Exxon faces opposition from CalPERS after 'devastating' anti-ESG activist suit

Exxon Mobil's monthslong battle with two environmentally focused activist investors has cost the company the support of the California Public Employees' Retirement System.

CalPERS, a $484 billion pension fund manager, said in an open letter Monday it would vote in opposition to all of Exxon's 12 director nominees and its CEO, Darren Woods, at the shareholder meeting next week as a result of the company's potentially "devastating" effort to quash the two activists, Arjuna Capital and Follow This. CalPERS has a $1 billion stake in Exxon.

The two activists submitted a shareholder proposal that would have forced the company to reduce direct emissions and set a target for lowering emissions at suppliers and customers. Exxon sued the investors in Texas federal court in January, prompting them to withdraw the proposal.

Even with the activists backing off, Exxon has continued its lawsuit to prevent the activists from ever again submitting such a proposal. The company said in a statement to CNBC that Arjuna and Follow This are attempting to "silence the voices of up to 90% of our voting shareholders who have rejected the proposal twice."

CalPERS said in its letter that Exxon's "reckless" lawsuit threatened shareholder activism efforts on any issue.

"If ExxonMobil succeeds in silencing voices and upending the rules of shareholder democracy, what other subjects will the leaders of any company make off limits?" CalPERS CEO Marcie Frost and board President Theresa Taylor said in the letter. "Worker safety? Excessive executive compensation?"

CalPERS said it's urging other shareholders to follow its lead "to send a message that our voices will not be silenced."

An Exxon spokesperson said the company had engaged with the pension fund and did