ExxonMobil Corp. has sued two climate activist investors to stop them from presenting an “extreme” climate proposal at its annual shareholder meeting in May.
In January, the company took the unprecedented step of filing a lawsuit against North Carolina-based Arjuna Capital and a group of activist investors based in Amsterdam. The lawsuit alleges that the resolution request is part of an “extreme program” aimed at shrinking the company’s existing business and is a violation of SEC rules. He is seeking legal precedent to prevent activist groups from exerting intense pressure on the shareholder petition process.
Both groups want Exxon to set Scope 3 targets to reduce emissions from oil and gas consumers. While Exxon has net zero targets by 2050 for Scope 1 and Scope 2 emissions (covering pollution from its production processes and energy consumed), it does not have Scope 3 targets (covering indirectly generated carbon emissions) – unlike four other major oil companies. According to Follow This, Shell, BP, Chevron and TotalEnergies have adopted Category 3 targets after their shareholders voted in favor of similar decisions.
Shareholder activism is not a new phenomenon; but corporate boards and management teams are advised to remain vigilant, according to the authors of Lazard’s latest Annual Shareholder Activism Survey. Global campaign activity reached record levels in 2023. With 252 new campaigns (up 7% year-on-year), activity exceeded the record set in 2018, with the highest activity seen in Europe and Asia Pacific. The January 2024 report noted that the total number of board seats won by activists increased for the third year in a row, with a record 31% of board seats won through proxy contests last year, well above the historical average of 17 %.
Exxon has long been one of the largest, most successful and enduring public companies in the world. In December 2023, the company said it was on track to more than double its revenue potential between 2019 and 2027, with compound annual profit growth of 18%.