Bloomberg Law has published Larry Cunningham’s opinion piece on this high-visibility lawsuit.

Exxon Mobil Corp. recently attracted significant attention after suing two climate activists who sent a shareholder proposal asking that the company set stringent targets to slash its greenhouse gas emissions and those of its customers. 

If implemented, the proposal would effectively place a hard limit on the company’s growth and ability to deliver returns for its shareholders, a clear misuse of a process intended to give shareholders a voice on important issues that affect their economic interests.

However, shortly after being confronted with the prospect of having a court of law—instead of the Securities and Exchange Commission—review whether their proposal was legal, the activists, Arjuna Capital and Follow This, decided to withdraw. Their action is likely a tacit acknowledgement that the proposal ran afoul of the SEC’s rules governing shareholder proposals. While this episode may appear to be an Exxon-specific issue, it is a sign of a bigger problem: how the SEC has allowed the misuse of shareholder proposals by a few individuals and groups with private agendas despite their own rules.

Read more on Bloomberg Law.