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Earlier this year, the flame flamed between shareholder collective Follow This and oil giant ExxonMobil. The latter decided to file a lawsuit against Follow This for calling on Exxon to tighten its CO2 reduction targets. Meanwhile, several institutional investors have indicated they will vote against Exxon's board at an upcoming shareholder meeting.

That tensions between Follow This and ExxonMobil would have a tailspin was obvious. Although Follow This withdrew its climate appeal for fear of a complicated legal battle with a giant corporation, Exxon announced that it wanted to continue that battle. The case was assigned to Mark Pittman, a judge still appointed by former President Donald Trump. But whether Pittman will actually take the case is still unknown.

Change Inc. previously wrote extensively about the goings-on between Follow This and ExxonMobil. Read more about it here.

It is known that a growing group of institutional investors wants to encourage Follow This at the upcoming Exxon shareholders' meeting. At that meeting - traditionally - shareholders will be asked whether CEO Darren Woods and his fellow board members can (continue to) fulfill their roles for the next 12 months. Several parties have indicated they will vote against that appointment.

Poor governance

For example, the British Brunel Pension Partnership and Dutch investors Achmea and Robeco. Robeco explains its choice in a public document. "Regardless of the outcome of the court case [...] this move will make shareholders reluctant to exercise their rights and in our view it demonstrates poor governance. Because of the cumulative failure to address climate risks, we will vote against the re-election of the combined CEO chairman."

Key

Meanwhile, Calpers, the largest pension fund in the United States, has also indicated its opposition to Exxon's full board. "For nearly four decades, Calpers has used its investments in large companies to hold directors and top officials elected by shareholders accountable," the pension fund announced in a statement on its website. "We believe this is the key to ensuring long-term sustainable investment returns for more than 2 million members."

Decades of dues

According to Calpers, the lawsuit filed threatens to set a negative precedent. "Now decades of shareholder rights are being threatened by a lawsuit filed by the leaders of a powerful American company, designed to punish two small groups who had the courage to expose the truth. If successful, the lawsuit could diminish the role and rights of any investor in improving a company's bottom line."

The protest votes, by the way, are unlikely to bother Exxon management. Indeed, taken together, the group of investors owns too small an amount of shares to be decisive in the (re)appointment of board members (for reference, Calpers holds 0.2 percent of Exxon's shares).

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