XOM

Religious investors urge Exxon to drop lawsuit against activist shareholders

Credit: REUTERS/DADO RUVIC

By Ross Kerber

Feb 8 (Reuters) - A group of religious investors urged Exxon Mobil XOM.N to drop a lawsuit against climate activists, saying in a letter to the energy company's board seen by Reuters on Thursday that the action is a broad threat to shareholder rights.

"This unprecedented suit risks alienating shareholders, harming Exxon’s reputation, and undermining the Securities and Exchange Commission" (SEC) by sidestepping the usual regulatory path companies use to block resolutions, states the Feb. 7 letter from the Interfaith Center on Corporate Responsibility.

The group represents religious investors and other socially minded institutions with some $4 trillion in total assets.

Members include Arjuna Capital of Massachusetts. It and Amsterdam-based activist group Follow This had filed a shareholder proposal calling on Exxon to strengthen its targets for emissions cuts.

On Jan. 21, Exxon sued to block the resolution, breaking with the traditional process in which companies ask U.S. regulators for permission to skip votes at their annual meetings. The filers then withdrew their proposal, but Exxon has continued the lawsuit seeking to recover legal costs and other relief.

In a motion on Monday, Exxon said the activists hope to constrain its business rather than increase shareholder value. In response to the letter from the religious investors, an Exxon spokesperson said it hopes the suit will motivate the SEC to re-evaluate how it interprets the rules about what shareholder motions can come to vote.

"We share the same concerns about shareholder rights being preserved, which is why we want clarity on a process that has become ripe for abuse. Proposals like this are obviously not in investors' best interests," the spokesperson said.

Shareholder proposals have put environmental issues at the center of many corporate meetings, winning some support from top asset managers concerned about climate change.

Josh Zinner, CEO of the Interfaith Center, said Exxon is trying to silence investors rather than grapple with how to lower emissions as other companies are doing. "This is not some fringe idea, that's why it (Exxon's suit) is particularly troubling," Zinner said.

Exxon has made traditional requests with regulators to skip seven other resolutions so far this year. In addition to their resolution at Exxon, Arjuna and Follow This filed a similar resolution with rival oil major Chevron.CVX.N

In contrast to Exxon's suit, Chevron asked the SEC for permission to skip a vote on the resolution and noted a similar proposal won little investor support last year, disclosures show. The activists then withdrew the proposal, citing the Texas litigation.

Chevron did not respond to requests for comment.

(Reporting by Ross Kerber; Editing by David Gregorio)

((ross.kerber@thomsonreuters.com; (617) 412 0093;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Tags

More Related Articles

Info icon

This data feed is not available at this time.

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.