ExxonMobil has filed a lawsuit against Follow This and Arjuna Capital after the organizations introduced a proposal for the company to accelerate its emissions reduction efforts, including establishment of Scope 3 emissions targets.
The company claimed that the two organizations have become shareholders in order to campaign for change in the fossil fuel industry, also expressing that the proposal does not seek to improve the company’s economic performance or create shareholder value. Specifically, Exxon claims it aims to exclude the proposal because it interferes with its typical course of business and because the company has rejected similar proposals multiple times.
“Like the previous proposals, it is designed instead to serve Arjuna’s and Follow This’s agenda to ‘shrink’ the very company in which they are investing,” said ExxonMobil in the complaint, filed in a Texas federal district court.
Proposals from Follow This and Arjuna Capital have become increasingly common at many oil giants’ shareholder meetings as they urge oil and gas companies to align emissions targets with the Paris Agreement. Follow This recently introduced a resolution for Shell to set tighter climate targets after the company’s CEO announced cuts to its renewables investments and plans to grow fossil fuel production.
According to a Reuters report, this is the first time that Exxon has sought to exclude a shareholder proposal by filing a complaint in court.
Exxon’s move to sue instead of debating the proposal with the SEC raises similar concerns from companies over the role of federal agencies. Last week, the Supreme Court began a trial questioning the legality of the Chevron deference, a doctrine that allows federal agencies to interpret unclear mandates from Congress. Exxon Mobil and other major corporations have claimed that the SEC’s advice varies based on the administration currently in office, according to a Yahoo report.
While many oil and gas companies have set net-zero targets for 2050, the large majority have not accounted for Scope 3 emissions, which account for 80% to 95% of emissions from the industry.
The United Nations has said that current governments’ plans indicate further production of fossil fuels that would push the world well over the 1.5-degree limit established in the Paris Agreement. Instead, the UN recommends a combined reduction of oil and gas production and use by three-quarters by 2050 compared to 2020 levels.
