Investor Advocates for Social Justice

Investors are Encouraged to Support Shareholder Proposals at Southern Company

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The Tri-State Coalition for Responsible Investment is encouraging shareholders to vote in favor of shareholder proposals at the May 25th Annual General Meeting of The Southern Company.  Tri-State CRI supported the drafting and filing of Item 9 on the proxy, which was filed by the Sisters of Charity of St. Elizabeth and 10 co-filers, who are members of the Interfaith Center on Corporate Responsibility.

This proposal has received support from both proxy advisory firms, ISS and Glass Lewis, with global institutional investors already declaring their support here. More information making the case in support of the proposal is available in our Exempt Solicitation here. CalPERS, the largest public pension fund in the United States, also filed an Exempt Solicitation in support, available here.

Item 9 asks the Board to publish a report outlining its business plan for this alignment that would include information about all the component parts needed to shift Southern’s business, including how Southern will strategically and systematically:

  • Integrate distributed energy resources  like storage and generation,
  • Demand response programs,
  • Smart grid technologies, and
  • Corresponding revenue models and rate designs.

This shift must also be prioritized by management and in Southern’s executive schemes, so we also request the report include information on steps you will take to align with the 2 degree goal, related to:

  • Incentivizing executives to meet these goals,
  • Shape Southern’s research and development agenda to support these efforts, and
  • Align public policy positions and engagement strategy with state regulators with meeting a 2 degree target.

This is a new moment, after the Paris Climate Agreement last winter, where 195 countries agreed to limit increases in global average temperature to 2 degrees Celsius or less. We must all be working toward the 2°C goal to stave off devastating impacts that will arise if we surpass that goal.  Even still, warming above 1.5 degrees will have detrimental impacts on communities. This will include forced migration of individuals in low-lying areas, creating climate refugees.  It will result in record high temperatures throughout the world, making some regions in the Middle East uninhabitable.

There is a strong case before investors for supporting this resolution at Southern Company:

  1. Southern faces regulatory and financial risk from climate change policy, including the Paris Climate Agreement and Clean Power Plan, and the carbon intensity of Southern’s operations.
  2. Southern’s current approach to reducing GHG emissions, including major capital investments, may entail material financial risks, related to cost overruns and delays at Kemper and Vogtle, and the debt issued to acquire AGL Resources, which recently led Moody’s and Fitch Ratings to downgrade The Southern Company rating .  The SEC recently initiated investigations into the Kemper plant related to cost-overruns and delays.
  3. Southern has inadequate disclosure on its strategy for aligning its business with a carbon constrained world. Southern still does not report to the CDP.  In addition, information on Southern’s scenario planning is not disclosed, and it therefore is impossible to assess how the possibility of a 2˚C scenario might impact operations.
  4. Finally, Southern Company will realize strategic benefits from this kind of reporting because it will enable you to seize opportunities and increase the resiliency of the business in the face of new regulatory developments.

A recent report from the Investor Responsibility Research Center Institute (IRRCi) ranking the climate orientation of the boards of the top 25 U.S. electric utilities on Climate Change, Corporate Governance, and Politics indicated that The Southern Company lags behind its peers, especially as it relates to political spending and lobbying.  As You Sow has also filed a shareholder proposal on Carbon Asset Risk, Item 10 on the proxy, with more information available here. Investors are encouraged to support both of these resolutions on Wednesday May 25th at Southern Company.

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