Exxon Sues to Prevent Climate Proposal From Getting a Shareholder Vote

Exxon Mobil is suing two activist investors to prevent their proposal calling for emissions cuts at the oil giant from going to a vote of shareholders.

In a complaint filed in U.S. District Court for the Northern District of Texas on Sunday, Exxon accused the investors, Arjuna Capital and Follow This, of abusing the process for proposing shareholder votes to advance their priorities with votes “calculated to diminish the company’s existing business.”

Arjuna filed a proposal in December for a nonbinding resolution that urged Exxon to accelerate its plans to reduce its carbon emissions and expand the scope of the emissions it measures to include its suppliers and customers. Follow This joined in support of the proposal shortly thereafter, according to the complaint.

The proposal “does not seek to improve ExxonMobil’s economic performance or create shareholder value,” Exxon said in the complaint, but is instead “constraining and micromanaging” the company’s operations.

Exxon said it already planned to exclude the proposal from appearing on the ballot for shareholders at the company’s annual meeting in May, arguing that U.S. securities law allows the company to toss petitions that “deal with matters relating to the company’s ordinary business operations.” In an unusual twist, the company also sued the investors in an effort to secure a “declaration” from a judge supporting its move to exclude the proposal.

The company said guidance from staff at the Securities and Exchange Commission was informal and could be subject to interpretation. A court ruling in favor of Exxon could generate stricter scrutiny of the kinds of shareholder proposals that companies allow to be put to a vote in the future.