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Keeping you in-the-know on environmental, social and governance developments

This is the final installment in our blog series on what ESG professionals and CSOs need to know about proxies and shareholder proposals in advance of the 2024 proxy season.


Most companies try to resolve shareholder proposals or proxy contests through negotiation. In the case of a shareholder proposal, a company may agree to actions that persuade the shareholder to withdraw the proposal. Along the same lines, a company may agree to operational changes, provide board representation, and/or other actions endorsed by the activist if the board sees a substantial risk of losing a proxy contest. For example, it is common for companies to agree to carbon emissions determinations/disclosures, water use/risk assessments and DEI surveys/metrics development.

However, companies can choose more aggressive approaches. As mentioned in a previous blog, ExxonMobil filed a lawsuit to stop shareholders from filing climate-related proposals that ask the company to set greenhouse gas emissions reductions related to the use of oil and gas. In response to the company’s lawsuit, the shareholder withdrew its proposal, but the company will continue pursuing legal action. According to Cooley’s Cydney Posner:

“A spokesperson for Exxon told Reuters that it would continue with the lawsuit, stating that it ‘believe[s] there are still important issues for the court to resolve. There is no change to our plans, the suit is continuing’…

Exxon explained that it filed the litigation ‘because year after year Defendants submit shareholder proposals under the federal securities laws to advance their personal agenda at the expense of ExxonMobil’s shareholders. And there is no good reason to believe they will stop.’ They own nominal shares, Exxon claimed, to pursue their ‘Goldilocks Trojan Horse’ strategy, under which they have submitted fourteen proposals in the past eleven years [Part 2 about limitations on proposals]. But, Exxon contended, the SEC permits these proposals to go forward under its current interpretation of the rules – an interpretation ‘that is inconsistent with the regulations and encourages Defendants and other activist organizations to submit shareholder proposals designed to disrupt the ordinary business operations of public companies and harm their shareholders. The SEC explains, however, that its guidance is informal and has no legal force or effect, and it further states that it cannot decide the merits of a company’s position regarding a shareholder proposal. Only a court can.’”  

Exxon’s success could affect the entire shareholder proposal process in the future. Charles Crain, a vice-president at the National Association of Manufacturers, told Financial Times last week that “companies writ large are watching to see how this case progresses.”

In this short series, we’ve outlined several aspects of proxies and shareholder proposals that ESG professionals and CSOs are likely to encounter given the popularity of ESG proposals – even in anti-ESG settings. These are common scenarios to which you may be called upon to help respond/manage. If you would like more information about proxies, shareholder proposals/activism or US securities law in general, check out (membership required). If you aren’t a member, sign up now and take advantage of our no-risk “100-Day Promise” – during the first 100 days as an activated member, you may cancel for any reason and receive a full refund.

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The Editor

Lawrence Heim has been practicing in the field of ESG management for almost 40 years. He began his career as a legal assistant in the Environmental Practice of Vinson & Elkins working for a partner who is nationally recognized and an adjunct professor of environmental law at the University of Texas Law School. He moved into technical environmental consulting with ENSR Consulting & Engineering at the height of environmental regulatory development, working across a range of disciplines. He was one… View Profile