ExxonMobil is “committed to responsibly meeting the world’s energy needs”, according to the corporate blah blah, but it is clearly not committed to allowing its shareholders to express their own opinions on the “responsibly” bit of the boast. The US oil company is off to court in Texas to try to block a vote on a resolution tabled by Follow This, a Dutch green activist investor group that would like Exxon to move faster (a lot faster) on reducing emissions.
Exxon has an argument of sorts, one might say, in that Follow This tabled similar-sounding resolutions at the last two annual meetings and neither passed. Some 27.1% of shareholders aligned with the rebels in 2022 and 10.5% last year. Why go through the same process again, the company will argue. And, since last year’s meeting at Exxon contained 13 shareholder motions in total, haven’t US regulators allowed agendas to become overcrowded?
Yet the company’s legalistic stance looks absurd in at least three ways. First, Follow This is not an obscure two-bob outfit: its resolution to be heard at Shell’s annual meeting this year is being supported by 27 mainstream investment houses, including Amundi, Europe’s largest asset manager. Whether Exxon likes it or not, the group represents a meaningful strand of climate opinion in the investment world. The grownup approach would surely be to make a counter-argument and let shareholders decide, just as Shell et al do. Anything else looks like a grubby attempt to avoid scrutiny.
Second, the thrust of the Follow This motion merely calls on Exxon to do what most other members of the big oil club have already done and set some targets to reduce scope 3 emissions, meaning those generated by the consumption of its products. If Exxon’s board is determined to stand out by resisting such commitments, it would surely be in its own interests to seek annual validation from its owners.
Third – and most obviously – Exxon could probably expect to win again. Yes, the company was humiliated in 2021 when a small hedge fund called Engine No 1 managed to get three of its own candidates voted on to the board, but rebellions (sadly) tend to succeed only when share prices are low, which is not the case at Exxon currently.
Why is the company taking such a hard-headed approach? One suspects its real motive may be corporate America’s wider resentment of the growing number of shareholder resolutions being tabled these days. Exxon may see itself as striking a blow for a board’s right to manage without outside interference, especially on climate matters.
That is the point at which Follow This’s struggle to be heard should concern all shareholders, whether they agree with the proposal at hand or not. Voting rights matter, and ought to be defended as a basic way to hold cocooned boards to account. The occasional real-world confrontation with the members of the awkward squad is a useful corrective. When the activist in this case could command 27% support – a minority, yes, but not a tiny one – as recently as two years ago, it ought to be seen as outrageous that Exxon thinks it can waft away dissent by running off to court.
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It would be a useful development if big fund managers rallied to Follow This’s defence. The right to table a climate proposal at an oil company is basic stuff.
