ExxonMobil
Follow This's motion called on the energy company to accelerate its efforts to reduce greenhouse gas emissions
Monday, January 22, 2024, 1:18 p.m. GMT
U.S. oil company ExxonMobil has filed a lawsuit to block a vote on a climate resolution introduced by a green activist, a move that will be closely watched by fossil fuel companies worldwide.
The company hopes to prevent investors from voting on a motion from Follow This, a Dutch investor group of green activists that called on Exxon to speed up its attempts to reduce greenhouse gas emissions.
The company filed the lawsuit in a U.S. district court in Texas on Sunday, arguing that the proposal violates the SEC's investor petition rules. It asked the court to make a decision by March 19 and before its annual meeting on May 29.
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The move is being watched closely by other oil and gas companies and green groups as environmental activists seek to hold the world's largest fossil fuel companies accountable for their emissions.
Follow This, which filed the motion with investment advisor Arjuna Capital, has for years registered motions at various oil companies' annual general meetings to tighten their commitments to reduce their emissions.
After a chaotic meeting disrupted by green activists last year, Shell faces a rebellion at this year's annual general meeting from investors who own about 5% of its shares.
It's unclear whether the company also sent a “no-action letter” to the Securities and Exchange Commission (SEC), the typical route public companies take to prevent a vote on a resolution. ExxonMobil has argued that the “Follow This and Arjuna” proposal violates U.S. regulator rules designed to prevent shareholders from “micromanaging” companies’ decisions through proposals.
The SEC came under pressure for allowing environmental groups to over-register at annual shareholder meetings after it revoked guidelines adopted by the Donald Trump administration.
Last year, ExxonMobil announced that it plans to achieve net-zero greenhouse gas emissions from its own operations by 2050.
In 2021, an activist hedge fund, Engine No 1, won three seats on Exxon's board at its annual meeting after calling for it to reduce its emissions more quickly.
An Exxon spokesman said: “The collapse of the shareholder proposal process, which allows proponents to advance their plans through a barrage of proposals, does not serve the interests of investors.”
“We simply ask the court to apply the SEC’s proxy rules, as written, to stop this abuse and eliminate the significant resources needed to combat it.”
Mark van Baal from Follow This said: “With this remarkable move, ExxonMobil clearly wants to prevent shareholders from using their rights.” Apparently the board fears that shareholders will vote for emissions reduction targets. We do not know why ExxonMobil took this remarkable step.”
In the United Kingdom, ExxonMobil's subsidiary Esso Petroleum Company (EPC) owns the Fawley oil refinery in Hampshire and a fuel distribution company. There are 1,200 Esso petrol stations in the UK, 197 of which are owned by the company.
Accounts filed with Companies House this month showed EPC's pre-tax profits rose to £864m from £150m in 2021, while sales rose to £13.7bn from £6.3bn than doubled.
The group's UK operations paid a £440 million dividend to its US parent in September 2023, the accounts show.
“Sales were significantly higher due to the economic recovery following the Covid-19 pandemic, which drove up both volumes and prices,” the directors said.
EPC's gross emissions increased by more than 5% to 2.81 million tonnes of CO2 equivalent in 2022, up from 2.66 million tonnes in 2021.
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