Lucas L Alpert, MarketWatch
EnergiesNet.com 01 22 2024
These yogis are stretching the patience of America’s biggest oil company.
Natasha Lamb and Farnum Brown founded and run Arjuna Capital. The decade-old sustainable-investment firm, whose mission is to push major corporations into adopting more socially conscious policies, has found itself at the center of a lawsuit by Exxon Mobil Corp. XOM, -0.13% that seeks to block a shareholder proposal on climate change.
With a mantra of “divest from old problems; invest in new solutions,” Arjuna says its goal for clients is “to invest in ways that further both their own financial well-being and the health of society.”
The founders, who met while working at Boston-based Trillium Asset Management, say their principles were influenced by their study of yoga. The fund is named after a figure in the Bhagavad Gita, a Hindu scripture.
This kind of investment strategy, commonly known as environmental, social and governance, or ESG, investing, has become increasingly popular in recent years. As of May 2023, the fund had $374 million in assets under management, according to filings with the Securities and Exchange Commission.
In recent years, Arjuna has filed similar shareholder proposals at companies like Amazon.com Inc. AMZN, -0.36%, Microsoft Corp. MSFT, -0.54%, Visa Inc. V, +0.11% and Tesla Inc. TSLA, -1.60%, pushing for changes to those businesses’ policies on pay equity, board diversity and sexual harassment.
While these types of shareholder proposals often don’t succeed, they can influence a company’s policies by forcing executives to respond. In 2021, Exxon Mobil suffered a stunning defeat when a tiny hedge fund, Engine No. 1, won two board seats by pushing for a more proactive clean-energy strategy.
The same year, a proposal pushed by Arjuna for clearer sexual-harassment policies at Microsoft won 78% of a shareholder vote.
Brown, who is the fund’s chief strategist and is based in Durham, N.C., has been involved in sustainable investing since its earliest days in the late 1980s.
Lamb, who is Arjuna’s chief investment officer and works from Manchester-by-the-Sea, Mass., has emerged as one of the most visible faces of ESG investing, having been named to the Bloomberg 50 list in 2017 and InStyle magazine’s Badass 50 list the following year.
In the lawsuit, filed Sunday in federal court in Texas, Exxon Mobil says that Arjuna follows an “extreme agenda” and that its shareholder proposal is “calculated to diminish the company’s existing business.”
Arjuna’s mission is not about helping energy companies improve their business practices but to “shrink” them, the suit claimed.
The lawsuit comes amid growing pushback against ESG investing, with Republican presidential candidates criticizing it on the campaign trail. In December, Rep. Jim Jordan, the Ohio Republican, subpoenaed Arjuna’s communications with the Vanguard Group over how they “advance ESG policies” as part of a larger investigation into ESG investing.
The Exxon Mobil shareholder proposal in question, filed by Arjuna in December, calls on the oil giant to dramatically accelerate the pace of its emission-reduction plans. A Dutch investment firm called Follow This, which similarly pursues sustainable-investment goals and has targeted several global energy firms, joined the proposal the next day.
Exxon Mobil argues that the proposal should be dismissed under SEC rules because it is substantially similar to a proposal filed within the past five years that had been rejected. Exxon Mobil’s annual meeting is set for May 29.
A spokeswoman for Arjuna said the firm considered it a “duty” to raise issues regarding climate change with the companies it was invested in.
“Investors face economy-wide risks from climate change and we have a fundamental right and duty to voice concern over climate risk, its impact on the global economy and shareholder value,” the spokeswoman said.
In a statement, Follow This called Exxon Mobil’s suit a “remarkable step” that appears aimed at preventing its “shareholders using their rights.”
“ExxonMobil appears to interpret reducing emissions as decreasing business even though fossil fuels can be replaced by renewable energy,” the statement said. “ExxonMobil’s interpretation shows a lack of imagination beyond oil and gas.”
marketwatch.com 01 22 2024