Exxon Mobil Corp. is facing renewed criticism from environment-focused investors for not meeting its climate-related commitments. This annual contention has gained more intensity ahead of the company’s shareholder meeting on May 29, especially after Exxon sued climate-focused groups Arjuna Capital LLC and the nonprofit.
The California Public Employees’ Retirement System (Calpers), the largest US public pension fund, is considering voting against the reelection of Exxon’s Chief Executive Officer Darren Woods. The nonprofit Majority Action is also urging investors to oppose the election of Exxon directors, accusing the company of “attacking shareholder democracy and failing to address climate risk.” This vote follows a significant proxy fight three years ago when activist investor Engine No. 1 managed to place three climate-focused directors on Exxon’s board.
Despite the ongoing criticism, Exxon appears less vulnerable to similar proxy fights this year. The company’s stock has risen by nearly 25% in the past year, and concerns over energy security due to Russia’s war on Ukraine have overshadowed environmental, social, and governance (ESG) issues.
Calpers and Majority Action’s main criticisms focus on Exxon’s environmental record and its lawsuit against Arjuna Capital and Follow This. Exxon remains the largest US producer of oil and gas and has the weakest emissions-reduction targets among major oil companies, according to Carbon Tracker. Exxon argues that its emissions are declining faster than the global average and that its climate targets are realistic because they align with its operations.
The lawsuit filed by Exxon against Arjuna Capital and Follow This has further angered activists. Exxon claims the groups became investors to push for changes that would harm the company’s business. After Arjuna and Follow This withdrew their proposal calling for faster emissions reductions, Exxon continued its legal action, aiming to tighten SEC rules on shareholder proposals. This move has been criticized as an attempt to silence environmentally concerned investors.
Proxy adviser Glass Lewis & Co. and Calpers have also opposed the reelection of lead director Joseph Hooley, citing Exxon’s aggressive tactics against activist investors. Calpers has called on other investors to join in voicing opposition to the lawsuit, asserting that it aims to stifle investor concerns related to climate-related financial risks.
