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ExxonMobil has stated their dedication to ethically fulfilling the global demand for energy, according to their official statement. However, it is evident that the company does not prioritize their shareholders’ ability to voice their own opinions on the matter of responsibility. The American oil corporation is currently embroiled in a legal battle in Texas in an attempt to prevent a vote on a proposed resolution by Follow This, a Dutch environmentalist investor group. This resolution urges Exxon to accelerate their efforts in reducing emissions at a much more significant pace.

According to Exxon, they have a justification of sorts for their stance. This is due to the fact that Follow This presented resolutions with similar content at the past two annual meetings, but they were not successful. In 2022, 27.1% of shareholders supported the rebels, while last year only 10.5% did so. Exxon may argue that it is unnecessary to go through the same process again. Additionally, with 13 shareholder proposals on the agenda at last year’s meeting, some may question if US regulators have allowed for an overcrowding of agendas.

However, the company’s legal position seems illogical in multiple ways. Firstly, Follow This is a well-known and reputable organization, with 27 major investment firms, including Amundi, Europe’s biggest asset manager, backing its resolution to be heard at Shell’s annual meeting this year. Regardless of Exxon’s opinion, this group represents a significant portion of climate perspective in the investment sector. A more mature approach would involve presenting a counter-argument and allowing shareholders to make their own decision, just as Shell and other companies do. Anything else would appear as a dishonest effort to evade examination.

The Follow This proposal primarily urges Exxon to follow the lead of other major oil companies and establish goals for decreasing scope 3 emissions, which are emissions produced by the use of their products. If Exxon’s board is determined to stand out by rejecting these commitments, it would benefit them to seek yearly approval from shareholders.

The third reason, which is the most clear, is that Exxon may have a high chance of winning again. While the company faced embarrassment in 2021 due to a small hedge fund named Engine No 1 successfully getting three of its own candidates on the board, rebellions typically only succeed when stock prices are low. This is not the current situation at Exxon.

What is the reason for the company’s stubborn stance? It appears that their true intention may be rooted in corporate America’s frustration with the increase in shareholder resolutions being proposed currently. Exxon may view this as a way to defend a board’s authority to make decisions without external influence, particularly on matters related to climate change.

When Follow This is struggling to be heard, it should be a concern for all shareholders, regardless of their stance on the current proposal. Voting rights are important and should be protected as a means of holding boards accountable. Real-life clashes with dissenters can serve as a valuable correction. It is unacceptable that Exxon believes it can dismiss opposition by seeking legal intervention, especially when the activist group had garnered 27% support just two years ago.

It would be beneficial if large fund managers came together to support Follow This in their efforts. The ability to present a climate proposal to an oil company is a fundamental right.

Source: theguardian.com