Religious investors urge Exxon to drop lawsuit against activist shareholders
Reuters
Published Feb 08, 2024 12:07PM ET
Updated Feb 08, 2024 06:25PM ET
By Ross Kerber
(Reuters) -A group of religious investors urged Exxon Mobil (NYSE:XOM) to drop a lawsuit against climate activists, saying in a letter to the energy company's board seen by Reuters on Thursday that the action is a broad threat to shareholder rights.
"This unprecedented suit risks alienating shareholders, harming Exxon’s reputation, and undermining the Securities and Exchange Commission" (SEC) by sidestepping the usual regulatory path companies use to block resolutions, states the Feb. 7 letter from the Interfaith Center on Corporate Responsibility.
The group represents religious investors and other socially minded institutions with some $4 trillion in total assets.
Members include Arjuna Capital of Massachusetts. It and Amsterdam-based activist group Follow This had filed a shareholder proposal calling on Exxon to strengthen its targets for emissions cuts.
On Jan. 21, Exxon sued to block the resolution, breaking with the traditional process in which companies ask U.S. regulators for permission to skip votes at their annual meetings. The filers then withdrew their proposal, but Exxon has continued the lawsuit seeking to recover legal costs and other relief.
In a motion on Monday, Exxon said the activists hope to constrain its business rather than increase shareholder value. In response to the letter from the religious investors, an Exxon spokesperson said it hopes the suit will motivate the SEC to re-evaluate how it interprets the rules about what shareholder motions can come to vote.
"We share the same concerns about shareholder rights being preserved, which is why we want clarity on a process that has become ripe for abuse. Proposals like this are obviously not in investors' best interests," the spokesperson said.
Shareholder proposals have put environmental issues at the center of many corporate meetings, winning some support from top asset managers concerned about climate change.
Josh Zinner, CEO of the Interfaith Center, said Exxon is trying to silence investors rather than grapple with how to lower emissions as other companies are doing. "This is not some fringe idea, that's why it (Exxon's suit) is particularly troubling," Zinner said.
Late on Thursday the Council of Institutional Investors, representing big state pension funds and other asset managers, also offered support for the SEC but stopped short of calling for an end to the lawsuit.
While companies have the right to go to court, "experience suggests that most market participants view the SEC’s Division of Corporation Finance as a fair arbiter," the council said in a statement posted to its website.
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Council members include Exxon and other companies with employee retirement plan assets. But Exxon had no input on Thursday's statement, said the council's executive director Amy Borrus.
Exxon has made traditional requests with regulators to skip seven other resolutions so far this year. In addition to their resolution at Exxon, Arjuna and Follow This filed a similar resolution with rival oil major Chevron (NYSE:CVX).
In contrast to Exxon's suit, Chevron asked the SEC for permission to skip a vote on the resolution and noted a similar proposal won little investor support last year, disclosures show. The activists then withdrew the proposal, citing the Texas litigation.
Chevron did not respond to requests for comment.
Written By: Reuters
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