By Sabrina Valle
HOUSTON (Reuters) -Exxon Mobil Corp on Sunday filed a complaint in a Texas court seeking to prevent a climate proposal by activist investors from going to a vote during the company’s shareholder meeting in May.
This is the first time Exxon is seeking to exclude a shareholder proposal by filing a complaint in court. The case was assigned to a judge with a track record of ruling in favor of conservative causes.
Exxon says the investors are “driven by an extreme agenda” and that their repeated proposals do not serve investors’ interests or promote long-term shareholder value. Investors led by U.S. activist investment firm Arjuna Capital and shareholder activist group Follow This are asking Exxon and other oil majors to adopt tighter climate targets.
They want Exxon to set so-called Scope 3 targets to reduce emissions produced by users of its products. Exxon is the only one among the five Western oil majors which does not have such targets. Follow This in the past two years made similar proposals in shareholder meetings of different oil majors. It received a 28% approval in a 2022 voting, and 10% last year. Exxon claims shareholders have already rejected scope 3 targets so it wants to exclude the proposal from its proxy statement.
Arjuna and Follow This were not available for comment on the lawsuit on Sunday night.
JURISDICTION
Exxon is asking a court in the U.S. District Court for the Northern District of Texas to exclude the Scope 3 proposal in its proxy statement.
Cases from Spring, Texas, where Exxon is based, are usually addressed by the court for Southern District. The complaint was filed to the Northern court on Sunday around 5 p.m.
The case has been assigned to U.S. District Judge Reed O’Connor, an appointee of Republican former President George W. Bush in Fort Worth. O’Connor has a track record of ruling in favor of conservative litigants challenging laws and regulations governing guns, LGBTQ rights and healthcare.
In 2018, the judge declared Democratic former President Barack Obama’s signature healthcare law, the Affordable Care Act known as Obamacare, unconstitutional. The U.S. Supreme Court later upheld the law. Exxon says Arjuna and Follow This pursue a strategy to “become shareholders solely to campaign” for changes “calculated to diminish the company’s existing business.”
Follow This said last year that investing in the energy transition and setting a Paris-aligned medium-term target covering Scope 3 is of shareholders’ best interest. Goals would prevent risks of losing access to capital markets, of facing policy interventions and incurring in losses associated with stranded assets, it said.
Exxon is seeking relief by March 19. Its proxy statement needs to be filed by April 11, in time for its annual shareholder meeting on May 29.
(Reporting by Sabrina Valle; additional reporting by Nate Raymond; Editing by Richard Chang and Christian Schmollinger)
