Court Dismisses ExxonMobil Lawsuit Against Activist Investor’s Climate Proposal

The proposal aimed to make ExxonMobil adopt tighter climate targets.
Court Dismisses ExxonMobil Lawsuit Against Activist Investor’s Climate Proposal
Climate activists protest on the first day of the ExxonMobil trial outside the New York State Supreme Court building in New York City, on Oct. 22, 2019. (Angela Weiss/AFP via Getty Images)
Naveen Athrappully

Oil giant ExxonMobil’s lawsuit filed against an activist investor that tried to introduce a climate-related shareholder proposal was dismissed by a court on Monday.

In January, ExxonMobil filed a lawsuit against climate activist investors Arjuna Capital and “Follow This” for seeking to bring a climate proposal up for vote during a shareholder meeting scheduled for May. The proposal sought to make ExxonMobil adopt tighter climate targets. The company argued that defendants were motivated by an agenda that neither reflected shareholder interests nor served to boost long-term shareholder value. The proposal was designed to “shrink” the company, Exxon alleged.

“By calling for an acceleration in the pace of medium-term reductions across Scope 1, 2, and 3 greenhouse gas (GHG) emissions, Defendants are asking ExxonMobil to change its day-to-day business by altering the mix of—or even eliminating—certain of the products that it sells,” the lawsuit stated.

“Defendants’ overarching objective is to force ExxonMobil to change the nature of its ordinary business or to go out of business entirely.”

ExxonMobil pointed out that a similar proposal was brought in 2023, which was already rejected by shareholders, with 89.5 percent voting against it.

Arjuna and Follow This withdrew their shareholder proposal in February. However, ExxonMobil asked the court to continue with the lawsuit “because, even though the proposal was withdrawn, the underlying issue remains and must be resolved.”

In late February, the U.S. Chamber of Commerce and Business Roundtable, which represents CEOs from over 200 leading American firms, filed a brief in the court in support of ExxonMobil.

In May, Arjuna Capital wrote a letter to ExxonMobil, assuring it “unconditionally and irrevocably” agrees to refrain from submitting any greenhouse gas or climate change proposals for consideration by shareholders.

The letter accused ExxonMobil of trying to “silence all shareholders who may attempt to raise similar concerns” by continuing the lawsuit against the activist firm even though the proposal was withdrawn and Arjuna promised not to refile it.

On June 17, the U.S. District Court for the Northern District of Texas, dismissed ExxonMobil’s lawsuit, noting that the company’s claims were not admissible. The order only included Arjuna as the defendant.

“Exxon raises concerns that Arjuna will work ‘behind the scenes’ with other activists to submit similar proposals,” the court order said. However, Arjuna’s “'unconditional and irrevocable’ pledge ensures Exxon the offending conduct won’t recur.”

“While Exxon nitpicks Arjuna’s language, the Court is unsure what would moot Exxon’s claim if Arjuna’s ‘unconditional’ and ‘irrevocable’ promise does not.” The court decided that Exxon’s claim is “MOOT and must be DISMISSED without prejudice.”

Lawsuits Against Oil Firms

The dismissal of the ExxonMobil complaint comes as oil companies are facing several climate-related lawsuits from states and cities.
Beginning in 2018, states such as New York, California, Rhode Island, Delaware, Massachusetts, and Minnesota filed lawsuits against oil giants including ExxonMobil, Chevron, ConocoPhillips, Sunoco, and BP. Cities such as Honolulu, New York, Chicago, San Francisco, and Boulder have taken legal action as well.
In a Colorado lawsuit, plaintiffs argued that oil firms should pay reparations for drought and forest fires, which they say were caused by climate change triggered by the use of fossil fuels.

It accused oil firms of concealing the “dangers associated with the burning of fossil fuels despite having been aware of those dangers for decades.”

In an interview with The Epoch Times, Kenny Stein, policy vice president at the Institute for Energy Research, said such lawsuits are trying to push these oil firms “out of business.”

“These governments are trying to mandate that people use less oil and less natural gas, but people want to heat their homes as much as they want, they want to drive as far as they want,” he said.

During a forum in May last year, Rep. Kelly Armstrong (R-N.D.) pointed out that the United States is “weakening ourselves” with climate policies that negatively affect domestic energy capacity and put national security at risk.

Pro-environmental policies, along with long wait times for government approvals, makes constructing new fossil fuel infrastructure in the United States risky, he said.