ESG Overview

EEI-AGA ESG/Sustainability Metrics

Introduction

These metrics are provided in response to the desire of investors and other stakeholders for ESG/Sustainability information that is consistent in terms of accessibility, content, timing and presentation. Companies that participate in voluntarily providing ESG/Sustainability information in this format share a common goal to provide investors with relevant information that:

  • Allows integration of ESG/Sustainability data and performance
  • Provides clarity of risks and opportunities and how they are being managed
  • Provides insight into growth strategy, assumptions and future trajectory
  • Provides both qualitative and quantitative information
  • Serves as a primary reporting channel for consolidated ESG/Sustainability information relevant to investors and other stakeholders
 

ESG/Sustainability Governance

SJI is governed by a 10-member Board of Directors, nine of whom are independent and not SJI employees. Our Board of Directors, elected by the shareholders, is the company’s ultimate decision-making entity, except matters reserved for shareholder consideration.

The Board includes 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.

There are seven standing committees of the Board including, the Audit Committee, Compensation Committee, Corporate Responsibility Committee, Executive Committee, Risk Committee, Strategy & Finance Committee and Governance Committee.

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. Our annual Corporate Sustainability Report, this document and supporting quantitative data were produced under the guidance of the ESG Committee.

 

ESG/Sustainability Strategy

SJI is dedicated to supporting the future of energy and the region. We’re committed to working with customers and industry, commercial, and government stakeholders to ensure a balanced approach to addressing the energy needs of our region – driving energy independence and lowering costs. Natural gas plays a critical role in this future – helping to ensure a balanced approach while delivering a safe, reliable, affordable solution to meet the energy needs of our state. In addition to supporting the need for energy from diverse sources, SJI is committed to driving down the cost of energy, delivering safe and reliable service and improving energy efficiency.

We continue to develop meaningful partnerships with all stakeholders to ensure we have a minimal impact on the environment and a positive impact on our customers and communities.

The New Jersey Board of Public Utilities (NJBPU) has approved several capital investment programs in the last ten years to modernize the South Jersey Gas and Elizabethtown Gas distribution systems. These investments help us to ensure our customers receive the service they expect and deserve. 

Additionally, the NJBPU has approved Energy Efficiency programs that make it possible for South Jersey Gas and Elizabethtown Gas to promote Energy Efficiency. In 2018, South Jersey Gas received approval from the NJBPU for an expanded energy efficiency program aimed at making efficiency even more accessible, offering $81.3 million for rebates, financing and home energy audits as well as solutions for large commercial customers. 

Sustainability Plans and Progress

To support our corporate sustainability efforts as well as monitor future sustainability plans and progress the Board of Directors established the internal Environmental, Social and Governance (ESG) management committee in 2018. 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.

The ESG Committee:

  • Monitors and responds to emerging ESG issues and makes recommendations to the Board where appropriate to improve the Company’s ESG performance.
  • Reviews and monitors the Company’s environmental and sustainability policies, practices and performance to ensure compliance with the relevant legal and regulatory requirements.
  • Implements, reviews and evaluates Company policies, procedures and practices relating to employment practices, including workforce diversity, employee work life, Equal Employment Opportunity (EEO), employee attraction development, retention and compliance with employment related laws, regulations and policies;
  • Manages environmental and socially responsible business practices that align with the Company’s values and long term strategic goals.
  • On an ongoing basis, assists the Company in monitoring and bringing to the attention of the Board of Directors, as appropriate, current and emerging political and social actions, public policy, environmental and social issues that may affect the business operations, financial performance or public image of the Company.
  • Performs a quarterly review of environmental, social, health and safety enterprise risks.
  • Annually reviews Company’s environmental, social, governance metrics to be included in the annual Corporate Responsibility Report (CSR).
  • Reviews the CSR report before distribution to the Corporate Responsibility of the Board.
  • Evaluates and approves environmental, social and health and safety metrics that will be publicly disclosed to external stakeholders.
  • Reviews and makes recommendations to the Board concerning the Company’s role, responsibilities, and reputation as a good corporate citizen.
  • Provides guidance on environmental impact and sustainability issues.

SJI invests time and resources in the communities we serve. We work hard to support a variety of local non-profit, commerce and civic organizations that can have a measurable, positive impact. Our investments during 2018 totaled more than $500,000 in financial support and more than 1,000 hours of employee volunteerism. Many of the organizations supported by our corporate giving and volunteerism benefit a healthy, sustainable environment including the Atlantic County Adopt-a-Road program, the New Jersey Audubon Society and the Cumberland County Improvement Authority.

South Jersey Gas and Elizabethtown Gas have long prioritized energy efficiency programs as a means to help customers reduce their energy consumption and costs. To date, more than 16,000 customers have participated in these programs. In 2018, South Jersey Gas received approval from the New Jersey Board of Public Utilities for an expanded energy efficiency program aimed at making efficiency even more accessible, offering $81.3 million for rebates, financing and home energy audits, as well as solutions for large commercial customers.

Additionally, in 2006 South Jersey Gas became one of the first utilities in the country to implement a Conservation Incentive Program. Today, the program continues to encourage customers to use natural gas more efficiently and benefits both South Jersey Gas and its customers by eliminating the link between utility profits and the quantity of natural gas sold. Since its inception, customers have reduced their natural gas usage by a total of 82.1 billion cubic feet, enabling them to save $771.2 million in energy costs.

SJI is an industry leader in utility customer growth. As customers convert to natural gas from less-environmentally friendly alternatives, we contribute towards a more positive environmental impact.

Climate-Related Risks and Greenhouse Gas Emission Reduction Opportunities

Climate change legislation could impact SJI’s financial performance and condition. Climate change is receiving ever increasing attention from both scientists and legislators. The outcome of federal and state actions to address global climate change could result in a variety of regulatory programs, including additional charges to fund energy efficiency activities or other regulatory actions. These actions could affect the demand for natural gas and electricity, result in increased costs to our business and impact the prices we charge our customers. Because natural gas is a fossil fuel with low carbon content, it is possible that future carbon constraints could create additional demands for natural gas, both for production of electricity and direct use in homes and businesses. Any adoption by federal or state governments mandating a substantial reduction in greenhouse gas emissions could have far-reaching and significant impacts on the energy industry. We cannot predict the potential impact of such laws or regulations on our future consolidated financial condition, results of operations or cash flows.

SJG has committed to reducing greenhouse gas emissions through a successful infrastructure modernization program. South Jersey Gas joined the U.S. Environmental Protection Agency’s Natural Gas STAR Methane Challenge Program in 2016 as a founding partner. The program is designed to provide a transparent platform to utilities to make, track and communicate commitments to reduce methane emissions.

Each year, we collaborate with industry peers to make ambitious and transparent commitments to reducing our methane emissions. The STAR Methane challenge aligns with our commitment to protect our region’s environmental and natural resources.

As part of our participation, South Jersey Gas follows the Cast Iron and Unprotected Steel Best Management Practice. We pledge to reduce emissions by replacing a significant portion of our aging and leak prone bare steel and cast-iron distribution mains and services with modern, medium-density plastic mains and services.

Tracking and Reducing Greenhouse Gas Emissions from Operations

As part of our effort to reduce our environmental impact, we track the greenhouse gas emissions from our natural gas delivery systems annually. In 2018, South Jersey Gas decreased its direct CO2-equivalent emissions from its system by 45 percent from 2011-2018.

Elizabethtown Gas infrastructure decreased its direct CO2-equivalent emissions from its system by 30 percent from 2011-2018. Through Southern Company Gas, Elizabethtown Gas was part of the STAR Methane challenge program starting in 2016 and committing to the ONE Future Emissions Intensity goals. Elkton Gas only has cathodically protected coated steel and plastic mains and services within its system, which subsequently provides reduced greenhouse gas emissions when compared to unprotected steel and cast-iron systems.

Additionally, we track the greenhouse gas emissions from our Marina Thermal Facility in Atlantic City, New Jersey on an annual basis. The energy produced at this natural gas-powered facility emitted 43,888 tons/yr of direct CO2 emissions in 2018 – a reduction of approximately 72% when compared to a conventionally powered facility.

At the current replacement rate, South Jersey Gas expects to reduce direct CO2-equivalent emissions by our targeted annual average goal of at least 5% per year through the pipeline replacement process, anticipated to be complete by 2021.

Additional Sustainability Information

Commitment to Safety

At SJI, safety is our top priority. 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 introduced several new initiatives to support this goal, including:

  • 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 installations in company vehicles supported a reduction also reported in December for preventable motor vehicle accidents

These efforts and initiatives have helped us make significant progress towards our goal. In 2018, South Jersey Gas employees reduced the work injury rate by 21.8% 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.

Additionally, 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. 

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, involving employees facing extreme simulations that require them to assess and address the safety of themselves, colleagues and customers, the impacts to our system and service, and the need to partner across the organization as well as with our partners and outside agencies.

These comprehensive safety training exercises mimic 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.

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.

On a regular basis we inspect the vast majority of our transmission pipelines to record any signs of dents, corrosion or other anomalies of concern. This data allows us to assess any needed system repairs. We use a third-party vendor to conduct mobile monitoring on all the transmission and distribution mains throughout the service area. To conduct the monitoring, they use vehicles outfitted with sensing equipment that can identify the location and magnitude of a leak. We regularly complete surveys of our service lines from the main in the street to the meter at the service location. This process includes a physical walkthrough to assess the safety of the line and equipment.

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 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.





SJI
1 South Jersey Plaza, Folsom, NJ 08037
1.609.561.9000