ExxonMobil (XOM) is suing activist investor firms Arjuna Capital and Follow This to block a shareholder proposal that would demand the gas producer hasten its timeline to reduce greenhouse gas emissions.

Yahoo Finance Senior Business Reporter Ines Ferré breaks down the details.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Luke Carberry Mogan.

Video Transcript

BRAD SMITH: Let's stay in the oil and gas space for a hot second here. ExxonMobil suing two sustainable investment firms. The company's trying to prevent a climate proposal by activist investors at the company's shareholder meeting in May. Can you tell us a little bit more about this one?

INES FERRE: Yeah. And this is a significant move that ExxonMobil has taken against Arjuna Capital. That's an investment firm that's based in Massachusetts and also follow this as an activist investor that's based out of Amsterdam. And this is the first for the oil major.

And it has to do with some proposals that these investment firms want. They have to do with scope 3 emissions, not to get too in the weeds, but they are certain types of targets. ExxonMobil has announced a plan to reach net zero by 2050 for its scope 1 and scope 2, now scope 3.

But basically, what this complaint is saying, it's highlighting sort of what they're calling sort of a broken system when it comes to these shareholders that issued these proposals. It also highlights the role of the SEC because it's been overseeing environmental and social shareholder proposals. And what they're basically saying is that these permit-- these activists, they acquire minimal shares, and then they put forth these proposals.

These proposals, ExxonMobil is saying that they have already been put forth in the last two meetings, so back in 2022 and also in 2023, and they were rejected then. I just want to show you just a full screen of part of the complaint and what it says. It says, "Arjuna," and follow this, "are aided in their efforts by a flawed shareholder proposal and proxy voting process that does not serve investors' interests and has become ripe for abuse by activists with minimal shares and no interest in growing long-term shareholder value." Guys.

SEANA SMITH: All right, Ines, that's the story that we're going to continue to track. Ines Ferre, thanks so much.