Exxon Mobil Corp, one of the largest oil companies in the world, has taken a bold step to block a climate proposal put forward by activist investors. The company has filed a complaint in a Texas court in an attempt to prevent the proposal from going to a vote during its shareholder meeting in May. This marks the first time that Exxon has sought to exclude a shareholder proposal by taking legal action.
The proposal in question is being led by investors from Arjuna Capital and the shareholder activist group Follow This. They are urging Exxon and other major oil companies to adopt stricter climate targets. Specifically, they are calling for Exxon to set what are known as “Scope 3 targets” to reduce emissions produced by users of its products. Interestingly, Exxon is the only one among the five Western oil majors that does not currently have such targets in place.
Exxon argues that the investors behind the proposal are driven by an extreme agenda and that adopting stricter emission goals would be detrimental to its business and share value. The company believes that these proposed changes are calculated to diminish its existing business rather than being in the best interest of the company and its shareholders.
This is not the first time that Arjuna Capital and Follow This have made similar proposals at shareholder meetings of other oil majors. However, their proposals have only garnered support from a minority of shareholders in the past. It remains to be seen whether their efforts will gain more traction this time around.
In a related development, a group of 27 investors, including Follow This, who collectively own around 5% of Shell’s shares, have co-filed an independent climate resolution. This resolution will also be brought to a vote during Shell’s shareholder meeting later this year. It seems that investor pressure on oil companies to take stronger action on climate change is growing.
Exxon’s move to block the climate proposal by filing a complaint in court is a significant escalation in this ongoing battle between activists and the oil industry. The company is seeking to exclude the Scope 3 proposal from its proxy statement, which needs to be filed by April 11 in preparation for the annual shareholder meeting on May 29.
The outcome of this legal battle will have far-reaching implications for Exxon and the wider oil industry. It will determine whether shareholder activism can successfully push oil companies to adopt stricter climate targets. The case also highlights the increasing importance of environmental concerns in the business world and the growing pressure on companies to address climate change.
Follow This has previously emphasized the importance of setting Paris-aligned medium-term targets covering Scope 3 emissions for the long-term interest of companies in the face of climate change. It remains to be seen how Exxon and other oil majors will respond to these demands and whether they will take meaningful action to address their environmental impact.
As the shareholder meeting approaches, all eyes will be on Exxon and its legal battle to block the climate proposal. The outcome of this case will undoubtedly shape the future of climate activism within the oil industry and could potentially set a precedent for other sectors as well. It remains to be seen whether Exxon’s efforts to exclude the proposal will be successful or if shareholder pressure for stronger climate action will prevail.
