons.
Based on Exxon's arguments, Arjuna and Follow This are trying to become shareholders, so they may push for policies that would hurt the company's current operations.
Last year, Follow This suggested that shareholders would be best served by adopting a medium-term goal that covers Scope 3 and investing in the energy transition, both of which are in line with the Paris Agreement. It argued that if goals were defined, there would be less chance of stranded asset losses, governmental interventions, and loss of access to financial markets.
Exxon is seeking a resolution by March 19. In order to have its annual shareholder meeting on May 29, the company must submit its proxy statement no later than April 11.
