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ExxonMobil sues activist investors to ban shareholder vote on 'extreme' climate proposal

A lawsuit by U.S. oil giant ExxonMobil to stop American and Dutch investors from putting in front of investors a proposal requiring the company to reduce emissions faster to comply with the Paris Climate Agreement could have a chilling effect on shareholder activism. File Photo by Eduardo Sverdlin/UPI
A lawsuit by U.S. oil giant ExxonMobil to stop American and Dutch investors from putting in front of investors a proposal requiring the company to reduce emissions faster to comply with the Paris Climate Agreement could have a chilling effect on shareholder activism. File Photo by Eduardo Sverdlin/UPI | License Photo

Jan. 22 (UPI) -- U.S. oil giant ExxonMobil is suing a group of American and Dutch activist investors in an unprecedented effort to block them from putting forward an "extreme" proposal for stricter emissions reductions at its annual shareholder meeting in May.

The filing of the suit in the Northern District of Texas on Sunday against Massachusetts-based Arjuna Capital and Follow This, an Amsterdam-based activist investor group, could have serious implications for shareholder activism if ExxonMobil is successful.

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Alleging the so-called "climate resolution" is part of an "extreme agenda" and an abuse of SEC's rules, the company said it was seeking a legal precedent that would stop groups with an agenda from hijacking companies and saddling them with prohibitive administrative and legal costs of fending them off.

"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," ExxonMobil said in a statement.

"We are simply asking the court to apply the SEC's proxy rules as written to stop this abuse and eliminate the significant resources required to address them."

Follow This founder Mark van Baal said in a statement that the suit showed Exxon Mobil's intention to deny shareholders their rights because it feared the meeting will vote to adopt the resolution.

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Van Baal said ExxonMobil's response was puzzling given it had successfully defeated the same resolution in 2022 and 2023.

"Maybe they see the writing on the wall. More and more institutional investors want to achieve Paris, like the 27 institutional investors who recently co-filed a similar climate resolution at Shell alongside Follow This," he said.

The resolution seeks to commit the company to so-called Scope 3 medium-term product emissions reduction targets in line with the 2015 Paris Climate Agreement.

The other big-four Western oil and gas giants -- Shell, BP, Chevron and TotalEnergies -- all adopted Scope 3 targets after their shareholders voted for similar resolutions, according to Follow This.

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