Transcription
CorporateResponsibilityReport 2018
2Letter from Tom Fanning4Carbon reduction goals6Our company22 Smart neighborhood projects Who we are Economic development Listening to our employees Environmental stewardship Diversity and inclusion Investing in employees Overview50 Lowering air emissions Developing people Energy portfolio Conserving water Diverse career options Celebrating 50 years of R&D Managing solid wastes Safety Advancing technology Supplier diversity Policy and engagement38Our communityOur world GHG emissions reductions Recruitment Business environment Leadership oversightOur people Mitigating methane emissions62Appendix GRI index New board members Charitable giving Environmental metrics Our Values Volunteering Company metrics Code of Ethics Educational initiatives Workforce metrics Supporting customers SASB indexAbout this reportOur Corporate Responsibility Report for 2018 highlights our efforts and progress on environmental, social and governance(ESG) topics. This report has been prepared in accordance with the Global Reporting Initiative (GRI) standards core option.The goal of this annual report is to provide insights into the inner workings of our corporate responsibility through the lens ofour company, our people, our community and our world. To learn more, please visit the Corporate Responsibility section ofour website where you can find additional information, reports and related news.1
Letter from Tom FanningEven in the face of an evolving future, Southern Company willSouthern Company is privileged to provide the clean, safe, reliablecontinue to emphasize that our culture is the key to meeting ourand affordable energy customers depend on to live, work andchallenges. As we shape what the future holds for this industry andplay. For more than a century, we have been building the futureour company, we will continue to develop and promote a corporateof energy and developing the full portfolio of energy resourcesculture that is inclusive, provides a sense of purpose and guides ourrequired to drive growth and prosperity.behaviors to the benefit of customers, communities, employees,stockholders and stakeholders alike. Not only because they demandSouthern Company and our subsidiaries recognize the responsibil-as much and deserve no less; but because it is the right thing to do.ity that comes with our privilege to develop energy solutions andare steadfast in our commitment to our customers, our neighborsTo address environmental, social and governance (ESG) topics in anand our communities. Energy done right gives us a near-unassail-open and honest way, this report is organized into four pillars:able advantage in a worldwide, competitive economy to sustain Our company sets the standard for delivering clean, safe, reliablegrowth, create jobs, grow personal incomes and make lives betterand affordable energy to the customers and communities we arefor so many.privileged to serve. Our people are the energy behind our energy. Our talented,We have been entrusted with an enormous responsibility andengaged and diverse workforce knows that how we do our job isoperate our business accordingly. That is why Southern Companyjust as important as what we do.brands are known for excellent customer service, high reliability Our communities must be better off because we are there. Ourresponsibility is to preserve and protect our environment and ourand affordable prices.neighbors.At Southern Company, we operate every day knowing how we doour jobs – the behaviors we exhibit with customers and each other Our world is rapidly evolving while presenting new opportunitiesto enhance the value we provide.– is just as important as what we do. Our uncompromising valuesensure we put the needs of those we serve at the center of every-On behalf of the thousands of people making thousands of goodthing we do and govern our business to the benefit of all. Acrossdecisions every day at Southern Company, thank you for your inter-Southern Company, the values at the core of how we do businessest in our company. We will continue our hard work on your behalf.include Safety First, Unquestionable Trust, Superior Performanceand Total Commitment.2
Tom FanningChairman, President & CEOSouthern Company3
Carbon reduction goalsa long-term goal of low- to no-carbonreduction since 2007. Notably, gen-Southern Company is transitioningoperations by 2050.eration from coal plants continuesto trend downward, in line with ourour energy generation fleet for alow-carbon future. In doing so, weThese goals are a continuation ofstated carbon reduction objectives.have established an intermediate goalour trajectory of lower carbon emis-For 2018, coal represented only 27of a 50 percent reduction in carbonsions over the past decade-plus,percent of our energy mix as com-emissions from 2007 levels by 2030 andwhich have resulted in a 35 percentpared to 69 percent in 2007.Greenhouse gas (GHG) emissions420072018Baseline35% reduction
Our strategy to achieve these goalsTo do this, we are growing our invest-and investing in energy efficiency forincludes the continued developmentment in renewable energy, modernizingsavings on both sides of the meter.and deployment of a diverse portfoliothe grid to optimize technology advance-of energy resources to reliably andments, increasing the use of natural gas,We will work within the regulatoryaffordably serve our customers andbuilding new nuclear generating units,framework in each of our states to ensurecommunities with a focus on reducingcontinuing our industry-leading, robustthat our carbon reduction efforts supportcarbon emissions.research and development (R&D) efforts,customers' needs and preferences.2030205050% reductionLow to no5
Our CompanyOur uncompromisingvalues guide us inkeeping those weserve at the center ofeverything we do andgovern how we dobusiness to improveour world.
744CC CTCTLNGLNG11CCSS22459 SSCTLNGCC CTSSCC10BSS74471711LNG931HAWAIIService territoriesSE3SS18PUERTO RICOElectricGasGas pipelinesSouthern PowerSouthern Company GasSouthern Natural GasCCCombined-cycle facility*LNGLNG facilitiesSouthern Company GasCTPeaking facilitySESequent Energy ManagementBBiomass facility**SSSouthStarSSolar facilityWWind facilityPipeline projects* In November 2018, Southern Power agreed tosell its Plant Mankato combined-cycle facility.PowerSecure#Owned and managedsites per stateNatural gas storageAs of Jan. 1, 2019** In April 2019, Southern Power agreed to sell itsNacogdoches biomass facility.8Back to contents
Through our longstanding focus on innovation, Southern Company is building the future of energy. We arecommitted to reducing our carbon emissions and to our goal of transitioning over time to low- to no-carbonoperations. Our uncompromising values guide us in keeping those we serve at the center of everything we doand govern how we do business to improve our world.Overviewoperating companies in three states andSouthern Company is delivering steadynatural gas distribution businesses in fourgrowth through a diversified fuel mix andstates are known for excellent customerDividends are a significant part of oura business model that keeps pace withservice, high reliability and affordablevalue proposition and our dividendevolving customer expectations and needs.prices below the national average. Weincreased for the 17th consecutive yearserve wholesale customers across Americain 2018. For 70 years, we have paid aAs a recognized energy leader, we providethrough a nationally recognized compet-dividend that was equal to or greaterclean, safe, reliable and affordable energyitive generation business, are the leadingthan the previous year, and at year-end,for 9 million customers through our subsid-distributed energy infrastructure com-Southern Company’s dividend yield wasiaries. Our premier state-regulated electricpany, operate a fiber optics network and5.4 percent.capabilities in50 statesApproximately29,000employees9 millioncustomers44,000 MWof generating capacityare a telecommunications provider.7electric and natural gas utilitiesmore than80,000miles of natural gas pipelinesAs of Jan. 1, 2019Back to contents9
Hardening Puerto Rico’s electric grid after Hurricane MariaIn October 2017, Southern CompanyThe job didn’t end there. Southernto help ensure Puerto Rico’s energypartnered with the Department ofCompany continues to work hard toinfrastructure is more resilient forDefense to restore power to Puertoprovide distributed energy resourceswhen the next storm strikes.Rico after the island’s electrical infrastructure was destroyed by HurricaneMaria. Over a seven-month period,more than 1,000 people from acrossthe entire Southern Company systemworked tirelessly to restore power andhope to the people of Puerto Rico.Damage assessment teams from oursubsidiary PowerSecure were amongthe first energy company personnelon the island. Additionally, SouthernCompany shipped hundreds of trucks –bucket trucks, digger derricks, pickupsand more – to the island via barge andreplaced thousands of power poles inextremely challenging conditions overdifficult terrain.10Back to contents
Business environmentWe are developing a full portfolio ofenergy resources to maintain and increasereliability and affordability. This strategyenables us to effectively manage thevariable nature of renewables, whileefficiently balancing fuel sources andproviding clean energy solutions.We continue to modernize our businessand are diligent in our approach toemerging opportunities in the energyproduction and delivery model as we planfor a low-carbon future. We remain steadfast in our commitment to improving lifefor our customers and communities bydelivering the energy that powers growth,vital customer value through our regulatedour customer-centric model, combiningnatural gas infrastructure. We also recog-state-regulated businesses and otherSouthern Company and its subsidiaries arenize the potential of energy solutions thatassets where energy is sold on long-termengaged across the energy value chain asreside behind customers’ meters.contracts with creditworthy counterpar-prosperity and wellness.ties. This asset mix is designed to producewe make, move and sell energy to a widecustomer base. We continue to diversifyAs we seek opportunities to expandstable, predictable revenue streams whileour electric generation options and deliverour business, we continue to focus onmanaging carbon risks.Back to contents11
Energy portfolioElectricity generation mixWe are one of the only energy companies pur-2007suing an “all of the above” energy strategy.1% Renewables/otherWe believe developing and maintaining a69%16%14%diversified energy portfolio is essential toCoalNatural gasNuclearsuccessfully reducing carbon emissions while2018maintaining reliability and affordability.Renewables/otherOver the past decade, we have significantly27%47%15%transformed our electricity generation mix.CoalNatural gasNuclearSince 2010, we have invested 20 billion in11%Portfolio of carbon-free and carbon-neutral energy sourcesdeveloping low-carbon and carbon-freeresources, and we have added more than34%5,000 megawatts (MW) of renewable generating capacity through our subsidiaries. We30%30%expect to add an additional 3,000 MW of25%renewable generating capacity by 2023.25%18%18%Our subsidiaries are focused on strategically15%increasing the role of renewables in ourenergy mix. We have numerous R&D proj-of emerging cost-effective renewableresources and technologies.123%2%ects underway to determine the potentialNuclearWindSolarHydro2018 - 12,500 MWBiomassNuclearWindSolarHydroBiomass2023 estimated - 17,300 MWBack to contents
Celebrating 50 years of R&DDemonstrations in varying sizes andThe overall focus of this research is toSouthern Company’s R&D organizationlocations focus on evaluating the per-provide a variety of future technologyhas been setting the standard in tech-formance, operational needs and costsoptions for commercial, industrial andnology development for energy produc-for deploying this type of technology.residential customers.tion, delivery and use for half a century.Through a diverse research portfolio, wemeet customers’ energy needs today byaddressing the latest technology challengesand trends. And we anticipate tomorrow.Southern Company’s R&D portfolio overthe past decade has returned benefitsexceeding 10 times our investment.Our renewable, storage and distributedgeneration R&D program is advancing afull spectrum of distributed energy solutions to benefit customers.Bloom Energy servers, shownOur many pilot projects explore and eval-here, power about one-third ofuate fuel cells, battery storage and micro-a high-quality business office.grids, as well as renewable technologiesto advance the industry.Back to contents13
Advancing technologyFuel cellsAdvanced nuclearCarbon captureOur advancement of distributedWe are developing next-gener-At the National Carbon Captureenergy resources includes theation nuclear technologies thatCenter, we have tested more thandemonstration of a Bloom Energycould produce carbon-free, sus-fuel cell in a landfill gas opera-tainable energy at low cost withtion, helping pave the way forsuperior safety and new businessthe large-scale use of a new cleanopportunities.energy solution.the projected cost of carbon capture by one-third. We are building new infrastructure to expandcarbon capture testing for naturalgas power plants.Energy storageGrid modernizationElectric transportationWe began commissioning the firstWe have installed approximatelyWe work with industry leaders andtest systems at the Energy Storage700 pole-mounted edge-of-net-manufacturersResearch Center, an industrywidework grid optimization (ENGO)transportation growth on the roadresource where third-party innova-devices to demonstrate significantand in industry. We are activelytors can accelerate the developmentgrid efficiency from the resultingengaged in bringing more directand deployment of a full spectrumtighter voltage control.current fast-charging infrastructureof energy storage systems.1460 technologies and helped reducetodriveelectricto our service territory.Back to contents
Investing in innovation: Energy Impact PartnersSouthern Company is a founding partner of Energy Impact Partners(EIP), a 700 million venture capital fund that invests in earlystage technology companies impacting the energy andutility industries. 700M14InvestingcapacityEIP has invested in 23 portfolio companiessince its inception in 2016 and already hasStrategicutility partnersachieved several successful exits. Thesesuccesses include Ring, the smart doorbellmaker acquired in 2018 by Amazon, andGreenlots, the leading electric vehiclecharging infrastructure company,acquired by Shell in 2019.1,500 aborating with the EIP portfolio companies helps Southern Company remain onthe cutting edge of disruptive technology whileuncovering new revenue opportunities and identifying potential partnerships. This is just one of the3Successful exitsRing, Greenlotsand Tendrilways we are working to shape the future of energy.Back to contents15
Policy and engagementgovernment entities, including, but notWe actively engage in proactive, constructivelimited to:dialogue with stakeholders who hold differ- Department of Defenseing views, including those with an interest in Department of EnergyESG topics. These discussions help inform our Environmental Protection Agencydecisions and make us better. Federal Energy Regulatory Commission Nuclear Regulatory Commission United States CongressEngaging our statesCertain of our operating companiesare subject to the jurisdiction of statePartnering with trade associationsPublic Service Commissions (PSCs) andOur mission to serve customers andenvironmental agencies. PSCs have broadstockholders includes partnering withregulatory authority of these operatingvarious trade associations and researchcompanies, and environmental agenciesorganizations, and working with numer-are charged with enforcing each state’sous stakeholders to help meet the needsenvironmental policies.of our customers and communities. Someof the many organizations we partnerOur efforts to shapenational energy policy gobeyond building a betterbusiness. Good publicSupporting national energy policywith include:We engage with legislators and regula- American Gas Associationpolicy makes Americantors to support an energy policy that Electric Power Research Institutelives better.promotes innovation. As an advocate Edison Electric Institutefor future energy policies that improve Interstate Natural Gas Association ofAmericathe lives of customers, we engage proactively and constructively with several16 – Christopher Womack, ExecutiveVice President and President ofExternal AffairsNuclear Energy InstituteBack to contents
Leadership oversightIndependent Directors, who have an aver-Key Board committees addressingSouthern Company is governed by anage tenure of 6.2 years, chair each BoardESG topicsannually elected Board of Directors thatcommittee. The Board and its commit-provides oversight of our overall strategy,tees have both general and specific riskincluding ESG issues. The Board serves asoversight responsibility. Each committeea prudent fiduciary for stockholders andprovides oversight for each of our mostoversees the management of the compa-significant risks assigned to it. A desig-ny’s business, including key enterprise risknated member of executive managementand business opportunities.serves as the primary responsible officerfor providing information and updates to Nominating, Governance andCorporate ResponsibilityReviews state and federal regulatoryand legislative environment, stockholderactivism, environmental, sustainabilityand corporate social responsibility. Operations, Environment and SafetyOur diverse and highly engaged Board – whichthe Board committees related to signifi-Reviews significant operations such asmet 14 times in 2018, with an average atten-cant risks. There is regular, open commu-safety, system reliability, nuclear anddance of 94 percent – seeks to maximizenication between management and theother operations, environmental regula-long-term investment value for stockholders.Board on these topics.tion and policy, fuel cost and ndentexceptexceptthetheCEOCEO94% rtenureTenureYears of consecutive service1Women515 years0-4 years6.2 years31%15 IndependentDirectorsDiversity410-14 yearsAverageTenure55-9 yearsAs of April 5, 2019Back to contents17
Meet our new Board membersDr. Janaki AkellaMr. Anthony "Tony" F. Earley Jr.Dr. Ernest J. Moniz- Operations, Environmental- Operations, Environmental- Operations, Environmentaland Safety Committee- Compensation andand Safety Committee- Nominating, GovernanceDr. Akella has served as DigitalManagement Successionand CorporateTransformation Leader at GoogleCommitteeResponsibility CommitteeLLC since 2017. A renowned busi-Mr. Earley was chairman, CEO andDr. Moniz is a renowned phys-ness leader, her problem-solvingpresident of PG&E Corporation fromicist and professor of Physicsskills address challenges arisinglate 2011 to 2017. At PG&E, he ledand Engineering Systems atfrom new technologies and newmajor initiatives on safety, opera-the Massachusetts Institute ofbusiness models. A trusted advisorand coach for executives across ational excellence, long-term integrated planning and workforce development. A former chair of the Edisonnumber of business functions andElectric Institute, he was directlydisciplines, Dr. Akella has a reputa-involved in developing national poli-tion for understanding complexcies on energy, the environment andtechnical issues.18and Safety Committeeclimate change. He also served aschair of the Nuclear Energy Institute.Technology. He served as UnitedStates Secretary of Energy from2013 to early 2017. As Secretary,he advanced energy technologyinnovation, nuclear security andstrategic stability, cutting-edgecapabilities for the Americanscientific research community andenvironmental stewardship.
During 2018, we announced the addition of three new independent Directors as part of Southern Company’scommitment to effective Board refreshment and good corporate governance. These new Board membersbring a diverse perspective to the technological advancements and evolving dynamics that are reshapingthe energy industry.Dr. Akella’s knowledge of disruptive technologies andtheir power to reshape our world helps us navigate ourevolving industry.With the support ofa highly engaged Boardof Directors, SouthernMr. Earley’s deep experience in regulated industries, alongwith his nuclear generation, technology and environmentalexpertise, enhances Southern Company's ability to operateour premier regulated utilities.Company fully embracesour environmental,social and governanceresponsibilities thatDr. Moniz brings a strong energy science background as wellas environmental policy expertise, which is invaluable as wedevelop solutions to address climate change, environmentalmatters and emerging technologies.Back to contentshelp our customers andcommunities thrive.– Tom Fanning19
Our ValuesValue statementsAt Southern Company, how we do ourwork is just as important as what we do.Our uncompromising values define our culture and are key to our sustained success.Safety FirstWe believe the safety of our employees and customers is paramount.We will perform and maintain every job, every day, safely.Unquestionable TrustHonesty, respect, fairness and integrity drive our behavior. We keep ourpromises, and ethical behavior is our standard.Superior PerformanceWe are dedicated to superior performance throughout our business. Wewill continue our strong focus on innovative solutions, improving how werun our business and our commitment to environmental stewardship.Total CommitmentWe are committed to the success of our employees, our customers, ourshareholders and our communities. We fully embrace, respect, and valueour differences and diversity.These tenets will continue to drive our future success as they guide us indefining who we are and how we operate as a business.20Back to contents
Code of Ethicsour conduct at work and in the community. They challenge usOur Code of Ethics sets the highest standards for all employees,and ensure we interact with each other and our customers withofficers and Board members to act with honesty, fairness andthe utmost integrity. Simply put: we mean what we say and dorespect. These ethical guidelines serve as the foundation forwhat we promise.Back to contents21
Our PeopleOur people are thepower of SouthernCompany. Theirenergy enables us tobuild a brighter futurefor our customers andthe communities wecall home.
Who we are*Gender25%WomenVeterans8%of activeregular employeesMinorities27%Minorities9%ofexternal hiresTotal Employees2.2%Voluntary %15 yearsInvoluntary turnover3.9%RetirementAverageemployeetenure3,934 expected toretire by end of 20238,260 expected toretire by end of 2028* As of Dec. 31, 2018.Excludes PowerSecure.24Retirement forecastBack to contents
From innovating our industry to making strides in sustainableas leaders by customers, partners, investors, employees and theenergy, Southern Company and our businesses are recognizedbroader business, science and technology communities.We’re recognized as a great place that does great workCulture Black Enterprise magazine - 50 Best Companies for Diversity The Disability Equality Index (DEI) - Best Places to Work for Disability Inclusion DiversityInc - Top 50 Companies for Diversity Forbes - Named as one of America's Best Employers (No. 17) G.I. Jobs - Top Military Employer Hispanic Network - Top Employer for Hispanics Human Rights Campaign Corporate Equality Index - One of the Best Places to Work for LGBTQ Equality Military Times - Top 10 Best for Vets Employer Women’s Choice Award - Best Companies for MillennialsDedication to customers Cogent Energy Reports - Most Trusted Utility (Georgia Power, Nicor Gas) Edison Electric Institute - Emergency Assistance Award for Puerto Rico Power Restoration (Alabama Power, Georgia Powerand Mississippi Power) Edison Electric Institute - Emergency Recovery Award (Alabama Power, Georgia Power and Gulf Power) J.D. Power - Residential Customer Satisfaction Award (Georgia Power No. 1, second year in a row. Mississippi Power No. 5) J.D. Power - Business Customer Satisfaction Award (Georgia Power No. 1)Business leadership Drucker Institute - Management Top 250 list Emerging Technology Program (ETP) - Illinois Sustainability Award (Nicor Gas) Edison Electric Institute - Distinguished Leadership Award (Tom Fanning) National Association of Corporate Board Directors - 2018 Directorship 100 (Veronica Hagen) S&P Global Platts Global Energy Awards - CEO of the Year (Tom Fanning)Back to contents25
Listening to our employeesemployees to share feedback and helpwide Voice of the Employee survey everyWe believe we are all better when weidentify opportunities for us to do eventwo years. Formal action plans are devel-openly discuss what is working well andbetter. We work to build mutual trust byoped based on results of the Voice of thewhere we have an opportunity to improve.making sure employees know they areEmployee survey.We continuously assess our culture andheard and valued.These initiatives help us build on ourlook for ways to strengthen it.We regularly gather employee feedbackstrengths and capitalize on improvementSouthern Company actively works tovia both formal and informal mecha-opportunities. The superior results forfoster an environment that encouragesnisms. Along with frequent, less formalwhich our companies are known are atopical surveys to solicit ideas andresult of our strong culture and our sharedthoughts, we conduct a formal companypride in our work.Voice of the EmployeeWe listen to employees to ensure asafe, engaging work environment.26Back to contents
Diversity and InclusionSouthern Company subsidiaries are equalopportunity employers and do not discriminate based on race, color, religion,sex, national origin, age, disability, veteranstatus, genetic information, sexual orientation or gender identity or expression.At Southern Company,we drive results by valuingdifferent opinions, backgrounds and experiences,and by welcoming diversepoints of view. We celebrateour progress and arecommitted to a diverse andinclusive organization.Sloane DrakeWe work hard to ensure a diverse work-thoughts and perspectives. The diversity of– Sloane Drake, senior viceforce and an inclusive workplace. Weour people makes us stronger, more agilepresident of Human Resourcesbelieve in the strength of diversity in all itsand provides a competitive advantage thatfacets – people, backgrounds, experiences,helps us achieve our goals.Back to contents27
Investing in employeesPhysical well-beingOur Total Rewards approach invests in the well-being of our employees through acomprehensive compensation and benefits Resources such as Sleep Medicine andCompetitive medical, pharmacy anddigital physical therapy tools that helpdental benefitsemployees maintain healthy routinesHealth Savings Accounts includingstrategy. This includes a competitive salary,company contributions and FlexibleFinancial well-beingan annual bonus for nearly all employeesSpending Accounts Competitive compensationRobust wellness and preventive Fully-funded pension plan andand pension and benefits plans that offersphysical, emotional and financial security. programsemployee savings plan Life and disability insurance that providesincome protection and peace of mind Financial planning education andresources to help employees meetshort-term and long-term goalsEmotional well-being Competitive vacation, holidays and paidtime off to provide work life balance Maternity, parental and adoption leaveto encourage a family-forward culture Tools that address our employee emotional needs at various stages of life Improved and cost-efficient mentalhealth plans to improve access to careand reduce stigma28Back to contents
RecruitmentSouthern Company’s Talent Acquisitionorganization uses a variety of strategiesto attract top talent. We join forces withhigh schools, technical schools and universities to recruit and prepare studentsto pursue careers across the energy valuechain – including power generation,power delivery and nuclear energy.Our military recruitment efforts have hada significant impact on our hiring. Veterans,National Guard and reserve members currently comprise approximately 10 percentof our systemwide workforce and comprised 16 percent of our new hires in 2018.Diverse hiring continues to outpace current representation.Hiring stats for 2018*1,769New hires24%Women39%Minorities33Average age*As of Dec. 31, 2018. Excludes PowerSecure.Back to contents29
Developing peopleOur long history of attracting, developingthe skills we need for the future. This is aOur people make Southern Company whoand retaining the best talent is a testa-key priority for the company and we deliverwe are. We are committed to developingment to our commitment to our people.several training programs targeted towardour talent and helping our employees suc-We provide experiential developmentall employees, high-potential employees,ceed in every phase of their careers.opportunities along with purposeful peoplefirst-level managers, managers of manag-moves as part of individualers and executives. We also offer robustdevelopment plans andtechnical training focused on specific skillsour more formal successionneeded for our apprentices and journeymanplanning processe
About this report Our Corporate Responsibility Report for 2018 highlights our efforts and progress on environmental, social and governance (ESG) topics. This report has been prepared in accordance with the
