Exxon Mobil has filed a lawsuit against activist investors in an effort to prevent a proposal calling for emissions cuts from coming to a vote of shareholders. The oil giant has accused the investors of abusing the process and proposing a resolution that does not seek to improve ExxonMobil’s economic performance or create shareholder value but rather aims to “constrain and micromanage” the company’s operations. Furthermore, Exxon has contended that U.S. securities law allows the company to exclude the proposal from appearing on the ballot for shareholders at the annual meeting.
The company’s decision to sue the investors represents a significant effort to secure a “declaration” from a judge supporting its move to exclude the proposal and could lead to stricter scrutiny of future shareholder proposals. This comes amid a backlash against environmental, social, and governance (E.S.G.) initiatives, with some companies and investors distancing themselves from such measures. The support for E.S.G. proposals among shareholders has declined in recent years, with a sharp decrease in support for environmental proposals in particular, suggesting a shift in priorities among investors and companies.
The lawsuit filed by Exxon has sparked further debate about the impact of E.S.G. initiatives on shareholder voting and the broader political landscape. With the Biden administration adopting a stricter standard for company challenges to activist proposals and investors pulling billions of dollars from E.S.G. funds, it is clear that E.S.G. issues have become a significant focus in both the corporate and political arenas.