Southern Co. Investors Support Net Zero Resolution For Utility's Natural Gas Business

Investors continue to hold corporate America accountable for doing its part to combat climate change, with 20% of Southern Co. shareholders being the latest group to vote in favor of a resolution to set a net zero target for emissions from its value chain, including the sale of natural gas.

The resolution filed by As You Sow asks Southern to take responsibility for the greenhouse gas emissions from producing natural gas and coal and the burning of gas sold to customers and purchased from the power grid. Collectively, these emissions account for about 30% of greenhouse gas emissions.

Southern is not the first utility whose shareholders are demanding it takes action to reduce greenhouse gas emissions. In April, 18.3% of CenterPoint Energy Inc.’s shareholders voted in favor of a similar resolution. Duke, Dominion, Sempra and Xcel all have announced the expansion of their net zero emission reduction targets to include the sale of natural gas to customers from their gas distribution businesses.  

“Southern and CenterPoint will benefit from stepping up their ambition in proactively reducing emissions reduction from their gas distribution business to match the progress they are making in their power business,” said Daniel Stewart, energy and climate program manager at As You Sow. 

“Without quantitative and time-bound, science-aligned targets, Southern and CenterPoint will be unprepared for the growing disruption facing the gas utility industry. Such unpreparedness increases the risk of misinformed strategy, insufficient innovation and misdirected capital expenditure on technologies that cannot scale at the level needed to achieve net zero emissions. A net zero target is the first step in addressing the climate risk they face.

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Southern Co.’s independent board of directors provides oversight on strategy and risk issues across the environmental, social and governance (ESG) spectrum, according to the company’s website. 

“The full board discusses key ESG topics as part of its regular agenda, including fleet transition and human capital management,” the website states. “Committees take a deeper dive into ESG risk and opportunities and report out to the full board on key issues.”

Across the U.S., cities and counties have adopted policies that require or encourage all-electric homes and buildings. Nearly 31 million people in nine states and Washington, D.C., live in a jurisdiction where policies have been introduced. 

Both the Nasdaq Stock Market and the U.S. Securities and Exchange Commission (SEC) have issued greenhouse gas emissions guidelines for public companies. Although neither are requirements yet, 90% of S&P 500 companies put out sustainability reports in 2019 — up from 20% in 2011.

In 2019, Nasdaq launched its ESG Reporting Guide for public and private companies. Although Nasdaq doesn’t require listed companies to issue ESG reporting, it may track their participation.

While the SEC’s proposed climate-disclosure rule is not yet effective, many companies are beginning to behave as though it is. A survey by accounting firm PwC and reporting software company Workiva Inc. found that about 70% of companies plan to comply with the SEC rule, which would require public companies to report climate-related risks and emissions data. That includes Scope 3 emissions, which are the result of activities in the reporting organization’s supply chain.

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