CalPERS Warns Exxon of ‘Strong Response’ to Lawsuit

ESG Investor

Public sector pension giant notifies oil major of consequences to its decision to sue shareholders over climate shareholder resolution.

The California Public Employees’ Retirement System (CalPERS), one of the world’s biggest pensions schemes, has warned ExxonMobil it will face consequences for its controversial decision to sue shareholders over a climate shareholder resolution.

CalPERS issued the warning after a group of ExxonMobil investors, employees and unions wrote to the pension fund urging it to vote against two of the company’s directors, including CEO and chairman Darren Woods, in protest against what they called an “attack on shareholder democracy”.

The move is the latest twist in an ongoing battle between the oil giant and climate-conscious investors over smaller shareholders’ rights to file resolutions.

In January, Exxon made the unusual decision to take legal action to prevent a shareholder resolution – which called for the group to adopt mid-term emissions reduction targets – from going to vote at its annual general meeting (AGM) later this month.

The two small shareholders who led the resolution, Arjuna Capital and Follow This, subsequently withdrew it. But Exxon still decided to press on with legal action, which many interpreted as an attempt to frighten off other investors from attempting similar action in the future.

In the letter to Exxon shareholders CalPERS and its sister fund the California State Teachers Retirement System (CalSTRS), the group of asset owners, unions and environmental groups led by California Common Good asked the pension giants to “hold [the company] accountable for its unprecedented and extreme lawsuit against its shareholders and its ongoing undermining of the efforts to fight climate change”.

“We ask that CalPERS and CalSTRS predeclare a vote against Exxon’s Board of Directors and stop purchasing Exxon’s bonds,” the letter said.

CalPERS has not confirmed whether it will vote against the two directors, but Fiona Ma, California State Treasurer and a trustee of the pension fund said Exxon’s actions were “a serious threat to shareholder rights and require a strong response”.

“As the largest public pension fund in the country, we have a responsibility to lead on issues that threaten to undermine shareowners,” she said in a statement released on Thursday to coincide with the meeting of investors. “As fiduciaries to our members, we must consider labour practices, environmental impact, and anything else that has the potential to affect the long-term value of the companies we invest in.”

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