Exxon Mobil is suing two sustainable investment firms in a bid to block them from putting forward a shareholder proposal that would commit the oil company to further curb its greenhouse-gas emissions and target its customers’ emissions.
In a federal lawsuit filed in Texas on Sunday, the Houston-based oil giant said investment firms Arjuna Capital and Follow This became Exxon shareholders only to put forward proposals that would “diminish the company’s existing business.”
Here is Exxon’s complaint. There is something a little odd about going to court over this.
[…]
Even if the shareholders vote yes, Exxon doesn’t have to do anything about it: The proposals are nonbinding, advisory expressions of shareholder desire, and the board and management are free to ignore them. Nothing in the law, or in the text of the proposals, requires Exxon to do anything.
Even if Exxon voluntarily does what the shareholders ask, it’s not that much. Here, the proposal asks the company “to go beyond current plans, further accelerating the pace of emission reductions in the medium-term for its greenhouse gas (GHG) emissions across Scope 1, 2, and 3, and to summarize new plans, targets, and timetables.” There are no hard and fast requirements; the request is just “do a bit more about greenhouse gases, and tell us what you’re doing.”
[…]
This is not a legal argument; the legal argument is the thing about the ordinary course of business. It is a philosophical argument: Real shareholders care only about shareholder value and long-term returns for their retirement savings; shareholders who want anything else are abusing the system.
