US oil company ExxonMobil has filed a lawsuit to block a vote on a climate resolution introduced by a green activist, in a move that will be closely watched by fossil fuel companies around the world.
The company hopes to prevent investors from voting on a proposal put forward by Follow This, a Dutch environmental activist group of investors, which called on Exxon to accelerate its attempts to reduce greenhouse gas emissions.
The company filed the lawsuit in a US District Court in Texas on Sunday, arguing that the proposal violates the Securities and Exchange Commission’s investor solicitation rules. It asked the court to make a decision by March 19, before its annual meeting on May 29.
The move will be closely followed by other oil and gas companies and green groups, as environmental activists try to hold the world’s largest fossil fuel companies accountable for their emissions.
Follow This, which put forward the proposal with 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 cutting their emissions.
Shell is facing a revolt from investors who own about 5% of its shares over a “go for this” decision at this year’s annual general meeting, after a chaotic meeting disrupted by environmentalists last year.
It is unclear whether the company also sent a “no-action letter” to the Securities and Exchange Commission (SEC), which is the typical route listed companies take in an attempt to stop a vote on the resolution. ExxonMobil has claimed that the “Follow This and Arjuna” proposal violates US regulations designed to prevent shareholders from being able to “micro-manage” corporate decisions through the proposals.
The Securities and Exchange Commission has come under pressure to allow environmental groups to register too many proposals at annual shareholder meetings, after it rescinded policies adopted by Donald Trump’s administration.
Last year, ExxonMobil announced that it plans to reach net zero by 2050 for greenhouse gas emissions from its own operations.
In 2021, activist hedge fund Engine No. 1 won three seats on Exxon’s board at its annual meeting after demanding that it reduce its emissions more quickly.
An Exxon spokesman said: “The collapse of the shareholder proposal process, which allows supporters to advance their agendas through a stream of proposals, is not in the interests of investors.
“We are simply asking the court to apply the SEC’s agency rules as written to stop this violation and remove the significant resources required to address it.”
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Mark Van Baal, of Follow This, said: “With this remarkable move, ExxonMobil clearly wants to prevent shareholders from exercising their rights. The board is clearly afraid that shareholders will vote in favor of emissions reduction targets. We do not know why ExxonMobil took this step.” Brilliant.
In the UK, ExxonMobil’s subsidiary Esso Petroleum Company (EPC) owns the Foley 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 owned by the company.
Pre-tax EPC profits rose from £150m in 2021 to £864m, while turnover doubled from £6.3bn to £13.7bn, accounts filed at Companies House this month showed.
The group’s UK operations paid a £440m dividend to its US parent in September 2023, accounts show.
“Trade value was much higher due to the economic recovery after the Covid-19 pandemic, which led to higher volumes and prices,” the managers said.
Total EPC emissions in 2022 increased by more than 5% from 2.81 million tons of CO22 That’s equivalent to a rise of 2.66 meters in 2021.