ExxonMobil is “committed to responsibly meeting the world's energy needs,” according to the company's explanation, but shareholders are not allowed to express their views on the “responsible” part of the company's bragging rights. It is clear that they are not committed to allowing this to happen. U.S. oil companies are trying to block a vote on a resolution filed by Follow This, a Dutch environmentalist investor group that wants Exxon to move more quickly (much sooner) to cut emissions. He is appearing in a Texas court.
Exxon may be making a case in that Follow This has proposed similar resolutions at the past two annual meetings, but neither passed. unknown. In 2022, about 27.1% of shareholders will be aligned with the rebels, compared to 10.5% last year. The company will argue, why repeat the same process again? And since Exxon's general meeting last year included a total of 13 shareholder motions, could U.S. regulators have allowed the agenda to become too crowded?
But the company's legal stance seems absurd in at least three ways. First, please follow us. This is not some obscure two-man organization. The resolution, which will be heard at Shell's annual general meeting this year, is backed by 27 mainstream investment firms, including Amundi, Europe's largest asset manager. Whether Exxon likes it or not, this group represents an important voice on climate change in the investment community. The adult approach would be to argue and leave the decision to shareholders, as Shell and others are doing. Anything else looks like a dirty attempt to avoid scrutiny.
Second, the intent of the “Follow This” motion is to force Exxon to do what most other members of the big oil club are already doing and reduce its Scope 3 emissions, that is, those produced by the consumption of its products. It only asks for some targets to be set to reduce emissions. If Exxon's board is determined to stand out by resisting such promises, it would certainly be in its own interest to require an annual review from its owners.
Third, and most obviously, Exxon can probably count on another win. Yes, the company was humiliated in 2021 when a small hedge fund called Engine No. 1 succeeded in getting three of its own candidates voted on to the board, but the revolt (Sadly) they tend to only succeed when stock prices are low. Current lawsuit at Exxon.
Why is the company taking such a hard line? Some suspect that the real motive is widespread resentment among corporate America over the recent increase in shareholder resolutions. Exxon may see itself as a blow to the board's right to operate free from outside interference, especially when it comes to climate.
That is the point that the Follow This fight should concern all shareholders, whether they agree with the proposals at hand or not, which should be heard. Voting rights are important and should be defended as a fundamental way to hold cocooned boards to account. Occasional real-world confrontations with awkward team members can help make amends. As recently as two years ago, when the activists in this case were able to secure 27% support (a minority, yes, but not insignificant), Exxon was able to sway dissent by rushing to court. It should be seen as outrageous that anyone even thinks they can blow it away. .
It would be a beneficial development if major fund managers rallied to Follow This's defense. The right to submit climate proposals to oil companies is fundamental.
