Shareholders Challenge Southern Company to Come Clean on Coal Ash
May 22, 2012—Tomorrow Southern Company* (Southern) shareholders will vote on a proposal asking the company to report on its efforts to reduce the environmental and health hazards of coal ash stored in ponds, landfills and mines. The proposal was filed by Green Century Capital Management (Green Century), an environmentally responsible investment advisory firm and co-filed by Catholic Health East.
Coal ash is a byproduct of the coal combustion process that contains arsenic, mercury, lead, and other toxins. The health, environmental, and financial risks of managing coal ash came to light in December 2008 when a dam holding back a 1.1 billion gallon coal ash pond belonging to the Tennessee Valley Authority (TVA) burst and covered over 300 acres with toxic sludge. TVA has estimated spill-related costs at $1.2 billion and has been the target of over 50 lawsuits since the spill.
“The management of coal ash is inherently risky, yet the company does not provide investors with adequate information to determine how the company is managing and mitigating those risks,” said Sister Kathleen Coll of Catholic Health East . “We believe Southern Company should respond to concerned investors demanding more information on efforts to reduce environmental and health hazards associated with coal combustion waste, and how those may reduce legal, reputational and other risks to the company’s finances and operations,” she continued.
Southern operates 22 facilities that manage coal ash but does not disclose to investors whether each has liners, caps, groundwater monitoring, or leachate collection systems beyond compliance with current regulations.
This is the third year that this proposal will go to a vote. It received over 20 percent of the vote the prior two years **. The shareholders contend this is a notable amount of support because, unlike electoral campaigns which require a majority vote, shareholder proposals require a much smaller threshold to make an impact. “When one-in-five shareholders supports additional disclosure, this should send a clear message to the company that its existing transparency on this issue is insufficient,” said Larisa Ruoff of Green Century Capital Management. “It is time for Southern to respond and provide shareholders with added disclosure on how the company is mitigating and managing the risks associated with coal ash,” she continued.
Last week, 30%** of shareholders at FirstEnergy Corporation* voted in support of a similar proposal.
Green Century Capital Management is an investment advisory firm focused on environmentally responsible investing. Founded by a partnership of non-profit environmental advocacy organizations in 1991, Green Century's mission is to provide people who care about a clean, healthy planet the opportunity to use the clout of their investment dollars to encourage environmentally responsible corporate behavior. Green Century believes that shareholder advocacy is a critical component of responsible investing and actively advocates for greater corporate environmental accountability.
* The Green Century Balanced Fund and the Green Century Equity Fund did not hold FirstEnergy Corporation or Southern Company as of March 31, 2012. Green Century Capital Management, Inc., the investment advisor to the Green Century mutual funds, owns shares of stock in FirstEnergy Corporation and Southern Company. Green Century engages with companies, including those that do not meet the environmental criteria of the Green Century Funds, to improve the companies’ environmental performance and help foster a sustainable economy. Please refer to the Green Century Funds website for current information regarding the Funds' portfolio holdings. These holdings are subject to risk as described in the Funds' prospectus. References to specific investments should not be construed as a recommendation of the securities by the Funds, their administrator, or their distributor.
** The percentage in favor was calculated by (i) dividing the number of votes in support of the proposal by (ii) the sum of the number of votes voted in support of and against the proposal. Abstentions and broker non-votes were not included in the calculation.
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The Green Century Funds are distributed by UMB Distribution Services, LLC. 5/12
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