ExxonMobil Is Taking Two Activist Investors To Court

ExxonMobil Is Taking Two Activist Investors To Court
Stéphane Renevier, CFA

about 1 month ago1 min

Mentioned in story

What’s going on here?

News broke that ExxonMobil is taking two activist investors to court for, uh, trying to save us all from extinction.

What does this mean?

Exxon has been a target for green-minded ESG petitioners for years, and it looks like the gas-extracting powerhouse has had enough of the peer pressure. The company was forced to replace a quarter of its board with new directors back in 2021, after it lost a battle with activist investor Engine No. 1. So now it’s playing offense, filing a lawsuit against activist investors Follow This and Arjuna Capital, both of which are pushing a proposal to clamp down on greenhouse gas emissions faster. Naturally, traditional energy companies aren’t known for putting the world above profit, but Exxon’s choice to take the duo to court is an unusually aggressive strategy. The energy goliath, though, believes that this eco-minded plan would sacrifice company and shareholder interests, which barely measures up to the trifling issue of Mother Nature’s survival.

Exxon stock
Source: Google Finance

Why should I care?

For markets: A little too (eco) friendly.

Exxon isn’t the only company disgruntled with the efforts of activist investors, but it could be the one to set a precedent. Many firms believe that the US financial watchdog is letting too many eco-focused proposals make it to the boardroom for annual meetings, and if Exxon wins its case, those vetting standards could get tightened up.

The bigger picture: Check the recycling bin.

It’s true, some ESG initiatives are more about bold claims than genuine progress. But more than a handful of shareholder petitions manage to marry business goals with long-term sustainability plans – and if businesses want to earn a place in the next decade’s economy, they should think twice before throwing those outlines out.

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