Exxon accused of ‘bullying’ tactics in legal pursuit of climate activist investors

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Climate activist investors have accused ExxonMobil of using “bullying” tactics and putting shareholders’ rights “under attack” by targeting them in a lawsuit even after they withdrew a resolution demanding the oil major do more to cut greenhouse gas emissions ahead of its general meeting.

The accusation from Follow This came as the Dutch shareholder group announced on Tuesday it had filed a motion to dismiss Exxon’s legal action alongside investment adviser Arjuna Capital, which is also targeted by the lawsuit.

Exxon sued the shareholders last month in an attempt to block the petition from going to a vote, alleging that the resolution breached US securities rules, marking the first time the Houston-based energy group has sought to prevent such a vote by using the courts. Earlier this month, Exxon said it would maintain the lawsuit despite the two investors’ decision to abandon their resolution.

Follow This said on Tuesday there was no “case” or “controversy” against the pair because they had withdrawn the resolution and agreed not to refile it.

Mark van Baal, founder of Follow This, said the activists had been forced to withdraw the resolution because of “Exxon’s preference to fight a battle in court instead of giving shareholders their right to vote in the annual meeting”.

“Exxon’s legal action amounts to tactics of intimidation and bullying to silence our fair ask to tackle the climate crisis,” said van Baal, adding that “shareholders’ rights are under attack”.

Van Baal said Exxon “may vastly prefer litigation against parties like Arjuna and Follow This”, two groups that had far “fewer resources and who Exxon can unfairly malign in its complaint”, over asking the Securities and Exchange Commission to block it.

The SEC has the ability to refuse shareholder resolutions but decided in 2021 to allow more petitions to go to a vote.

On Tuesday, Exxon said the current process to get proposals excluded from annual meetings was “flawed” and permitted activists with minimal shares to “bring an increasing number of repeat proposals that do nothing to grow long-term shareholder value”.

“The intent of our lawsuit is simple — we want clarity on a process that has become ripe for abuse. We hope our suit motivates the SEC to go back to applying the proxy rules as they were written, not as they’ve been interpreting them over the last few years,” added Exxon.

The company’s lawsuit was filed in a US district court in Texas and alleges that the proposal by Follow This and Arjuna violated SEC rules for such investor petitions. Exxon has accused the groups of being “driven by an extreme agenda”.

Earlier this month, lawyers for Exxon told a federal judge that the case was not moot, arguing that Follow This and Arjuna had manipulated shareholder activism “for the sole purpose of attacking ExxonMobil from within”.

Follow This, backed by thousands of small investors, has used shareholdings in oil and gas companies to file climate resolutions at oil companies in Europe and the US for years. The burning of fossil fuels is by far the largest contributor to global warming. 

In the statement, van Baal said the proposal from Follow This and Arjuna asked “for a shareholder vote to encourage the company to come up with a plan and targets to accelerate greenhouse gas reduction efforts”. 

Exxon has faced heavy criticism, including from Norway’s oil fund, over its decision to sue its shareholders.

Similar climate motions have failed to reach majority support at previous Exxon annual meetings, with the vote in favour from shareholders slipping from 27.1 per cent in 2022 to 10.5 per cent in 2023.

Exxon has set a goal to reduce emissions from its own operations to net zero by 2050. But the bulk of its emissions are so-called scope 3, which come from the burning of the oil and gas it produces and sells, rather than energy used in its own operations.

Follow This said it would instead refocus its efforts on a resolution it had co-filed with 27 big investors, including Amundi, at Shell’s annual meeting later this year. 

Additional reporting by Tom Wilson

This post was originally published on Financial Times

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