A federal judge has dismissed Exxon Mobil Corp‘s XOM lawsuit against activist shareholder Arjuna Capital over a climate proposal.
What Happened: The lawsuit, filed by Exxon in January, aimed to prevent Arjuna Capital and another shareholder, Follow This, from submitting a proposal at the company’s annual shareholder meeting on May 29, reported CNBC. The proposal called for an acceleration in carbon dioxide emissions reductions.
However, the investors withdrew the proposal after Exxon’s lawsuit. Despite this, Exxon continued with the lawsuit, arguing that the investors could submit a similar proposal in the future.
"Arjuna has eliminated any case or controversy between the Parties here, Exxon's claim is moot and must be dismissed without prejudice," wrote U.S. District Judge Mark Pittman for the Northern District of Texas wrote in his ruling after a hearing held Monday.
Pittman initially allowed the suit against Arjuna to proceed but dismissed the suit against Follow This due to jurisdiction issues. However, the judge ruled on Monday that the case was no longer relevant after Arjuna made an “unconditional and irrevocable” pledge not to submit a similar proposal again.
"The SEC is behind the ball on this issue," Pittman wrote. "But the Court cannot advise Exxon of its rights without a live case or controversy to trigger jurisdiction."
Why It Matters: The dismissal of Exxon’s lawsuit marks a significant moment in the ongoing battle between the oil giant and climate activists. This legal action began in January when Exxon filed the lawsuit to block the climate proposal, which was the first time the company had resorted to such measures to exclude a shareholder proposal.
The proposal, backed by Arjuna Capital and shareholder activist group Follow This, called for Exxon to set stricter climate targets, specifically Scope 3 targets, to reduce emissions produced by users of its products.
In May, a U.S. judge allowed the lawsuit to proceed, raising concerns among activists and proxy advisers that it could stifle shareholder debate. Despite the withdrawal of the proposal, Exxon continued its legal action, citing the likelihood of future similar resolutions.
Additionally, this legal battle comes at a time when Exxon is involved in other significant transactions, such as the nearing completion of its Nigerian asset sale to Seplat Energy for $1.28 billion.
Investors have the opportunity to invest in XOM through the Energy Select Sector SPDR Fund XLE and iShares U.S. Energy ETF IYE.
Price Action: Exxon Mobil Corp’s stock closed on Monday at $108.36, marking a 0.69% decline for the day. In after-hours trading, it edged down by 0.13%. So far this year, the stock has surged by 5.86%, according to the data from Benzinga Pro.
Image Via Shutterstock
This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
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