Exxon has been stonewalling civil suits filed by states and cities for decades, saying among other things that courts are not supposed to be making policy decisions for society, but when Follow This and other activist shareholders submitted a motion it wants put on the agenda for the next annual meeting, Exxon went scurrying to the nearest courthouse, begging for protection from those crazy people who think oil companies shouldn’t kill the planet in order to make enormous profits.
Last month, Follow This and and its supporters submitted a proposal calling for a “further accelerating” of Exxon’s emission reduction plans that include Scope 3 emissions. CEO Darren Woods is a vocal critic of Scope 3 emissions accounting, saying it’s misleading and doesn’t capture overall emission-reduction efforts. A similar proposal last year gained just over 10% of shareholder support, down from 27% in 2022.
Exxon is seeking to have the proposal excluded on two counts. First, that it interferes with the ordinary course of business. Second, that shareholders have rejected similar proposals multiple times. “The 2024 Proposal does not seek to improve ExxonMobil’s economic performance or create shareholder value,” the company said in the complaint. “Like the previous proposals, it is designed to ‘shrink’ the very company in which they are investing.”
Exxon And Follow This Clash
Follow This was founded by Mark Van Baal, a Dutch journalist who spent years trying to influence the oil giants by writing stories about their nefarious deeds. When they didn’t work, he decided only shareholders have that kind of influence. This year he has convinced 27 institutional investors who combined own 5 percent of the outstanding shares of Shell to work together to get Shell to start acting like a responsible adult. That means making concrete plans to align its business model with the goals agreed to by the nations of the world in Paris in 2015.
Follow This has filed a similar motion it wants added to the agenda for the next Exxon annual meeting but the company wants nothing to do with it. Usually, the Securities and Exchange Commission establishes the rules that determine what shareholder proposals get added to the agenda and which do not. Exxon complains that the the SEC looks more favorably today on such shareholder initiatives than it did during the prior administration. The number of environmental and social proposals voted on has more than doubled over the past two proxy seasons, Bloomberg says.
Doing The Fifth Circuit Boogie
So this is how it works. Exxon is headquartered in Texas, which is under the jurisdiction of the Fifth Circuit Court of Appeals. Most of the judges on the Fifth Circuit are Tramp appointed stooges firmly committed to the MAGA agenda. Appeals from the Fifth Circuit go directly to the US Supreme Court, which is top heavy with anti-woke MAGA judges.
Those judges owe their seats on the court to the nefarious doings of the Federalist Society, a group of extremist lawyers who champion corporate rights over those of actual citizens. And who is the godfather of the Federalist Society? None other than oil man Charles Koch. Do you get the feeling the fix is in? Oh, yeah.
So, file your lawsuit in Texas, get blessed by the Fifth Circuit, then get the stamp of approval saying everything is legally correct from the Supreme Court. If this reminds you of how a criminal gang operates, you’re not wrong. George Carlin told us what was going on decades ago when he said America was owned by the wealthy. “It’s a big club, and you ain’t in it,” he said but no one listened.
Exxon And Scope Three Emissions
Exxon wants the courts to restrict the ability of shareholders to get their motions demanding it clean up its emissions — particularly this pesky Scope 3 emissions caused by actually burning the oil and gas it sells — onto the meeting agenda. It argues that a judgment in its favor would tighten the Securities and Exchange Commission’s interpretation of the rules concerning what proposals get on proxy ballots across corporate America.
“Defendants are asking Exxon Mobil to change its day-to-day business by altering the mix of — or even eliminating –certain of the products that it sells…..to force Exxon Mobil to change the nature of its ordinary business or to go out of business entirely,” the company said in its court filing.
That assertion is patently absurd. What Follow This and its supporters want Exxon to do is stop poisoning the Earth. Is that too much to ask? Exxon is free to transition its skill and knowledge to other areas of endeavor, like constructing wind turbines or drilling for geothermal heat — things that could actually be useful to humanity while being profitable at the same time.
Corporations And Social License
The capitalist system does not give businesses the right to destroy the environment just so they can continue to make a profit. Asbestos manufacturers had no right to continue in business after the health risks of their product became known, nor did makers of PCBs or TCE or Freon have a right to continue making those products just because it was profitable. Exxon is being asked to alter its business practices to protect the Earth and every living thing on it. Surely society has the right to ask for that in exchange for the grant of a corporate charter?
Exxon argues that Follow This and other activist investors have “become shareholders solely to campaign for change through shareholder proposals that are calculated to diminish the company’s existing business.” They “are aided in their efforts by a flawed shareholder proposal and proxy voting process that does not serve investors’ interests and has become ripe for abuse.” As if blanketing the Earth with trillions of tons of atmospheric pollutants was not a form of abuse. The arrogance of the Exxon comes across loud and clear in its filings with the court.
And The Winner Is…..
Its decision to seek a legal remedy rather than go through the SEC is highly unusual and marks an aggressive pushback against climate activists who use shareholder voting to influence boardroom strategy. It also comes as the Supreme Court questions a longstanding legal doctrine known as the “Chevron doctrine” that gives federal agencies wide latitude to interpret unclear mandates from Congress.
The lawsuit is a “remarkable step,” Follow This founder Mark van Baal said in a statement. “ExxonMobil clearly wants to prevent shareholders using their rights. Apparently, the board fears shareholders will vote in favor of emissions reductions targets,” he said.
The betting line is that Exxon will likely win this round because the courts are infested with judges who have swallowed their MAGA medicine and like the taste of it. This case has nothing to do with the law. It is all about bare knuckle brawling where those with the most money prevail most of the time. Exxon is used to getting its own way when it throws its weight around. Chances are it will succeed in its quest to silence Follow This while it continues to pump is climate killing pollution into the atmosphere and putting the lives of millions at risk.
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