Exxon Mobil Sues Shareholders Over Climate Proposal: 'Driven By An Extreme Agenda'

In a surprising move, Exxon Mobil Corp XOM has taken legal action against its investors. The company is seeking to block a climate proposal from being voted on at its upcoming shareholder meeting.

What Happened: Exxon filed a lawsuit in a Texas court on Sunday to prevent a climate proposal, backed by activist investors, from being put to vote at its May shareholder meeting, Reuters reported. This is the first time Exxon has resorted to legal action to exclude a shareholder proposal.

The investors, led by U.S. activist investment firm Arjuna Capital and shareholder activist group Follow This, are urging Exxon and other oil majors to adopt stricter climate targets. They specifically want Exxon to set Scope 3 targets to reduce emissions produced by users of its products.

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Exxon, however, argues that the investors are “driven by an extreme agenda” and that their proposals do not serve the interests of shareholders or promote long-term shareholder value. The company is the only one among the five Western oil majors that does not have such targets.

Exxon claims that shareholders have previously rejected Scope 3 targets and, therefore, wants to exclude the proposal from its proxy statement. The case has been assigned to U.S. District Judge Reed O’Connor, who has a history of ruling in favor of conservative litigants.

Why It Matters: This legal action by Exxon comes at a time when the company is facing significant challenges in the energy sector. Despite anticipated gains in its Q4 upstream operations, Exxon is also expecting up to $2.6 billion in impairments. The company has also reportedly exited the West Qurna 1 oilfield in Iraq, transferring its operations to PetroChina Co Ltd PCCYF as the lead contractor.

Exxon’s legal battle with its investors also reflects the broader struggle within the energy sector to balance shareholder interests with environmental concerns. This tension was evident at the COP28 climate summit, where a historic agreement was reached to shift away from fossil fuels and increase commitments to renewable energy sources.

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