NEW YORK, March 21 (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.