Exxon Mobil permitted to pursue lawsuit against activist investor over climate change proposal

A federal judge ruled in favor of Exxon Mobil, allowing the company to proceed with a lawsuit against activist investors who proposed a climate change resolution to be tabled at the May 29 annual shareholder meeting. The ruling raises questions about the impact on shareholder resolutions in the future.

Judge's Decision

U.S. District Judge Mark Pittman for the Northern District of Texas permitted Exxon's lawsuit to proceed against Boston-based Arjuna Capital. However, the lawsuit against the second activist shareholder, Follow This, was dismissed because the firm is based in the Netherlands.

Exxon's Lawsuit

Exxon sued both investors in January after they submitted a proposal calling for the company to accelerate carbon dioxide emissions reductions. Although Arjuna and Follow This withdrew the proposal, Exxon continued with its claims against them, citing concerns about potential future proposals from the firms.

Judge's Comments

Judge Pittman referred to the investors' strategy as a "Trojan Horse" model, where they gather enough shares in oil companies to influence and submit proposals aimed at combating climate change. He supported Exxon's cautious approach, stating that the company's distrust of the activist investors is rational due to their opposition to the oil industry.

Future Implications

Pittman suggested that Arjuna could modify its withdrawn 2024 proposal slightly for submission in future shareholder meetings. This decision may have significant implications for how activist investors approach proposing resolutions at major corporations in the future.