US sustainability investor Arjuna Capital and Follow This, a well-known Dutch activist shareholder group, have asked judges to dismiss ExxonMobil’s lawsuit against them given the investors withdrew their climate shareholder resolution proposal.
In a motion filed with the Texas court chosen by Exxon for its lawsuit, Arjuna and Follow This argue that the dispute does not qualify as a “case” or “controversy” as required under the US Constitution because they had withdrawn the proposal and agreed not to resubmit or present it at any future Exxon shareholder meeting.
There was therefore no subject matter jurisdiction for Exxon’s complaint to proceed.
“In refusing to dismiss the case following the withdrawal, Exxon has laid bare its true intention – to challenge how the [Securities & Exchange Commission (SEC)] interprets and applies its own proxy proposal rules, without actually confronting the SEC itself,” the motion continued.
“Exxon may prefer litigating against parties like Arjuna and Follow This – who have fewer resources and whom Exxon can unfairly malign in its Complaint – over seeking a routine ‘no-action’ letter from the SEC”.
Follow This said it would now focus on building support for the climate resolution it has co-filed at Shell with the support of major institutional investors.
“Exxon’s legal action amounts to tactics of intimidation and bullying to silence our fair ask to tackle the climate crisis, but we will continue to empower shareholders to vote for change at other oil and gas companies, since Big Oil can make or break the Paris Climate Agreement,” said Follow This founder Mark van Baal.
He also thanked institutional investors for their support, “publicly and privately”, over the Exxon lawsuit, saying they realised that shareholders’ rights were “under attack”. Investors working with Follow This on the Shell shareholder told IPE they would be thinking about how best to respond to Exxon’s action.
The shareholder resolution Arjuna and Follow This had proposed was about asking Exxon to step up the pace of medium-term emissions reductions, including value chain emissions. The company has faced such requests before, with votes in favour dropping from 28% in 2022 to 11% in 2023.
Last week Dutch pension fund PFZW revealed it had given up on all but seven of the almost 100 oil and gas equity and credit holdings that remained in its portfolio after an engagement effort that had already seen it divest from energy majors including BP, Exxon Shell and Total.
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