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Exxon Mobil Corp. (NYSE: XOM) has filed a complaint in a Texas court to exclude an activist shareholder proposal from its upcoming shareholder meeting in May.
This is the first time Spring-based Exxon has sought to remove a shareholder proposal from the company’s proxy statement, and it is doing so now that the shareholders are attempting to push through the resolution for the third year in a row.
Two shareholders — Arjuna Capital and Follow This — put forward a resolution in December that would call for Exxon to “go beyond current plans” to accelerate “the pace of emissions reductions in the medium-term” for scope 1, 2 and 3 greenhouse gas emissions.
Exxon currently has plans to reduce scope 1 and 2 emissions — those caused by the company directly and indirectly — to net zero by 2050 but has made no targets for reducing scope 3 emissions. Scope 3 refers to emissions from assets and activities not owned by the company but that are indirectly affected by Exxon’s value chain.
In the complaint, Exxon claims that Arjuna Capital and Follow This are abusing the shareholder proposal process by submitting proposals that are not meant to benefit shareholders and instead aim to diminish Exxon’s existing business.
“Arjuna and Follow This have submitted numerous shareholder proposals to energy companies, including ExxonMobil,” the complaint said. "Although ExxonMobil’s shareholders have consistently rejected Arjuna’s and Follow This’s proposals, those proposals are expensive and time-consuming to address, and they are rarely designed to promote overall shareholder value.
“Instead, they are frequently at odds with the interests of investors who are seeking to obtain returns for their pensions, 401(k) plans, and other savings and retirement investments. Defendants’ proposal this year is no different.”
The complaint added that the shareholders should not be permitted to submit proposals that interfere with Exxon’s ordinary business operations when close to 90% of voting shareholders rejected the firms’ 2023 proposal.
“By calling for an acceleration in the pace of medium-term reductions across Scope 1, 2, and 3 greenhouse gas emissions, Defendants are asking ExxonMobil to change its day-to-day business by altering the mix of — or even eliminating — certain of the products that it sells,” the complaint said. "Defendants’ overarching objective is to force ExxonMobil to change the nature of its ordinary business or to go out of business entirely."
Exxon asked the court to allow the exclusion of the shareholder proposal by March 19 so it can send out its proxy statement by April 11 in preparation for its May 29 shareholder meeting.
After seeing the news of Exxon’s complaint from Reuters, who initially reported on the complaint, Follow This released a statement from its founder, Mark van Baal: “With this remarkable step, ExxonMobil clearly wants to prevent shareholders using their voting rights. Apparently, the board fears investors will vote in favor of emissions reduction targets. It seems ExxonMobil is afraid of its shareholders.
“Maybe they see the writing on the wall. More and more institutional investors want to tackle the climate crisis and they realize Big Oil has a key role to play, like the 27 institutional investors who recently co-filed a similar climate resolution at Shell alongside Follow This.”
Last week, Follow This and 27 institutional investors owning around 5% of Shell PLC’s (NYSE: SHEL) stock filed a climate resolution for the company to align its medium-term emissions reduction targets with the Paris Climate Agreement.
Exxon said in a statement to the Houston Business Journal: “The breakdown of the shareholder proposal process, one that allows proponents to advance their agendas through a flood of proposals, does not serve the interests of investors. We are simply asking the court to apply the [Securities and Exchange Commission's] proxy rules as written to stop this abuse and eliminate the significant resources required to address them.”
The supermajor has gone back and forth on its position on the energy transition. At CERAWeek by S&P Global in 2023, CEO Darren Woods denounced the metric of scope 3 emissions to evaluate individual companies, Upstream reported. Woods said at the event that expecting scope 3 emissions reductions for individual companies could actually lead to more emissions globally.
However, the company withdrew its membership with the Independent Petroleum Association for America in 2022 because the organization did not support emission-reduction policies and advocated against strong methane regulations.
Exxon also recently announced the launch of its Mobil Lithium brand in its attempt to become a leading producer of lithium for electric vehicles.
The company has faced much shareholder pressure in the past, with activist shareholder Engine No. 1 getting three of its nominees elected to Exxon's board of directors in 2021.