Exxon Mobil has filed a lawsuit in federal court aiming to remove a climate-related shareholder proposal from its proxy ballot.
The oil company on Jan. 21 filed a lawsuit in U.S. District Court in Fort Worth, Texas, against activist investors Arjuna Capital and Follow This after the two groups last month submitted a proposal calling for a "further accelerating" of Exxon's emission reduction plans that include Scope 3 emissions, which are the indirect emissions generated from Exxon's supply chain.
A similar proposal last year gained just over 10% of shareholder support, down from 27% in 2022.
"The 2024 Proposal does not seek to improve Exxon Mobil's economic performance or create shareholder value," Exxon said in the complaint. "Like the previous proposals, it is designed instead to serve Arjuna's and Follow This' agenda to 'shrink' the very company in which they are investing."
Shareholders can file proposals before a company's annual meeting. If a company thinks a proposal is out of bounds or has already been addressed, it can file a no-action letter with the SEC, requesting permission not to include the proposal in its proxy statement.
But Exxon, is skipping the SEC and heading straight to court.
The decision is highly unusual and marks an aggressive pushback against climate activists who use shareholder voting to influence boardroom strategy. It also comes as the U.S. Supreme Court questions a longstanding legal doctrine known as the "Chevron doctrine" that gives federal agencies wide latitude to interpret unclear mandates from Congress.
The lawsuit is a "remarkable step," Follow This founder Mark van Baal said in a statement. "Exxon Mobil clearly wants to prevent shareholders using their rights. Apparently, the board fears shareholders will vote in favor of emissions reductions targets," he said. Arjuna has "a fundamental right and duty to voice concern over climate risk," said Natasha Lamb, the firm's chief investment officer.
Bloomberg contributed to this story.
