Last month, ExxonMobil sued two of its “activist investors” — groups that try to use shareholder resolutions to pressure companies into taking action on social and environmental problems — in an attempt to block a proposal for the oil giant to limit its climate pollution from coming to a vote at an upcoming shareholder meeting.
Follow This and Arjuna Capital announced Friday that they would withdraw their proposal from the ballot and promised not to refile. But Exxon says it will move forward with its lawsuit anyway.
“We believe there are still important issues for the court to resolve,” an Exxon spokesperson said of the lawsuit, which is the first of its kind to try to take a climate resolution off the ballot. “There is no change to our plans.”
The shareholder groups maintain that there is no reason for the oil giant to continue its lawsuit — unless Exxon wants to prevent investors from speaking out in the future. “This amounts to tactics of intimidation and bullying,” Natasha Lamb, chief investment officer of Massachusetts-based Arjuna Capital, said in a statement.
Follow This and Arjuna Capital’s now-withdrawn resolution encouraged Exxon to put a plan in place to reduce the “Scope 3” emissions that arise from the use of its fossil fuel products. (Exxon’s emission-reduction plans and net-zero “ambitions” do not account for its Scope 3 emissions, which make up the vast majority of its emissions in total.) The groups had filed the same resolution in 2022 and 2023, and both times, Exxon advised its shareholders to vote against it. Both times, the majority did.
But this year, instead of allowing the proposal to come to a vote at its annual shareholder meeting in May, Exxon filed a lawsuit accusing the groups of being fueled by an “extreme agenda” that is “calculated to diminish the company’s existing business.”
Advocates say the oil giant’s legal actions seem aimed at preventing shareholders from even suggesting the company makes a plan to reduce its emissions, considering such resolutions are completely non-binding — and the one Exxon sued for is no longer in play.
“What Exxon is asking for in this case is to say that shareholders should have no right to question companies on climate-related issues,” said Danielle Fugere, President & Chief Counsel of As You Sow, another shareholder advocacy group. “That’s obviously an extreme viewpoint, and one that the vast majority of shareholders and the SEC don’t agree with. It’s an end run around the process.”
A larger legal strategy?
Indeed, there is already a process in place for companies to appeal to the Securities Exchange Commission (SEC) to stop resolutions they feel are “micromanaging” their ordinary business operations or violating another SEC rule.
In its complaint, Exxon maintained that the existing proposal and proxy voting process is “flawed,” arguing that it “does not serve investors’ interests and has become ripe for abuse by activists with minimal shares and no interest in growing long-term shareholder value.” The company’s lawsuit seeks to bypass that process entirely, asking the court for a declaratory judgment excluding the proposal from the ballot (along with attorneys’ fees and other expenses). Now that the proposal has been withdrawn, it’s unclear what outcome Exxon is seeking.
The lawsuit is being argued in part by attorneys at Gibson, Dunn & Crutcher — a firm that, as recently reported by ExxonKnews and DeSmog, is helping to lead the fossil fuel industry’s legal strategy to silence opponents in court. While using a free speech defense to protect oil companies from liability for deceiving the public about climate change, Gibson Dunn is simultaneously representing them in a slew of lawsuits that accuse their critics of violating the law.
Which begs the question: is Exxon’s latest suit an extension of the latter tactic — a way to insulate its ever-growing fossil fuel operations from scrutiny, even from its own investors?
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Kathy Mulvey, Climate Accountability Campaign Director at the Union of Concerned Scientists, said the suit was an “aggressive escalation of the fossil fuel industry-driven backlash against investors who take into consideration not only short-term profits, but also the health of the social and ecological systems on which our economy and all life on Earth depend. The company is seeking to dilute investor demands for more ambitious climate action as it simultaneously attempts to intimidate shareholders who are leading the charge.”
In lashing out at shareholders who are asking for meaningful action behind the company’s pledges, Exxon is “showing its true stripes,” she said.
Exxon’s “true stripes”
At the same time Exxon is battling efforts to reign in its emissions and transition away from fossil fuels, the company is publicly claiming that it has better solutions in store.
“Wind and solar alone can’t solve emissions in the industrial sectors that are at the heart of a modern society. The technologies ExxonMobil is pursuing can,” said Exxon’s chief executive Darren Woods during a speech about “reframing the climate challenge” at the Asia Pacific Economic Cooperation (APEC) CEO summit in November. “World-scale problems like climate change need world-scale companies to help solve them — like ExxonMobil.”
In an interview with the Financial Times during his debut at COP28, Woods claimed that the UN climate talks “put way too much emphasis on getting rid of fossil fuels, oil and gas, and not . . . on dealing with the emissions associated with them.”
Experts and advocates have long warned that technological “solutions” claiming we can reduce emissions without phasing out oil and gas — like carbon capture — are a farce intended to prolong the lifespan of fossil fuels. In November, the International Energy Agency said the fossil fuel industry needed to “[let] go of the illusion that implausibly large amounts of carbon capture are the solution” to climate change.
Exxon is well aware of that reality, internal documents show — but it plows on with its narrative nonetheless. In its complaint against investors, Exxon boasts that it already “helps its customers reduce their own emissions” by “expanding the supply of natural gas to displace coal,” “produc[ing] lightweight plastics and other materials for a range of vital health, safety, and lower-emissions products,” and “developing and implementing carbon capture technologies.”
As Exxon rakes in profits and doubles down on fossil fuels, its claim to be an essential in the clean energy transition is “the latest evolution of its decades-long disinformation and greenwashing campaign,” said Mulvey. Exxon just reported $36 billion in earnings for 2023 — its second-biggest annual profit in a decade after the record-breaking $55.7 billion it made the year prior. Last year, the company announced that it was making one of the biggest oil and gas mergers in history.
Exxon’s “continued position that it is somehow not subject to climate concerns” comes at a cost for everyone else, said Fugere. “Climate change is costing billions of dollars globally. We’re experiencing droughts and food can’t be grown. We’ve got floods, we’ve got fires, we can’t get insurance — the list goes on.”
“It’s just like whale oil,” she said. “The company can’t stop progress.”
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This article by ExxonKnews is published here as part of the global journalism collaboration Covering Climate Now (CCN).
Editor’s Note: The opinions expressed here by the authors are their own, not those of Impakter.com — Featured Photo Credit: Justin.
