CalPERS says Exxon should stop suing climate-sensitive investors. By Reuters

© Reuters. FILE PHOTO: The ExxonMobil logo is visible in this picture taken Oct. 6, 2023. REUTERS/Dado Ruvic/Illustration//File Photo

Isla Binnie

NEW YORK (Reuters) – The largest public pension fund in the U.S. plans to make a request. ExxonMobil (NYSE:) is dropping a lawsuit against an investor who filed a shareholder resolution calling on the U.S. oil major to curb greenhouse gas emissions faster.

The California Public Employees’ Retirement System (CalPERS), which owns a 0.2% stake in Exxon, said it would raise the issue at an executive meeting this week ahead of the energy company’s annual shareholder meeting in May, according to its most recent disclosure. .

Exxon filed suit in January to block a proposal from two investors to accelerate the pace of greenhouse gas reductions from being put to a shareholder vote. The investors responded by canceling the offer, but Exxon refused to take legal action against them.

“I don’t think it’s particularly helpful for corporations to sue the people who provided their capital,” Drew Hambly, investment director at CalPERS, told the $444 billion pension fund’s board of directors on March 18.

“We will certainly express those views to the company when we have the opportunity,” Hambly added.

Exxon did not respond to a request for comment. The company’s CEO, Darren Woods, defended its handling of the issue Monday at the CERAWeek industry conference in Houston.

“These are not legitimate investors. The process was hijacked to the detriment of our shareholders. We’re basically trying to make things right,” Woods said.

Exxon’s lawsuit means companies will rely on the U.S. Securities and Exchange Commission to exclude investor proposals from shareholder voting.

Exxon said in its lawsuit that activist investors want to restrict its business rather than increase shareholder value, and cited a surge in such resolutions.

This is not the first time that CalPERS has emerged as a thorn in Exxon’s side over environmental, social, and corporate governance (ESG) issues. In 2021, the pension fund supported an activist investor’s successful board challenge against Exxon to better position it for the energy transition.

Exxon’s legal action against activist shareholders is part of a broader effort to discourage investors about ESG, CalPERS Executive Director Theresa Taylor said at the fund’s meeting Monday.

“We need a plan, and that plan has to include whether we want to keep those people in our portfolio,” Taylor said, referring to Exxon.

A CalPERS spokeswoman did not respond to a request for further comment on whether the pension fund was considering excluding Exxon from its investment portfolio.