Southern resolution by the Tri-State Coalition: our analysis

Climate disruption

Preventable Surprises will be watching carefully how investors stand on climate risk issues with respect to the proxy vote at the Southern Company on May 25th, 2016. In our opinion, investors voting “yes” to support the Tri-State Coalition for Responsible Investment’s shareholders’ resolution (Item #9 on the proxy statement) will be showing important support for the Southern Company to disclose how it proposes to address climate risk going forward.

This resolution is among the first of its kind US shareholders have filed with a major US based electricity utility. Southern is one of the top five US emitters of Green House Gases. We remind investors and other stakeholders that fossil fuel (gas and coal) dependent utilities are of paramount strategic importance for reducing emissions and Southern Company need investors to require the company to align with, rather than resist, the Obama administration’s Clean Power Act for utilities that is key for the US to be able to honor its non-binding COP21 commitments.

In Southern’s proxy statement, Southern’s Board opposes the resolution and recommends shareholders to vote against it. Southern claims that the resolution is unnecessary because the company already is developing CO2 emission reduction technologies and has an internal scenario planning approach it regards as sufficient for capital allocation and strategic planning. The Tri-State Coalition and other co-filers argue that due to a lack of transparency on the part of Southern’s disclosure, investors are unable to properly evaluate Southern’s strategy for alignment with a 2°C scenario and the impact on its business from a transition to a low carbon economy. Tri-State and other co-filers call for Southern’s shareholders to vote to affirm the resolution (Item 9 on the proxy) and ask for all of Southern’s stakeholders to express their support in urging Southern to provide the more accountable, transparent, and comprehensive approach to climate reporting that disclosure of 2°C scenario planning enables.

Preventable Surprises is highlighting this resolution in particular because we deem this to be an important opportunity for Southern shareholders to clearly state their position on climate risk disclosure and bring the debate on disclosure and planning at Southern to international, national, and regional attention. This request is as important as scenario resolutions before ExxonMobil and Chevron and is the only one of its kind at an investor owned utility. A majority shareholder vote in favor would be a major victory for forceful stewardship and a significant vote to affirm will set the stage for successful resolutions on climate risk in 2017 at major US electric utilities including Southern.

UK contact: [email protected]
US contact: [email protected]

Disclaimer: This note represents an analysis of issues by Preventable Surprises only and does not represent a recommendation to buy or sell securities nor does it constitute any other form of investment advice including how investors should vote on shareholder proxy issues.

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