ExxonMobil Sues Own Investors in Warning to Climate Activists

ExxonMobil investors have abandoned calls for the company to act more aggressively to curb emissions from its operations after ExxonMobil sued them in response. In what the Financial Times reports is "likely to have a chilling effect on similar forms of shareholder activism," ExxonMobil took "the unusual step" of suing two investor groups, Follow This and Arjuna, that had filed shareholder proposals asking the company to accelerate the pace of reductions in greenhouse-gas emissions, including Scope 3 emissions. ExxonMobil currently has no plans to cut Scope 3 emissions, though they account for 90% of the company's carbon footprint, according to the groups.

ExxonMobil argued the proposal came from activists "masquerading as investors," was virtually identical to other failed proposals, did not have sufficient support to be resubmitted, and violated Securities and Exchange Commission guidelines preventing shareholder proposals from trying to "micromanage" business decisions, per the Times. Arjuna's chief investment officer Natasha Lamb said the lawsuit showed the company was using "tactics of intimidation and bullying" in an effort to silence investors who "voice climate-risk concerns." Still, the groups withdrew their proposal Friday. That wasn't enough for ExxonMobil. The company announced it would abandon a request for an expedited hearing but continue with the lawsuit in the hope that it would clarify SEC rules.

The company has argued the SEC isn't enforcing its own rules about when investors can resubmit shareholder proposals. In 2021, the SEC said it would no longer consider shareholder proposals asking companies to set targets to address climate change as "excludable on micromanagement grounds ... so long as the proposals afford discretion to management as to how to achieve such goals." The National Association of Manufacturers counters that forcing companies to publish such shareholder proposals violates their right to free speech, per NPR. The outlet adds "interest groups on both sides of the case say [the lawsuit] could unleash a wave of corporate litigation against climate activists." (More ExxonMobil stories.)