This year's annual meeting, held May 28 in a Callaway Gardens convention room, was no different. That is, until Erica Frank took the microphone. A physician and vice chair of family and preventive medicine at Emory, Frank is also a Southern Co. shareholder. She cited the numbers that make Southern executives cringe: 1,880 premature deaths and 37,900 asthma attacks, all allegedly caused by their power plants.
That a prominent doctor from one the South's most prestigious universities would boldly condemn Southern's business practices shows that taking on the Southern Co. is leaving the fringes of the environmental movement and becoming more mainstream.
Even the company's shareholders are slowly waking up to the dangers of Southern's ways. A group of four religious charities that collectively owns 23,690 shares of Southern stock put forth a pro-environment argument that even the MBAs in suits would appreciate: A company that pollutes opens itself to financial risks, whether it's lawsuits, fines or increased government regulation. The groups sponsored a shareholder resolution that urged company executives to analyze the financial risks of emitting the gases that most scientists agree cause global warming. They also asked for a study showing how much the company could benefit -- in terms of profit and enhanced competitiveness -- by reducing those emissions.
The resolution is a new approach taken by environmentalists in their battle to clean up Southern Co. Pollution statistics are being augmented with bottom-line economic arguments, and shareholders and industry analysts are seeing the light.
At last week's meeting, the shareholder resolution won the support of investors representing 23 percent of the company's stock. That's not near enough to win, but it was still surprisingly high, considering that last year, a resolution that would have edged Southern toward renewable energies captured only 9 percent.
No doubt this year's resolution was helped along by the endorsement of International Shareholder Services, one of the largest firms in the country that monitors the way corporations are run. On March 31, it recommended that Southern Co. adopt the resolution. Southern's board of directors opposed the resolution.
The ISS analysis says that "while the company does provide some of the information requested in its [annual report], this disclosure does not include an evaluation of how the company's actions or new regulation related to greenhouse gas emissions may impact the company in the long term."
It marked the first time that analysts recommended passage of a green resolution within Southern Co.
"It demonstrates a rapidly growing understanding among shareholders that bad environmental performance can damage the value of their shares," says Becky Stanfield, a lawyer with the U.S. Public Interest Research Group.
What makes this year's vote so noteworthy is that it's not just environmentalists who are claiming that polluting companies need to clean up their act. "There's an increasing awareness in the investment base of companies that are more aware of -- and more proactive [with] -- environmental and pollution reduction trends," says Christine Tezak, an analyst with Schwab Capital Markets who studies the energy industry.
Tezak says shareholders' newfound awareness comes from bona-fide financial risks.
For Southern, that risk derives from expected new rules on mercury, carbon dioxide and particulate matter pollution that would require millions of dollars -- and perhaps billions -- to be spent on new pollution controls.
Also, in November 1999, the Justice Department and the EPA filed a lawsuit against Southern Co. for increasing power production at Plant Bowen and nine other plants without upgrading pollution controls, an alleged violation of federal regulations.
Two companies recently settled similar cases in April. Dominion Virginia Power Co. settled with the EPA and Justice Department for $1.2 billion. Of that, $5.3 million was a straight up punitive fine, $14 million will go to the kind of environmental projects that Georgia and Atlanta are in dire need of. Spread across five states, the projects include $2.7 million for retrofitting diesel buses traveling from New Jersey to New York City and $2.1 million for solar panels on public buildings. The rest will be spent on pollution controls at the company's coal-fired power plants.
Wisconsin Electric Power Co. settled for $600 million, most of which will be used to reduce 105,000 tons of air pollution a year by installing new equipment on five coal-fired plants.
Three more decisions, involving the Tennessee Valley Authority, Illinois Power and Ohio Edison, are expected any day now.
When pressed on how he would respond to the resolution's popularity during a Q&A session, CEO Allen Franklin responded that it would receive as much attention as all shareholder resolutions do.