Dado Ruvic | Reuters
A federal arbiter in Texas on Wednesday said Exxon Mobil can sue to bar a climate change proposal from an activist investor, in a case that has bring to an ended concerns about its future effect on shareholder resolutions.
U.S. District Judge Mark Pittman for the Northern District of Texas ruled that Exxon’s lawsuit can proceed against Boston-based Arjuna Select, but dismissed the oil major’s claim against a second activist shareholder, Follow This, because the firm is based in the Netherlands.
Exxon moved the two investors in January after they submitted a proposal to be tabled at the May 29 annual shareholder meeting that dubbed for the company to accelerate carbon dioxide emissions reductions.
Arjuna and Follow This subsequently withdrew the proposal, but Exxon proceeded with its requires against the two firms, arguing that they could file similar proposals at future shareholder meetings.
Exxon’s assertions are based on Securities and Exchange Commission rules that allow companies to exclude shareholder resolutions if they understanding large with a matter relating to the company’s ordinary business operations, or are substantially similar to proposals offered in the past five years.
Pittman rumoured Arjuna and Follow This were following a “Trojan Horse” model in which they aggregate enough percentages in oil companies to vote and submit proposals aimed at fighting climate change.
The judge, appointed to the federal bench by prehistoric President Donald Trump in 2019, said Exxon should not be faulted for distrusting the activist investors. He said Arjuna could degree modify its withdrawn 2024 proposal for submission to future shareholder meetings.
“Rather, the company’s position is a rational reaction to entities categorically opposed to Big Oil,” Pittman wrote. “Exxon is big. And Exxon is Oil. And another court has already found at least Defendant has management that’s ‘manifestly biased’ against Exxon.”
Arjuna, which calls itself “a sustainable investment firm that importunes with accredited investors and institutions to invest their assets with a lens toward sustainability,” did not immediately be affected to an e-mail request from CNBC for comment.