A federal court in Texas has dismissed a lawsuit brought by ExxonMobil against activist shareholders pushing for the oil giant to reduce greenhouse gas emissions as well as contributions to anthropogenic climate change.
The lawsuit aimed at Arjuna Capital was dismissed after a lawyer for the activist investor group agreed not to pursue its effort to put climate science on the agenda at the company’s annual meetings.
At heart, the dispute centered on whether climate risk is a legitimate business concern and part of a corporate pushback against shareholder proposals. Exxon’s lawsuit had raised alarm among investors that by going through the courts rather than regulators at the US’s Securities and Exchange Commission (SEC) because it could restrict the ability of shareholders to raise concerns with public companies.
In the ruling, US district court judge Mark Pittman said Exxon’s claim was no longer valid after Arjuna “unconditionally and irrevocably” agreed not to submit a future proposal regarding Exxon’s greenhouse gas emissions.
“Our lawsuit put a spotlight on the abuse of the shareholder-access system,” Exxon said in a statement. “The court has made absolutely clear that Arjuna cannot continue abusing the process. Shareholder democracy is only as strong as the rules that govern it, which must be fairly and consistently applied.”
Netherlands-based climate group Follow This, which had been joined to the Arjuna claim, characterized the order as a victory for climate activists.
“The dismissal of Exxon’s lawsuit against shareholders is a victory for all investors who want to safeguard the long-term future of US oil and gas companies and the global economy in view of the climate crisis,” said Follow This founder Mark van Baal.
“The right for shareholders to file proposals has not been compromised as no precedent about the application of the SEC rules and use of shareholder rights has been created, which was the ultimate goal of pulling our proposal.”
Van Baal said that withdrawing the lawsuit was “the toughest decision in the history of Follow This, but we had to take one for the team, the global team of responsible investors. We are glad that our withdrawal was not in vain.”
Exxon had sued Follow This and Arjuna in January and had refused to drop the case after they agreed not to bring the shareholder petition forward. The company cited “the likelihood” the two could file similar resolutions in the future.
Exxon had been backed by the US Chamber of Commerce and the business roundtable trade groups who said that government regulators’ decision to allow “shareholder proposals pushing social and political agendas” enables “a subset of activists to commandeer corporate proxy statements for their own parochial ends”.
