Exxon’s legal actions against climate-conscious shareholders invoke PC(USA)’s response

Current MRTI efforts include letter to fossil fuel giant, resolution filed with Goldman Sachs

by Emily Enders Odom, Mission Communications | Special to Presbyterian News Service

Photo by NASA via Unsplash

LOUISVILLE —  For nearly 30 years, the Presbyterian Church (U.S.A.) through its Committee on Mission Responsibility Through Investment (MRTI) has worked to engage corporations to adopt better and more just environmental policies and practices to mitigate the escalating impact of climate change.

One such focus of the PC(USA)’s engagement, ExxonMobil — which has historically been resistant to proposals related to Environmental, Social and Governance matters — is once again making headlines. And although the 225th General Assembly (2022) voted to divest from Exxon, the PC(USA) has nonetheless continued to exert its influence with the company where possible through its affiliation with the Interfaith Center on Corporate Responsibility, of which the denomination is a founding member.

ICCR is a coalition of faith- and values-based investors who view shareholder engagement with corporations as a powerful catalyst for change.

When Exxon filed a lawsuit in January against two of its shareholders, the investor groups Arjuna Capital and Follow This, ICCR requested that other investors support its efforts to challenge such an unprecedented move against shareholders seeking changes in the company’s climate-related practices.

“The ExxonMobil lawsuit is important because, if successful, it would set a dangerous precedent that a company could sue its own shareholders when it disagrees with resolutions those shareholders file,” said Katie Carter, the PC(USA)’s director of Faith-Based Investing and Shareholder Engagement and lead staff to MRTI. “Even if the suit is not successful, the potential threat of dragging shareholders through a long legal process could be used to deter shareholders from filing resolutions.”

Katie Carter

Carter further observed that Exxon’s most recent action builds on already troubling developments in the broader corporate and shareholder engagement context.

“Companies are trying to discredit shareholders as ‘woke progressives’ who are just trying to push an agenda without any interest in actually improving company performance or financial returns,” she said. “Because a core part of engagement with companies in recent years has been on Environmental, Social and Governance issues, the recent company pushback has been colloquially termed the ‘anti-ESG’ movement, in which we see the Exxon lawsuit as the latest development.”

Because the PC(USA) is no longer an Exxon shareholder, its ability to influence the company is limited, according to Simon Doong, associate for Corporate, Community and Church Engagement in the office of Faith-Based Investing and Shareholder Engagement.

“But our work is not done,” Doong said. “These companies still exist. They are still problematic. Whenever we can exert our influence, we will.”

In the case of the Exxon lawsuit, ICCR — whose Board of Directors is chaired by Rob Fohr, a former director of the PC(USA)’S office of Faith-Based Investing and Corporate Engagement — advocated that investors write letters to Exxon’s Board of Directors, which the PC(USA) did on March 27.

“We believe this costly and unnecessary suit constitutes a serious threat to general shareholder rights,” Carter wrote on behalf of the PC(USA). “It also sends a clear message that the company is seeking to shut down any debate by its shareholders on actions needed to address climate risk. This unprecedented suit risks alienating shareholders, harming Exxon’s reputation, and undermining the Securities and Exchange Commission (SEC) by circumventing efficient, effective and time-honored procedures established by the agency. We urge the Board to intervene to convince management to abandon this legal strategy.”

As Exxon’s attacks on its shareholders — including ICCR — have only escalated since the company’s January lawsuit, ICCR filed a proxy response on April 22.

Simon Doong

In other climate-related engagement, Doong appeared last week on behalf of MRTI at the Goldman Sachs Group’s 2024 Annual Meeting of Shareholders in Salt Lake City to speak to a resolution filed by the PC(USA) requesting that its Board initiate a review of both Goldman Sachs Asset Management’s 2023 proxy voting record and proxy voting policies related to diversity and climate change.

According to Carter, Goldman Sachs had a clear drop in support in 2023 for shareholder resolutions related to addressing climate and Diversity, Equity and Inclusion issues compared to the previous year. She said that the company clearly lags behind other large asset managers in terms of its support of resolutions on these issues.

“The PC(USA)’s resolution matters because it is an example of how the denomination, through MRTI, is trying to hold companies accountable and improve their behavior on climate, race and gender issues,” said Carter. “How companies that are investment and asset managers like Goldman Sachs vote, or refrain from voting, their proxies can impact and influence the chance that certain proposals are supported.”

As a participant in the meeting, Doong was able to observe that of the eight shareholder proposals that were discussed and voted on, four were directly or indirectly about supporting climate-related changes.

“What that says to me is that even in sectors and industries where people may not expect climate to be pushed, investors are pushing it and trying to hold companies like investment and asset managers and banks accountable,” said Doong.

And although the PC(USA)’s proposal was ultimately not approved, it nevertheless witnessed to the church’s ongoing commitment to address climate change wholistically.

“While the resolution filed by the Presbyterian Church received a modest vote under 10%, the resolution and speech to the board at the stockholders meeting still sent a clear message of concern from an important investor,” said ICCR’s senior policy advisor, Timothy Smith, who has been involved in this work for more than 50 years. “The vote for our resolution is not the only way to measure impact. As we face an increasing climate crisis, it is also important to channel a prophetic voice urging companies to urgently address this crisis.”

For more information about MRTI, its current workplan and a list of companies it engages, click here.