Exxon lawsuit against activist investor dismissed
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A Texas federal judge on Monday dismissed a lawsuit by ExxonMobil against activist investor Arjuna Capital following the firm's promise not to file any climate change-related shareholder proposals.
Why it matters: Although the oil giant could refile its lawsuit, this ruling is a blow to the company's attempt to get more company-friendly guidance on shareholder resolutions via the court.
Catch up quick: In January, ExxonMobil sued Arjuna and Dutch group Follow This for submitting a proposal for shareholders to consider on its annual ballot, calling for stronger targets to reduce greenhouse gas emissions.
- Exxon said it filed the lawsuit to get clarification about shareholder proposals, believing that recent guidance from the U.S. Securities and Exchange Commission made it harder for companies to get exemptions they view as irrelevant to their businesses.
- Arjuna withdrew its proposal in February. In late May it told the company and the court that it "unconditionally and irrevocably" will not file climate change-related proposals to Exxon anymore.
What they're saying: "[T]he Court cannot advise Exxon of its rights without a live case or controversy to trigger jurisdiction," wrote Judge Mark Pittman in the dismissal on Monday, noting that Arjuna's agreement removed the presence of a "controversy" for the court to take up.
- Exxon said in a statement that its lawsuit "put a spotlight on the abuse" of the shareholder-access system.
- "In ruling now that there is no continuing controversy, the court has made absolutely clear that Arjuna cannot continue abusing the process. Shareholder democracy is only as strong as the rules that govern it, which must be fairly and consistently applied."
- Meanwhile, Arjuna said in a statement: "Climate change presents real headwinds to the oil and gas industry, and deflection will not change that simple fact. Investors understand these risks and are looking to their companies to engage with them on measured approaches to risk mitigation, not engage in litigation."
Go deeper:
- As shareholder meeting looms, it's ExxonMobil vs. everybody
- The next front in the ESG wars is governance
Editor's note: This article has been updated with comments from ExxonMobil and Arjuna Capital.
