Yogis face Exxon Mobil’s lawsuit over climate proposals

Yogis face Exxon Mobil’s lawsuit over climate proposals

Exxon Mobil has filed a lawsuit against two yogis, Natasha Lamb and Farnum Brown, who run the sustainable-investment fund Arjuna Capital. The lawsuit aims to block a shareholder proposal filed by Arjuna that calls on Exxon Mobil to accelerate its emission-reduction plans. Arjuna Capital, known for its mission to push major corporations towards more socially conscious policies, has previously challenged companies like Microsoft, Visa, and Tesla on issues such as pay equity and sexual harassment. The lawsuit comes at a time of growing pushback against ESG investing, with Exxon Mobil arguing that Arjuna’s proposal aims to “shrink” the company, rather than improve its business practices.

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Introduction

Exxon Mobil, the largest oil company in the United States, has recently filed a lawsuit against Arjuna Capital, a sustainable-investment fund, over a shareholder proposal related to climate change. This article will provide a comprehensive overview of the situation, discussing the background of Arjuna Capital, the rise of environmental, social, and governance (ESG) investing, Exxon Mobil’s previous defeat in a shareholder vote, the details of the lawsuit, the growing pushback against ESG investing, the specifics of the shareholder proposal, and the response from Arjuna Capital and Follow This.

Background on Arjuna Capital

Arjuna Capital is a sustainable-investment fund founded by Natasha Lamb and Farnum Brown. The fund, which aims to push major corporations towards adopting more socially conscious policies, has been involved in various shareholder proposals targeting companies like Microsoft, Visa, and Tesla. The founders’ study of yoga has influenced their investment principles, and the fund is named after a figure in the Hindu scripture Bhagavad Gita. By following their mantra of “divest from old problems; invest in new solutions,” Arjuna Capital seeks to benefit both its clients’ financial well-being and the health of society.

ESG Investing and Shareholder Proposals

ESG investing, which focuses on environmental, social, and governance factors, has gained popularity in recent years. Investors are increasingly considering a company’s impact on these areas when making investment decisions. Shareholder proposals related to ESG issues have become a common tool for investors to exert influence on companies and drive changes in their policies. Arjuna Capital has a history of filing such proposals at major companies, including Amazon, Microsoft, Visa, and Tesla, with the aim of promoting pay equity, board diversity, and sexual harassment policies.

Exxon Mobil’s Defeat in Previous Shareholder Vote

Exxon Mobil faced a significant defeat in a previous shareholder vote in 2021. Engine No. 1, a small hedge fund, won two board seats by advocating for a more proactive clean-energy strategy. This result demonstrated the influence that shareholder proposals can have on shaping a company’s policies. The outcome of this vote highlighted the impact that sustainable-investment funds like Arjuna Capital can have in driving change within major corporations.

Lawsuit Filed by Exxon Mobil against Arjuna Capital

Exxon Mobil has filed a lawsuit against Arjuna Capital, claiming that the fund follows an “extreme agenda” and that its shareholder proposal on climate change is intended to undermine the company’s existing business. The lawsuit was filed in federal court in Texas. Exxon Mobil argues that the proposal should be dismissed under SEC rules, as it is similar to a previous proposal that had been rejected within the past five years. This legal action reflects Exxon Mobil’s resistance to the climate-related changes proposed by Arjuna Capital.

Growing Pushback Against ESG Investing

ESG investing has faced growing criticism and pushback, particularly from Republican politicians. Republican presidential candidates have criticized ESG investing during their campaigns. In addition, there has been an investigation into Arjuna Capital’s communications with the Vanguard Group to understand how they advance ESG policies. These developments reflect the broader challenges and controversies surrounding ESG investing, despite its rising popularity.

Details of the Shareholder Proposal

Arjuna Capital filed a shareholder proposal in December, urging Exxon Mobil to significantly accelerate the pace of its emission-reduction plans. The proposal is aimed at addressing the climate impact of the oil giant’s operations. Joining forces with Arjuna Capital, Dutch investment firm Follow This also supports the proposal. The involvement of Follow This further emphasizes the global nature of the movement towards sustainable investment and the growing demand for action on climate change.

Response from Arjuna Capital and Follow This

Arjuna Capital has asserted its duty as an investor to raise concerns regarding climate change and its impact on the global economy and shareholder value. The fund considers it essential to address climate risk and advocate for emission reductions in the companies it is invested in. Follow This has described Exxon Mobil’s lawsuit as a remarkable step aimed at preventing shareholders from exercising their rights. Both Arjuna Capital and Follow This have emphasized the need for companies to adapt and explore renewable energy alternatives to mitigate the effects of climate change.

In conclusion, the lawsuit filed by Exxon Mobil against Arjuna Capital sheds light on the tensions and debates surrounding ESG investing and shareholder proposals. As sustainable-investment funds like Arjuna Capital continue to push for change within major corporations, the outcomes of these legal battles will have significant implications for the future of ESG investing and the pursuit of climate-related goals.