A group of religious investors urged Exxon Mobil Corp. 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” 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 US$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 centre 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 [Exxon’s suit] is particularly troubling,” Mr. Zinner said.
Exxon has made traditional requests with regulators to skip seven other resolutions so far this year.