NEW YORK (Reuters) - The largest U.S. public pension fund plans to ask Exxon Mobil ( XOM ) to drop a lawsuit against investors that filed a shareholder resolution asking the U.S. oil major to curb greenhouse gas emissions faster.

California Public Employees' Retirement System (CalPERS), which according to its most recent disclosure holds a 0.2% stake in Exxon, disclosed at a meeting of its officials this week that it will raise the issue ahead of the energy company's annual shareholder meeting in May.

Exxon sued in January to block a proposal from two investors asking the company to speed up the pace of its emissions reductions from being put to a shareholder vote. The investors responded by dropping the proposal, but Exxon has refused to drop the legal action against them.

"We don't think it's particularly helpful for companies to be suing the people who provide their capital," CalPERS investment director Drew Hambly told a board meeting of the $444 billion pension fund on March 18.

"We will certainly voice that opinion with the company when we have that opportunity in our engagement," Hambly added.

Exxon did not respond to a request for comment. The company's Chief Executive Darren Woods defended its handling of the matter on Monday at the CERAWeek industry conference in Houston.

"These are not legitimate investors... That process has been hijacked to the detriment of our shareholders, and we're basically trying to correct the problem," Woods said.

Exxon's lawsuit marked a departure from companies turning to the U.S. Securities and Exchange Commission for permission to exclude investor proposals from shareholder votes.

Exxon said in its lawsuit that activist investors want to constrain its business rather than increase shareholder value, and noted that such resolutions have burgeoned.

It is not the first time that CalPERS has emerged as a thorn in Exxon's side over environmental, social and corporate governance (ESG) issues. In 2021, the pension fund backed a successful board challenge by an activist investor against Exxon in a push to better position it for the energy transition.

CalPERS administrative board president Theresa Taylor told the fund's meeting on Monday that Exxon's legal action against the activist shareholders was part of a broader effort to impede investors over ESG.

"We need a plan and that plan needs to include whether or not we keep those people in our portfolios," Taylor said, referring to Exxon.

A CalPERS spokesperson did not respond to a request for further comment on whether the pension fund was considering shedding Exxon from its investment portfolio.