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Religious investors urge Exxon to drop lawsuit against activist shareholders

2024.02.08 18:57


© Reuters. FILE PHOTO: Exxon Mobil brand and inventory graph are seen by way of a magnifier displayed on this illustration taken September 4, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

By Ross Kerber

(Reuters) -A bunch of non secular investors urged Exxon Mobil (NYSE:) to drop a lawsuit against local weather activists, saying in a letter to the power firm’s board seen by Reuters on Thursday that the motion is a broad menace to shareholder rights.

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

The group represents non secular investors and different socially minded establishments with some $4 trillion in whole belongings.

Members embrace 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 decision, breaking with the normal course of wherein firms ask U.S. regulators for permission to skip votes at their annual conferences. The filers then withdrew their proposal, however Exxon has continued the lawsuit in search of to recuperate authorized prices and different aid.

In a movement on Monday, Exxon stated the activists hope to constrain its enterprise moderately than enhance shareholder worth. In response to the letter from the non secular investors, an Exxon spokesperson stated it hopes the swimsuit will inspire the SEC to re-evaluate the way it interprets the principles 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 stated.

Shareholder proposals have put environmental points on the middle of many company conferences, profitable some help from high asset managers involved about local weather change.

Josh Zinner, CEO of the Interfaith Center, stated Exxon is making an attempt to silence investors moderately than grapple with how to decrease emissions as different firms are doing. “This is not some fringe idea, that’s why it (Exxon’s suit) is particularly troubling,” Zinner stated.

Late on Thursday the Council of Institutional Investors, representing huge state pension funds and different asset managers, additionally provided help for the SEC however stopped wanting calling for an finish to the lawsuit.

While firms have the appropriate to go to court docket, “experience suggests that most market participants view the SEC’s Division of Corporation Finance as a fair arbiter,” the council stated in a press release posted to its web site.

Council members embrace Exxon and different firms with worker retirement plan belongings. But Exxon had no enter on Thursday’s assertion, stated the council’s govt director Amy Borrus.

Exxon has made conventional requests with regulators to skip seven different resolutions thus far this 12 months. In addition to their decision at Exxon, Arjuna and Follow This filed an identical decision with rival oil main Chevron (NYSE:).

In distinction to Exxon’s swimsuit, Chevron requested the SEC for permission to skip a vote on the decision and famous an identical proposal gained little investor help final 12 months, disclosures present. The activists then withdrew the proposal, citing the Texas litigation.

Chevron didn’t reply to requests for remark.

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