ExxonMobil's shareholder lawsuit over climate proposal dismissed

Less than a month after rejecting a motion to dismiss the lawsuit brought by ExxonMobil against activist shareholders seeking stricter climate policies, the same judge has now ruled Exxon’s claim as moot.

The US oil giant filed a lawsuit against activist investors Arjuna Capital and Follow This in January to prevent them from submitting a resolution requiring it to include Scope 3 emissions in its climate agenda. The two investors immediately withdrew the proposal, but ExxonMobil refused to drop the lawsuit, seeking to set a precedent limiting the power of stockholders in pressuring management on climate issues.

A legal rollercoaster

In late May, it seemed U.S. District Judge Mark T. Pittman agreed with Exxon: while ruling that Amsterdam-based Follow This was outside of his court’s jurisdiction, he refused to dismiss the case against Arjuna Capital, arguing that “as worded, Arjuna’s letter allows defendants to take the 2024 proposal, add an Oxford comma here, shorten a sentence there, and submit the results anew for Exxon’s shareholders”.

But on Monday (June 17), after another hearing, he finally dismissed the case based on the impact investor’s “unconditional and irrevocable” pledge to stop submitting similar proposals in the future.

“While the Court sympathises with Exxon’s predicament, its hands are tied by the Constitution. Exxon can only sue Arjuna if there’s an ‘actual, ongoing controvers[y]’ between them,” Pittman wrote.

Arjuna Capital has yet to comment on the dismissal. 

Shareholder tensions at ExxonMobil AGM

Its Chief Financial Officer had previously compared Exxon’s legal offensive to “tactics of intimidation and bullying” – and although activist investors around the world are likely breathing a sigh of relief that no legal precedent against their action will be set in the near future, Exxon itself appeared satisfied with the outcome.

Reacting to the dismissal, it said in a statement: "Our lawsuit put a spotlight on the abuse of the shareholder-access system. 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."

Amid protests against what was seen by some investors as an attempt to silence their voices, the company’s AGM in late May (after the lawsuit was first greenlit) saw shareholders reject all sustainability-related proposals, sending what Exxon CEO Darren Woods called “a powerful message that rules and value-creation matter”.