A US judge has dismissed ExxonMobil’s lawsuit against an activist shareholder who challenged the oil major’s climate change risks, capping a stand-off with environmentalists and giant pension funds.
The decision ends a six-month campaign by Exxon to fend off shareholders who have for years filed petitions at the company’s annual meeting to challenge its efforts on climate change.
The case had been closely watched on Wall Street, as some big investors, including pension giant Calpers and Norway’s $1.5tn sovereign wealth fund, accused Exxon of seeking to undermine shareholder rights. But a campaign to block the re-election of some board members in protest was easily defeated by the company last month.
In December, Exxon sued Arjuna Capital and climate non-profit Follow This alleging their climate petition breached US securities rules. The company argued the Securities and Exchange Commission was allowing too many frivolous shareholder petitions and that it was forced to take the unusual step of going to court to stop them.
In an order published late on Monday, Texas district judge Mark Pittman said Exxon cannot continue its litigation because Arjuna, a boutique asset manager known for filing shareholder petitions, has definitively pledged not to refile its controversial climate shareholder petition at the company.
Exxon, which had sought to continue pursuing the case even after Arjuna’s effort was dropped, said its lawsuit had “put a spotlight on the abuse of the shareholder-access system”.
“The court . . . made it clear that Arjuna is bound by its commitment to not submit, or work with others to submit, similar proposals to ExxonMobil in the future,” said Darren Woods, Exxon chief executive. He gave no indication the company would appeal Pittman’s order.
“As Arjuna has eliminated any case or controversy between the parties here, Exxon’s claim is moot and must be dismissed,” Pittman wrote.
Arjuna’s chief investment officer, Natasha Lamb, said the firm was pleased with the judge’s decision. “Climate change presents real headwinds to the oil and gas industry, and deflection will not change that simple fact.”
Netherlands-based Follow This is headed by Mark van Baal, who has campaigned against oil majors, including Exxon and Shell, by using shares voted at companies’ annual meetings to agitate for cutting carbon emissions. Exxon’s case against Follow This had already been dismissed on jurisdiction grounds.
“If allowed to continue, this case could have had a detrimental effect on shareholder proposals focused on climate,” van Baal said on Tuesday. “This dismissal may prevent a dangerous wave of litigation against shareholders trying to effect change to protect the long-term health of the company.”
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