Investors withdraw Exxon climate proposal after court complaint

News wire — Activist shareholder group Follow This said on Friday it has withdrawn a climate resolution against Exxon Mobil after the oil giant sought to block the move through a Texas court.

Exxon’s unusual legal action has been closely watched by investor activists worried the move could lead other companies to block shareholder resolutions in court, rather than through the usual process of appealing to regulators.

Exxon said in a court filing on Thursday that Follow This and activist investment firm Arjuna Capital were withdrawing the resolution they wanted to bring to the company’s shareholder meeting in May.

“Given Exxon’s preference to fight a battle in court rather than allow shareholders the freedom of a vote at its annual meeting, we decided to withdraw the climate proposal,” Follow This founder Mark van Baal said in a statement.

“Now that we have withdrawn, the company has no reason to continue the lawsuit,” he added.

In a statement, Exxon said that it is continuing with the suit despite the withdrawal. “We believe there are still important issues for the court to resolve. There is no change to our plans,” Exxon said.

Exxon filed the complaint on Jan. 21, the first time it sought to exclude a shareholder proposal through court. In addition to seeking approval to skip a vote on the resolution, Exxon had sought attorneys’ fees and expenses and that the court enter “other and further relief as the Court may deem just and proper.”

The case was assigned to a judge with a track record of ruling in favour of conservative causes.

The investor proposal called for Exxon to set targets to reduce emissions produced by the burning of its products, known as Scope 3 emissions. Exxon is the only one of the five Western oil majors which does not have such targets.

Exxon has said the groups were driven by an “extreme agenda” and that their proposals do not serve investors’ interests or promote long-term shareholder value.

Shareholder resolutions calling on companies to take steps on environmental, social and corporate-governance (ESG) issues have drawn increasing attention at corporate annual meetings as investors pay more attention to climate change and workforce diversity.

Top U.S. fund firms, however, have cooled their support for many of the reforms, amid pressure from conservative politicians who say the ideas can distract companies from their main duty to earn profits.

Traditionally at this time of year companies appeal to the U.S. Securities and Exchange Commission (SEC) for permission to leave scores of resolutions off their ballots. Various business groups had argued the SEC was allowing too many resolutions to go to a vote, and Exxon had argued that the agency’s current application of its rules was not serving investors’ interests.

Exxon, however, had said it supported the resolutions process broadly and was in talks with the proponents of other shareholder measures. Agency disclosures show Exxon has filed traditional appeals to skip votes on subjects including plastics pollution and climate-related asset sales.