Exxon sues shareholders over ESG proposal

January 25th, 2024

Shareholder voting rights could be under threat in the US as oil company ExxonMobil filed to sue investors over an ESG vote at its AGM.

ExxonMobil filed a complaint against activist investment firms Arjuna Capital and Follow This, which the oil company said became shareholders only to put forward proposals that would “diminish the company’s existing business”, Follow This reports.

The Dutch activist group said it learned about the complaint through an article on Reuters and that it has not seen the court filing.

The two groups submitted a proposal calling for an acceleration in ExxonMobil’s emissions reduction plans last month, which would be voted on at its upcoming AGM in May.

The resolution noted that while ExxonMobil has acknowledged the importance of reduction goals for Scope 1 and 2 emissions, it lacks any Scope 3 target, which accounts for 90% of its carbon footprint.

Follow This said the ExxonMobil’s current metrics are all based upon an intensity basis, which allow it to increase its absolute emissions.

The resolution also notes that oil and gas peers BP, TotalEnergies and Repsol all aim to reduce absolute Scope 1, 2, and 3 targets by at least 30% by 2030, and calls for a similar commitment from ExxonMobil.

The groups filed similar resolutions in 2022 and 2023, and in those cases, ExxonMobil accepted the resolutions on the ballot advising shareholders to vote against it, which the majority did.

This is in line with findings from the Minerva Shareholder Proposals Annual Review, which found that votes in favour of ESG proposals reduced by a significant margin from 2022 to 2023.

In the complaint, ExxonMobil said the shareholder proposal and proxy voting process has become “ripe for abuse by activists”.

Companies that want to exclude shareholder proposals from their proxy statements usually submit a request to the SEC, but ExxonMobil has bypassed this.

Mark van Baal, founder of Follow This, said: “With this remarkable step, ExxonMobil clearly wants to prevent shareholders using their voting rights.

“Apparently, the board fears investors will vote in favour of emissions reduction targets. It seems that ExxonMobil is afraid of its shareholders.”

Last Updated: 26 January 2024