ExxonMobil oil company sues to block climate proposals from activist investors

This story was originally published by The Guardian and appears here as part of the Climate Desk collaboration.

The US oil company ExxonMobil has filed a lawsuit to block a vote on a climate resolution brought by a green activist, in move that will be watched closely by fossil fuel companies worldwide.

The company hopes to stop investors voting on a motion put forward by Follow This, a Dutch green activist investor group, which called for Exxon to accelerate its attempts to cut greenhouse gas emissions.

The company filed the lawsuit at a US district court in Texas on Sunday, arguing that the proposal violates SEC investor petition rules. It asked the court to make a decision by 19 March, before its annual meeting on 29 May.

The move will be followed closely by other oil and gas companies and green groups, as environmental campaigners attempt to hold the world’s biggest fossil fuel companies to account for their emissions.

Follow This, which put the motion forward with the investment adviser Arjuna Capital, has registered motions at a series of oil companies’ annual general meetings for years, in a campaign to tighten their commitments to reducing their emissions.

Shell is facing a rebellion from investors that own about 5% of its shares over a Follow This resolution at this year’s AGM, after a chaotic meeting disrupted by green campaigners last year.

It is unclear whether Exxon also sent a “no action letter” to the Securities and Exchange Commission (SEC), the typical route taken by listed companies attempting to stop a vote on a resolution. The company has argued that the Follow This and Arjuna proposal breaks the US regulator’s rules designed to prevent shareholders being able to “micromanage” businesses’ decisions through proposals.

The SEC has come under pressure for allowing environmental groups to register too many motions at annual shareholder meetings, after it revoked policies adopted by the Donald Trump administration.

Last year, ExxonMobil announced it planned to reach net zero by 2050 for greenhouse gas emissions from its own operations.

In 2021, an activist hedge fund, Engine No 1, won three seats on Exxon’s board at its annual meeting after demanding it reduced its emissions more quickly.

An Exxon spokesperson said: “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 SEC’s proxy rules as written to stop this abuse and eliminate the significant resources required to address them.”

Mark van Baal, of Follow This, said: “With this remarkable step, ExxonMobil clearly wants to prevent shareholders using their rights. Apparently, the board fears shareholders will vote in favour of emissions reductions targets. We don’t know why ExxonMobil took this remarkable step.”

In the UK, ExxonMobil’s subsidiary Esso Petroleum Company (EPC) owns the Fawley oil refinery in Hampshire as well as a fuel distribution business. There are 1,200 Esso branded forecourts in the UK, of which 197 are company owned.

Accounts filed at Companies House this month showed EPC’s pre-tax profits surged from £150m in 2021 to £864m, while turnover more than doubled, from £6.3bn to £13.7bn.

The group’s UK operations paid a £440m dividend to its US parent in September 2023, the accounts show.

“Turnover was significantly higher due to the economic recovery after the Covid-19 pandemic, driving up both volumes and prices,” the directors said.

EPC’s gross emissions in 2022 increased by more than 5% to 2.81m tonnes of CO₂ equivalent, up from 2.66m in 2021.