In Letter to Exxon’s Board, Investors Denounce Lawsuit Against Shareholder Proponents as an Attack on Shareholder Rights
CONTACT:
Susana McDermott
Director of Communications
Interfaith Center on Corporate Responsibility (ICCR)
201-417-9060 (mobile)
smcdermott@iccr.org
Shareholders say a lawsuit over a shareholder proposal calling for disclosures of GHG emissions reductions is akin to a “SLAPP suit” intended to intimidate perceived opponents and silence dissenting points of view.
NEW YORK, NY, THURSDAY, FEBRUARY 7, 2024 – The Interfaith Center on Corporate Responsibility (ICCR) today announced it had sent a letter to the board of directors on ExxonMobil ($XOM) requesting that they prevail upon management to abandon a lawsuit it brought against shareholder proponents calling for disclosures related to the company’s management of climate risk.
The lawsuit against shareholders Arjuna Capital and Follow This, co-sponsors of a proposal focused on climate risk and seeking an accelerated reduction in GHG emissions to meet net zero by 2050 goals, seeks the court’s approval to block the proposal from its corporate proxy where it would go to a vote at the company’s annual meeting this spring. The lawsuit was filed in a Northern Texas Court known to be “friendly” to the company.
In its letter, ICCR characterized the lawsuit as a serious threat to shareholder rights and a clear message that the company is seeking to shut down any debate by its shareholders on actions needed to address climate risk. Investors further say this action attempts to circumvent and undermine the Securities and Exchange Commission which governs the shareholder proposal process and, in cases where companies challenge the merits of shareholder proposals recommends whether or not they should appear on the proxy.
Said Josh Zinner, ICCR’s CEO, “The lawsuit is an attempted 'end run' around the SEC which it knows is likely to agree that the request is legitimate given the systemic risks climate change represents to investors’ entire portfolios. This aggressive action is nothing less than a 'SLAPP suit' intended to intimidate perceived opponents and silence dissenting points of view. The disregard Exxon shows for both the urgency of the climate crisis and the legitimate concerns of its shareholders is breathtaking.”
Shareholder proposals seeking action on GHG reduction have been filed at Exxon since the late 1980s/early 1990s when climate scientists, including Exxon’s own scientists, first made the indisputable connection between the burning of fossil fuels and dangerous global warming. A study by Harvard University and the University of Potsdam published last year showed that not only did Exxon know that GHG emissions were harming the environment, but it was also able to predict with remarkable accuracy how devastating the damage would be.
Exxon’s very public conflict with Engine No. 1 in 2021, which was supported by some of its biggest investors who sought increased board oversight of climate risk, further demonstrated Exxon’s reluctance to address climate concerns.
Said, Christina Herman, ICCR’s Sr. Program Director for Climate and Environment, "Exxon’s decades-long and well-documented campaign of misinformation regarding climate change succeeded in sowing damaging doubt. This has hindered our ability to address the climate threat and embedded risk to investors across their entire portfolios. Exxon’s announcement earlier this week that it intends to pursue the case despite the proponent’s withdrawal of the proposal while seeking an award of attorneys’ fees and costs associated with the suit, only exacerbates the perception that Exxon's intention is to utterly silence dissenting investors. Taken in this context, one can easily see the pattern emerge of a company stuck in the past - an unwilling participant in the clean energy transition the rest of the world understands is inevitable.”
ICCR’s letter points out that climate-related proposals have served as an avenue for investors to express their views to Exxon about the need to address the climate risks inherent in its business model, with several achieving majority votes. Other proposals garnering votes in the 35% to 49% range represent strong messages of dissent from shareholders calling for more urgent action to better manage climate risk.
Continued Zinner, “By filing this lawsuit, Exxon sets a dangerous precedent attempting to limit a crucial and productive form of investor-management communication without good cause. In bypassing the SEC, Exxon is undermining a long-standing private ordering process that has been extremely beneficial to both investors and companies. Absent the SEC Staff as arbiter, investors would be forced to appeal to the courts to protect their rights, ushering in a new era of onerous and costly litigation.”
About the Interfaith Center on Corporate Responsibility (ICCR)
The Interfaith Center on Corporate Responsibility (ICCR) is a broad coalition of more than 300 institutional investors collectively representing over $4 trillion in invested capital. ICCR members, a cross-section of faith-based investors, asset managers, pension funds, foundations, and other long-term institutional investors, have over 50 years of experience engaging with companies on environmental, social, and governance (“ESG”) issues that are critical to long-term value creation. ICCR members engage hundreds of corporations annually in an effort to foster greater corporate accountability. Visit our website www.iccr.org and follow us on Twitter/X (@iccronline), LinkedIn, and Facebook.
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