2018 ESG Report

The Company

The Company
 

SJI

 

A Letter from Our CEO

Michael Renna

At SJI, 2018 was one of the most transformational years in our history.

We made meaningful progress in support of our strategic objectives. We completed the acquisitions of Elizabethtown Gas and Elkton Gas and moved forward with our strategic transformation – reinforcing our focus on reliable, repeatable earnings. We also developed innovative regulatory solutions to help us better serve our customers and opened our state-of-the-art South Jersey Gas Headquarters in Atlantic City, the birthplace of our first utility.

Despite our transformation, our mission endures. We’re committed to providing safe, reliable, affordable energy, ensuring the safety of our employees, customers and the communities we serve, while also delivering value to our shareholders and being stewards of the environment. We are unwavering in our mission, and our focus on sustainability helps us maintain this commitment to our nearly 700,000 customers. 

This year, for the first time, our annual review is presented as the SJI ESG Report. In this, our tenth report, we continue to highlight SJI results that enhance the sustainability of our company, environment and community. We’ve also enhanced the document, preparing the appendix in accordance with the American Gas Association Voluntary Sustainability Metrics reporting guidelines to highlight our commitment to the environmental, social and governance priorities that matter most to our investors and other stakeholders.

Across our business this year, we reinforced the foundation needed for SJI to thrive – now and in the future. Chief among our achievements remain efforts intended to create an inclusive work environment that engages and empowers employees. These dedicated employees delivered exceptional service to customers, with a focus on innovation and continuous improvement, while still always putting safety first.

Safety is as essential to the environment as it is to our business operations. We remain committed to conducting business in a manner that protects and sustains the environment for future generations of our customers, employees and neighbors. In 2018, our commitment to environmental stewardship drove our efforts around pollution prevention and waste minimization, environmental awareness and partnerships that support a healthy environment.

Our role as a corporate partner means continued investment of time as well as human and financial resources in the communities we serve. We view our support of vital non-profit, commerce and civic organizations as having a measurable, positive impact on our region, improving quality of life, spurring economic development and promoting the responsible use and protection of our natural resources.

As we continue to transform our business for the future, we promise to maintain our commitment to sustainability, reinforcing the foundation for a sustainable business and energy future for our region.

Signature
Michael J. Renna
President & CEO

 

SJI at a Glance

Headquartered in Folsom, New Jersey, SJI is an energy services holding company that delivers energy services to its customers through three primary subsidiaries.

SJI Utilities

The new holding company for our regulated natural gas utilities, SJI Utilities (SJIU), serves nearly 700,000 customers across three utilities, including South Jersey Gas and Elizabethtown Gas in New Jersey and Elkton Gas in Maryland. During 2018, SJIU was the second largest provider of natural gas distribution in New Jersey and third largest local gas provider in the United States, based on enterprise value.

South Jersey Energy Solutions

Our non-utility businesses, South Jersey Energy Services and South Jersey Resources Group within South Jersey Energy Solutions, prioritize wholesale commodity marketing, asset optimization and fuel supply management.

SJI Midstream

SJI Midstream houses the company’s interest in the PennEast Pipeline project.  


SJI Economic Earnings totaled $116.2 million in 2018, compared with $98.1 million in 2017. Strong performance by our utilities, as well as in our asset optimization and fuel supply management business drove strong results, helping to offset the impacts associated with the acquisitions of Elizabethtown Gas and Elkton Gas that were completed in 2018.

SJI continues to focus on driving shareholder value through investments that expand and modernize our utility infrastructure. In collaboration with our regulators, we remain focused on delivering safe, reliable, affordable natural gas service to our customers. We have also prioritized investments in long-term contracted energy infrastructure that will help make the region more affordable for families and competitive for businesses. Additionally, we continue to leverage our industry expertise to provide essential services to utilities, power generators and industrial customers through wholesale marketing, fuel management and consulting services.

For additional information regarding 2018 financial performance, please visit the Investors section of our website.

 

Governance

SJI is governed by a 10-member Board of Directors, nine of whom are independent and SJI employees. Our Board of Directors, elected by the shareholders, is the company’s ultimate decision-making entity, except matters reserved for shareholder consideration.

Board of Directors:


Michael J. Renna (President & CEO, SJI)
Walter M. Higgins III (Chairman)
Sarah M. Barpoulis
Thomas A. Bracken
Keith S. Campbell
Victor A. Fortkiewicz
Sheila Hartnett-Devlin
Sunita Holzer
Joseph M. Rigby
Frank L. Sims

Board Committees:

  • Audit Committee
  • Compensation Committee
  • Corporate Responsibility Committee
  • Executive Committee
  • Risk Committee
  • Strategy & Finance Committee
  • Governance Committee

 

Three of our 10 members of the Board of Directors are female. We are proud of this 30% female representation on our Board and the significant, positive role diversity plays in our organization.

To support the creation of this report and other corporate sustainability efforts, the Board of Directors established the internal Environmental, Social and Governance (ESG) management committee in 2018 that reports to the Board Corporate Responsibility Committee at least quarterly. The ESG Committee is responsible for the development and implementation of the company’s key sustainability strategies, initiatives and policies. This includes oversight of SJI’s commitment to safety, environmental, health, human rights, employee relations, governance and community support strategies. We welcome feedback on this report, our programs, and our environmental, social and governance metrics. Please submit comments to corpcommunications@sjindustries.com 

 

Recognition and Awards

2018 Awards
Executive Women
of New Jersey

recognized SJI as a member of its A Seat at the Table Honor Roll for having three or more women on the company’s Board of Directors.

The Forum of
Executive Women

recognized SJI and other companies where women directors comprise at least 25 percent of the Board.

The Metropolitan Business
& Citizens Association

awarded the Atlantic City Gateway Project, which includes the new Corporate Headquarters for South Jersey Gas, with the Community Spirit Award.

   

Employees

Every day, our employees come to work and play a critical role in building the foundation that will support the future growth of SJI. Through our employee engagement initiative, diversity and inclusion efforts, focus on talent acquisition, development and succession planning, and our emphasis on safety, we are invested in creating a truly empowered workforce. We create an environment that fosters diverse perspectives and a support structure that champions our very talented and dedicated employees.

As of December 31, 2018, 1,100 people have made our company their workplace of choice. 

  • 150 corporate staff members
  • 905 utility company employees in New Jersey and Maryland
  • 45 non-utility company employees
  • 45% total population represented by unions
 

Employee Engagement

Employee Engagement

A stable and highly motivated workforce is at the core of our company’s superior performance. Our low voluntary employee turnover rate of 6.9% reflects our status as a desirable workplace with competitive pay, benefits and opportunities.

We listen to our employees and involve them in our mission. We know employees who experience a connection to corporate objectives, feelings of inclusion and engagement in their work are best suited to advance a high-impact work culture.

Employee engagement surveys, conducted biennially, have enabled us to gain a better understanding of why people choose to work at SJI, what they value and why they choose to stay. Specifically, our results have indicated a safe workplace, peer acceptance and community involvement are the foremost reasons employees favor working at SJI. We are committed to continuing the outreach and two-way dialogue needed to inform decision-making that aligns our workplace culture with the needs and expectations of our employees.

During 2018, we continued to grow employee engagement through enhanced communication and activities designed to drive a culture of safety, inclusion and high-impact performance.

  • SJI Today – We developed more employee driven content and features, while consistently employing tools that provided opportunities for involvement and feedback.
  • CEO Lunches – Our senior leaders hosted 48 lunches for over 400 employees to create more meaningful leadership-employee relationships and reinforce the connection of employees to our corporate strategic objectives.
  • Monthly Manager’s Checklist – This data driven checklist, launched in 2018, provided both information and visual support to encourage and assist people managers in their efforts to timely and effectively share consistent messages with their employees across the organization.
  • Employee Programs – Nearly 70 different activities were executed during 2018 – including volunteer events, family-focused programs and celebratory gatherings – all of which aimed to positively impact the employee experience in support of the continued safety and success of our organization.
   

Not Just Diversity, Inclusion

We respect and value the unique contribution each employee brings to SJI. Our commitment to inclusion ensures that we build a workforce whose differences serve to broaden our capabilities, drive performance and deliver results – now and well into the future.

Our culture of inclusion and diversity is reflected through the below listing of the generational, gender and ethnic employee composition at SJI during 2018.

Generations Age Employee Count Percentage 
Traditionalists Over 72 2 0.01%
Baby Boomers 53 – 71 413 38%
Generation X 37 – 52 363 33%
Millennials (Gen Y) 22 – 36 321 29%
I Gen (Gen Z) 21 and younger 1 0.01%
TOTAL ALL EMPLOYEES 1100 100.02%

 

  Female Male Total
American Indian 3 0 3
Asian 8 20 28
Black 76 62 138
Hispanic 65 44 109
Two or More Races 7 4 11
White 249 562 811
Total 408 692 1100

 

Female Leadership

Female representation in leadership positions has increased dramatically, in 2018 we added 16 women in leadership roles, four of which were at or above the officer level. Today, 43% of our workforce and 39% of our leadership is female, indicating not only our progress, but also our commitment to inclusion. 

Position Percentage
Senior Executive 50%
Officer 35%
Director 35%
Manager 40%
Supervisor 39%
Total 39%

 

Employee Resource Groups

Our commitment to a high-performance culture, achieved through a well-rounded employee population, includes allocating resources intended to strengthen our workplace. During 2018, SJI employees and leaders walked through several different Employee Resource Groups to facilitate events, activities and initiatives that have helped develop our workforce, engage our employees and support our communities.

Employee Resource Groups
American Association of Blacks in Energy

Emerging
Leaders

Women’s Leadership Initiative

Hispanic Organization for Latino Awareness

 

Talent Acquisition and Development

Talent Acquisition

Where possible, SJI capitalizes on opportunities to develop and advance existing talent to new roles or roles of increasing responsibility within our organization. When we recruit externally, we look for employees with strong technical skills and creative vision, those who thrive in a highly collaborative and dynamic environment.

During 2018, the company partnered with top colleges and universities to prepare and provide students with meaningful internships.  A total of 23 interns from more than 15 institutions gained valuable, real-life experience working with SJI professionals and serving the community, while we benefited from the education, creativity and fresh perspective these individuals offered.   

Development

Through SJI’s corporate university, Empower U, aspiring and appointed management employees can take courses to develop critical skills and industry knowledge. Multiple training opportunities provide employees at every level the knowledge, skills and abilities they need to grow within the organization. During 2018, employees benefited from a variety of training modules under this program, gaining over 5,700 hours of relevant training to support their professional development and contributions to the organization. 

SJI also uses the Public Utilities Reports – Principles of Public Utilities Operations and Management program, taught by senior company leaders, to expose employees to all aspects of gas operations. In 2018, approximately 20 employees completed this intensive, 10-week program.

As part of our commitment to developing talent and providing meaningful training opportunities, SJI offers the POWER Leadership Development Program, which commenced in 2010. This two-year, rotational program provides early to mid-career professionals with added opportunities to further develop their leadership competencies and skills.

Additionally, SJI offers a comprehensive Tuition Reimbursement program to all eligible employees. This program assists employees pursuing certificates as well as undergraduate and graduate degrees, empowering them to contribute in new ways to the organization.

   

Safety Culture – Make Every Day a Safe Day

At SJI, safety is our top priority. There is no greater responsibility than ensuring every employee gets home safe every day. During 2018 we continued to audit our operations and construction activities, track and report on compliance items and deliver ongoing Health, Safety, and Environment (HSE) training. 

Our goal remains to minimize risks and promote a zero-injury culture. In 2018, we added several new initiatives to support this goal, and are proud to highlight the following resources:

  • Safety Talking Points – Included in the Monthly Manager’s Checklist for managers to share helpful and timely safety and health information with their employees
  • Family Safety & Health – A quarterly magazine featuring information for on and off the job safety
  • Monthly Safety News – Added a standing safety section to our monthly employee newsletter, One SJI
  • Safety Site Visits – Conducted by company officers at all divisional offices to discuss safety performance and reinforce safety as SJI’s top priority
  • MySafeWorkplace®Provided employees with a confidential and anonymous communication resource to voice workplace safety and conduct concerns
  • IT Security Training – Trained all employees on cybersecurity risks using training modules to protect employees and the organization from potential threats
  • Motor Vehicle Safety – Introduced a driver training initiative and installed back-up cameras in company vehicles supported a reduction also reported in December for preventable motor vehicle accidents

These efforts and initiatives contributed to results in 2018 that saw South Jersey Gas employees reduce the work injury rate by 21.8% – far exceeding the original 15% goal set for the year for Occupational Safety and Health Administration (OSHA) recordable injuries. Marked improvement was made during the year as well to reduce injuries leading to days away from work.

 

Operations

Our utilities take an aggressive, proactive approach to maintaining safe operations. This comprehensive effort includes infrastructure modernization, as well as ongoing testing and emergency response planning.

 

Safe Pipeline Operations

Safe Pipeline Operations

On a regular basis, to ensure the integrity of our system, we inspect our pipelines throughout the areas we serve.

Transmission Line Integrity

On a regular basis, our utilities inspect their transmission pipelines using External Corrosion Direct Assessment (ECDA) and InLine Inspection (ILI) technologies. The vast majority of our transmission pipelines are inspected using InLine Inspection, where a device is inserted into and travels through the pipeline. The device gauges and records if there are any signs of dents, corrosion, gouges, metal loss or other anomalies. This gathered data is then used to assess the pipeline and determine the need for any repairs.

Additionally, our utilities use a third-party vendor to conduct leak surveys along our transmission pipelines on an annual basis. This survey is conducted using natural gas sensing equipment on both vehicular and walking surveys along the pipelines. This equipment can identify the location and magnitude of a leak, should one be encountered. This data is then used to determine the need for any repairs.

Distribution Integrity

Our utilities use a third-party vendor to conduct leak surveys along our distribution mains on an annual basis and on our distribution services every three years. These surveys are conducted using natural gas sensing equipment on both vehicular and walking surveys along the distribution mains and services. This sensing equipment can identify the location and magnitude of a leak should one be encountered. This data is then used to determine the need for any repairs.

The community also plays a critical role in pipeline safety. Through our pipeline safety communications, in accordance with regulatory standards, we communicate not only to customers but also to the entire community we serve. We inform local officials, emergency responders, customers, residents and more of the importance of natural gas safety and safe practices including how to detect a natural gas leak, how to safely dig and what to do in the event of a natural gas emergency.

 

Infrastructure Modernization

Our system improvement efforts across our utilities focus on enhancing the safety, reliability and resiliency of our natural gas systems.

When our systems are safe, reliable and resilient there is a significant benefit for our customers and the environment. Our modernized system results in fewer leaks, and our diligent leak tracking and response program ensures timely repairs. With less natural gas escaping our system, we also see less greenhouse gas emissions.

NEW MAIN INSTALLED IN 2018  
South Jersey Gas 152 miles
Elizabethtown Gas 173 miles
Elkton Gas 0.2 miles
  

Emergency Response Preparation

At SJI, safety is our top priority. To keep our customers and communities safe, we must ensure our utility crews are prepared for any emergency. Safety drills are the best way to prepare our dedicated crews.

In 2018, our utilities completed six comprehensive safety exercises, mimicking various gas leak emergency situations from those caused by a lightning strike to those caused by damage from digging. All our drills involve a comprehensive effort involving many departments including operations, dispatch, safety, government affairs, communications and construction.

We believe these simulation exercises best prepare our workforce by requiring employees to assess and protect the safety of themselves, their colleagues and our customers while minimizing the impacts to our systems and service.

At South Jersey Gas, the new Mobile Command Center, introduced in 2018, played a critical role in these exercises. The 31-foot Mobile Command Center operates as a hub for South Jersey Gas employees and provides them with the resources and space they need to respond effectively to any situation. The Mobile Command Center is equipped with a generator, climate control, wi-fi, cell booster antennas and digital TV – all critical features that support a timely and uninterrupted response effort.

These exercises are part of our continued efforts to enhance response protocols, partner with emergency responders and local officials and improve overall emergency response.

 

Gas Leak Hotline

We encourage anyone who suspects a natural gas leak in any of our service areas to call our respective utility Gas Leak Hotlines. Through customer and community outreach, we encourage awareness among customers and local residents of our emergency contact information as well as the appropriate way to identify and respond to a potential leak.

South Jersey Gas
Received 12,383 potential leak calls
Responded on average within 29 minutes
 
Elizabethtown Gas
Received 12,800 potential leak calls
Responded on average within 26 minutes
 
Elkton Gas
Received 1,884 potential leak calls
Responded on average within 23.5 minutes
 

Liquified Natural Gas

To ensure that demand for natural gas can be met during peak periods, South Jersey Gas maintains and operates a natural gas liquefier at its McKee City facility. The facility draws natural gas from the existing pipeline system, converts it to liquified natural gas and stores it. When demand is high, this liquified natural gas can be returned to a vapor and injected into the South Jersey Gas system to reinforce supply and stabilize the pressure needed to ensure uninterrupted service. This reduces the need for truckload shipments of liquified natural gas and assists with maintaining affordable, reliable service for customers during high usage periods, typically in the winter months. Across SJI, we continue to evaluate opportunities to use this method for ensuring the delivery of safe, reliable, affordable natural gas.

SJI
1 South Jersey Plaza, Folsom, NJ 08037
1.609.561.9000