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Climate litigation is the primary focus of today’s newsletter as Exxon Mobil seeks to prevent a climate proposal by activist investors from going to a vote at the company's shareholder meeting in May.
This is the first time Exxon is seeking to exclude a shareholder proposal by filing a complaint in court. The oil major says the investors are "driven by an extreme agenda" and their repeated proposals do not serve investors’ interests or promote long-term shareholder value.
The case in a Texas court was assigned to a judge with a track record of ruling in favor of conservative causes.
* ‘Adopt tighter climate targets’ Investors led by U.S. activist investment firm Arjuna Capital and shareholder activist group Follow This are asking Exxon and other oil majors to adopt tighter climate targets.
They want Exxon to set so-called Scope 3 targets to reduce emissions produced by users of its products. Exxon is the only one among the five Western oil majors that does not have such targets.
Exxon is asking a court in the U.S. District Court for the Northern District of Texas to exclude the Scope 3 proposal in its proxy statement.
The case has been assigned to U.S. District Judge Reed O'Connor, an appointee of Republican former President George W. Bush in Fort Worth. O'Connor has a track record of ruling in favor of conservative litigants challenging laws and regulations governing guns, LGBTQ rights and healthcare.
Follow This are also a part of a group of 27 investors that own around 5% of Shell's shares and co-filed an independent resolution urging the energy company to set tighter climate targets, the biggest such drive to date.
The effort to ratchet up pressure on Shell's climate strategy comes as CEO Wael Sawan seeks to boost the company's profits, partly by cutting low-carbon jobs and scaling back its hydrogen business.
* ‘The banker of the climate crisis’ Elsewhere, climate group Friends of the Earth said it intends to hold ING liable for its climate policies, including its financing of the fossil fuel industry, the first step in a Dutch lawsuit.
Shares in ING, the Netherlands' largest financial group, fell by more than 1% after the environmental group unveiled its plans at a press conference in Amsterdam.
"ING is very simply the banker of the climate crisis," Friends of the Earth director Donald Pols said, adding that the bank was targeted because of its size and influence. "Because they fund polluters, they play a crucial role in climate change."
ING said in a response that it had taken note of the group's claim. "We are confident that we (already) take impactful action to fight climate change and sustainability is part of our overall strategic direction," the bank said. "We will of course respond in court if necessary."
* Youth-led climate cases Elsewhere, the Montana Supreme Court has refused to pause a landmark ruling that found that the state's policies prohibiting regulators from considering the impacts on climate change when approving fossil fuel projects violate the rights of young people.
The high court said in a 5-2 ruling that the state had not shown a lower court abused its discretion when it refused to stay its August ruling in favor of 16 young people who said their health and futures are jeopardized by climate change, which the state aggravates through its permitting of energy projects.
The young plaintiffs said in their 2020 lawsuit, filed when they were ages 2 to 18, that the state’s permitting of projects like coal and natural gas production exacerbated the climate crisis.
* Talking Points
* In Conversation
Julia Grothaus, litigation, arbitration & investigations partner at international law firm Linklaters, shares her thoughts on legal ESG trends:
“From greenwashing claims to the rise of regulatory enforcement and ESG backlash litigation, the fabric of risk is becoming more complex, and cases brought this year in the EU, UK and U.S. courts show the significance of this.
“In 2024, we expect to see tighter ESG reporting rules, as legislators and regulators demand transparency and accountability.
“The EU’s Corporate Sustainability Reporting Directive (CSRD) will broaden mandatory reporting, improving data standardization.
“Similarly, the U.S. Securities Exchange Commission (SEC) will likely enhance ESG disclosure rules, leading to more informed investment decisions and better corporate sustainability practices. This transparency creates new risks.
“Not least for this reason, we can also expect to see legal repercussions for greenwashing intensify even further in 2024.
“This shift is also driven by incidents like a 2023 case where an asset manager was penalized $19 million for false ESG disclosures, and dozens of successful greenwashing claims by NGOs in Germany and the EU more widely.
“In parallel, the European Union is taking further – far-reaching – steps in eliminating greenwashing, including developing new rules to prevent misleading advertisements.”
“With this surge in ESG policy and regulation, ensuring compliance with evolving regulatory standards will become a paramount concern for companies in the year to come.”
* ESG Lens
A pipeline owned by Shell's subsidiary in Nigeria has spilled crude oil in the Niger Delta following a leak, the country's spills agency and an environmental group said.
The Obolo-Ogale pipeline in southern Rivers State feeds the 180,000 barrel-per-day Trans Niger line, one of two conduits to export Bonny Light crude. It had restarted operations this month after being shut for maintenance in December.
* ESG Spotlight Today’s spotlight highlights a win for animal rights activists in Mexico.
Benito the giraffe, whose lonely life at a park on Mexico's arid northern border inspired a campaign to relocate him, was en route on Monday to a new home at a safari park in the center of the country.
Since May the giraffe has been living at Central Park in Ciudad Juarez, where the city's desert climate has been sending temperatures soaring in the summer and plummeting this winter, with a low of 9°C (48°F) forecast for Monday.
In addition to better weather conditions, Benito is expected to benefit from the company of seven other giraffes at his new home, Africam Safari said.
Benito's move was a victory for activists, who argued that the park housing him in Juarez was not an adequate home for the majestic animal.
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