Impact Report - Diversity Best Practices · • Generational Inclusion • Unconscious Bias Education 11. Leadership Empowerment Acceptance and Diversity (LEAD) Council The LEAD Council

2017 Diversity and Inclusion Impact Report

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Message from Kim Greene . . . . . . . . . . . . . . . . . . . . . . . 4

Workforce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

LEAD Council . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Workplace . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Message from Randy Cobb . . . . . . . . . . . . . . . . . . . . . . . 29

Community . . . . . . . . . . . . . . . . . . . . . . . 30

Message from Jerrold Hill . . . . . . . . . . . . . . . . . . . . . . . 35

Message from Kim Greene

Our Values ensure we put the needs of those we serve at the center of all we do.

By working with people from different backgrounds and with different experiences and working styles, we learn and get another view. Diverse views make for better decisions and drive a high-performance culture.

The work that we do, as well as how we do our work, has broader reach to make a positive impact for our customers, our communities and our employees.

We strive to provide an environment where our employees are enriched by working at Southern Company Gas and are able to do and be their very best. We do this by creating an inclusive culture with a workforce that reflects the diversity of the communities we serve. Our commitment to diversity and inclusion is integral to our culture and to how we foster a workplace dynamic that improves performance, drives growth and enhances employee engagement.

My own commitment to inclusion has its roots in my personal and professional experiences, so it’s easy for me to be passionate about ensuring that Southern Company Gas remains an organization that values the contributions of everyone. True workplace inclusion requires more than passion, however. If we are to continue making meaningful strides, intentional inclusive actions are required by each of us that contribute to our business priority of People and Performance.

In order to make today better than yesterday, and tomorrow better than today, our focus on the success of our people must continue to elevate. As our teams become more diverse, and business challenges become more complex, our cultural bandwidth and inclusive leadership capabilities must continue to expand to accommodate these shifts.

I believe everyone at Southern Company Gas can contribute to these efforts, and I am personally committed to advancing our inclusion goals. Thanks for your commitment to ensure Southern Company Gas remains a great place to work and build a career.

Kim Greene President and Chief Executive Officer Southern Company Gas

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Growing People

Workforce Statement on Workforce Diversity and InclusionAt Southern Company Gas, we believe our diversity cultivates new perspectives and innovation and enhances our ability to deliver superior results for our customers, employees and shareholders. We promote inclusiveness – both in our workforce and our ways of thinking – so that all employees feel valued and respected for their contributions to the business.

At Southern Company Gas, our core values guide us to make every decision, every day, in the right way. These values – Safety First, Unquestionable Trust, Superior Performance and Total Commitment – set the standard for who we are and how we interact with our employees, customers and the communities we serve. Our value of “Total Commitment” states: We are committed to the success of our employees, our customers, our shareholders and our communities. We fully embrace, respect and value our differences and diversity.

We strive to provide an environment where our employees are enriched by being here and are able to do and be their very best. We do this by creating an inclusive culture with a workforce that reflects the diversity of the communities we serve. This commitment to diversity and inclusion is integral to our culture and to how we approach each person every day.

DiversityWe define diversity not just as race or gender but also as the differences, for example, in the backgrounds, experiences, perspectives and ideas of our employees. We believe diversity is an asset that brings value to our organization. Viewing diversity as an asset means that each individual is valuable because of who they are and what they bring to our business. Life experiences and personal perspectives enable us to respond and think differently, approach challenges and solve problems differently, make suggestions and decisions differently, and see different opportunities and risks. The more assets an organization possesses, the greater its ability to innovate, grow and compete.

Inclusion

We define inclusion as a work environment without barriers in which all employees feel welcomed, valued, respected and engaged. It’s how we relate to each other in a way that recognizes, respects and values each individual. Inclusion leverages the power of diversity to achieve our business strategies and goals. By providing an inclusive work environment the company will utilize the diversity of the workforce to drive results, performance, engagement and innovation.

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People We’re building a workforce reflective of the communities we serve to deliver the best to our customers and stakeholders through innovation and creativity derived from diverse perspectives. This infographic reflects the demographics of our workforce and the diversity and inclusion demonstrated through Our Values. Understanding and valuing the diversity throughout our organization is vital to developing employee engagement initiatives that foster the inclusive work environment required to build the future of energy.

Employee counts at a glance

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Workforce

68.4%Male

31.6%Female

employees5,323

66.5%Non-exempt

33.5%Exempt

Hawaiian/ American IndianAlaska Native/ Pacific Islander

1.9% Asian

25.3%African-

American

60.5%White

1.1%Two or more races

10.6%Hispanic

0.3%

Ethnicity

0.1%ActiveReserve

0.2%InactiveReserve

0.7%ActiveDuty

1.6%All otherveterans

MilitaryStatus

0-3yrs27.7%

4-10yrs25.5%

21-30yrs15.6%

30+yrs12.3%11-20yrs

18.9%

Tenure

Generational

0.1%1922-1945

30.5%1946-1964

40.6%1965-1980

28.7%1981-2000

Employee counts at a glance (cont’d)

Did you know?

As of December 2017, three employees had 48 years tenure within the Southern Company Gas family. The average tenure as of December 2017 was 13.22 years.

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Initiative: D&I and ERG Leadership Summit

Intention:The Power of Inclusion summit was intended to accomplish the following:

• Advance our collective mission of inclusion

• Prepare our leaders for continued success by educating inclusive leadership principles and skills

• Further align the objectives of the business and future impact plans of Employee Resource Groups (ERGs)

• Deepen the connection between ERG leaders and executive leadership

Impact: Employee group leaders of Southern Company Gas, Georgia Power and Southern Company participated. Day One ratings: 74 percent rated Excellent; 21 percent rated Very Good; 6 percent rated Fair; Day Two ratings: 57 percent rated Excellent; 43 percent rated Very Good.

Elevating our D&IQ

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Workforce

Initiative: Courageous Conversations workshop with leaders (select population)

Intention:To explore the inclusive leadership trait of courage and apply to practical situations and conversations in the workplace.

Impact: 100 percent of survey respondents indicated that they learned something new, believed that session objectives were met, and believed that the topic should be a focus for the company.

Initiative: Programs and events

Intention: To elevate our D&IQ regarding workplace inclusion.

Impact:• Black History Month

• Women’s History Month

• D&I Talks with Jerrold Hill, Sloane Evans and Brian MacLean

• Hispanic Awareness Month

• Veteran’s Day Lunch and Learn

• ERG Leadership Summit

• Listening Sessions

• Generational Inclusion

• Unconscious Bias Education

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Leadership Empowerment Acceptance and Diversity (LEAD) Council

The LEAD Council is an executive diversity council made up of officers who represent our broad footprint. This council strategically supports and advances our enterprise D&I efforts, helping to create a culture that reflects our Total Commitment to our employees, communities and suppliers as stated in Our Values.

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Workforce

1. Carolyn Bermudez Vice President, Operations Florida City Gas

2. Lewis Binswanger Vice President, Regulatory Affairs, Nicor Gas

3. KR Campbell Vice President, Operations, Virginia Natural Gas

4. Randy Cobb Director, Diversity & Inclusion

5. Laura Creekmur (Support) Vice President, Corporate Communications

6. Wendell Dallas Vice President, Operations, Atlanta Gas Light and Chattanooga Gas

7. Jerrold Hill (Support) Vice President, Human Resources

8. Jesse Killings Vice President, Operations, Atlanta Gas Light

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9. Grace Kolvereid Senior Vice President, Accounting

10. Brian MacLean President, Elizabethtown Gas and Elkton Gas

11. Anthony McCain Vice President, Resource Management

12. Kathryn McCoy Associate General Counsel, Commercial Businesses

13. Bob Schnorr (Support) Director, Supply Chain

14. Paul Shlanta (Executive Sponsor) Senior Vice President, General Counsel and Chief Ethics and Compliance Officer

15. Anne Tkacs (Support) Director, Ethics and Compliance

16. David Weaver Vice President, External Affairs

17. Clint Whybark Vice President, System Operations

18. Melvin D. Williams President, Nicor Gas and Senior Vice President

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Building Connections

Workplace

According to a yearlong study done by McKinsey & Company, a leading business consulting firm in the U.S., the most important corporate asset will not be technology or plant infrastructure. It will be talented people, so-called human capital, which will become the most valued corporate resource. It also will be the resource in shortest supply.

Did you know?

Companies that promote a culture of inclusion produce better results. The following table displays the positive differential between companies that are effective at creating inclusion and companies that are not.

Source: Cumulative Gallup Workplace Studies

Customer Satisfaction

Productivity Profitability

Lower turnover

+39%+27%

+22%

-22%

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Initiative: Executive Breakfast series featuring conversations with leaders

Intention:To provide opportunities for members to hear directly from leaders about what it takes to excel at Southern Company Gas.

Impact: Series rated outstanding by attendees as noted in survey feedback.

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Workplace

Our missionTo increase job satisfaction, cultivate company pride and create a welcoming environment for Southern Company Gas’ newest employees through education, knowledge sharing, mentorship and networking.

Chapters: Georgia and Texas

Did you know?

According to the 2017 Center for Energy Workforce Development survey, 71 percent of employees in the natural gas transmission and distribution segments exit the organization (non-retirements) within the first five years of employment. This rate is the highest among peers in electric (21 percent), non-nuclear generation (36 percent), and nuclear generation (36 percent).

Initiative: D&I event featuring DNA on Generational Inclusion

Intention:To dispel myths and stereotypes in order to facilitate better understanding of generational differences.

Impact: 45 percent of survey respondents indicated event exceeded expectations; 55 percent indicated event met expectations.

Our missionTo build a trusting and productive relationship with employees and leadership founded on integrity, honesty, dignity and respect. We will leverage the vast knowledge and diversity of the DNA employee resource group to create a better understanding of the generational dynamics, trends and areas of opportunity that face our organization while being open and receptive to each generation represented. We will recognize and reinforce the values of Southern Company Gas while seeking opportunities to transfer business and industry knowledge and to be inclusive in all that we do.

Chapters: Georgia

Did you know?

As people work longer and delay retirement, internal career paths have changed. Organizational careers don’t look the way they did before. It’s more common to see someone younger managing someone older. This can lead to tension on both sides.

Source: hbr.org

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Georgia

Initiative: Engaged with Ron Clark Academy and the Michelle Obama Leadership Academy in Atlanta

Intention:To engage African-American students with mentorship opportunities.

Impact: Demonstrated commitment to forming meaningful community relationships that align with our value to engage and develop our energy workforce of the future.

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Workplace

Our mission To create an employee resource group that focuses on African-American issues in the workplace and provide opportunities for networking, community activism and personal and professional development.

Chapters: Georgia and Illinois

Illinois

Initiative: Annual Golf Outing

Intention:To support the African-American community where Nicor Gas employees live and serve.

Impact: More than $33,000 raised for the Warren Sharpe Community Center.

Did you know?

According to Deloitte University, 79 percent of African-American employees cover at work. Covering is a strategy through which individuals manage or downplay their differences. Covering can prevent an individual from bringing their authentic selves to work and hinder an organization from creating a true culture of inclusion. Respondents who cover feel considerably more negative about their workplace and work experience than those who do not cover.

Source: Uncovering Talent: A new model of inclusion; Deloitte University: The Leadership Center for Inclusion

Did you know?

According to the Selig Center for Economic Growth, the 10 states with the most African-American buying power are:

New York $103.8 billion Maryland $66.9 billionTexas $99.1 billion North Carolina $52.5 billionCalifornia $80.5 billion Illinois $48.1 billionGeorgia $78.6 billion Virginia $47.5 billionFlorida $78.5 billion New Jersey $41.9 billion

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Workplace

Our mission To attract, retain and foster young, engaged professionals through networking and relationship-building opportunities in support of company values and business ideals, while enhancing the company’s reputation through volunteerism and advancing corporate business goals by sharing consumer insights.

Chapters: Illinois

Initiative: Lunch and learn about the execution of special projects with Christa Markgraff, vice president, Operations, Nicor Gas

Intention:To help young professionals understand how leading special projects can elevate your career and managing techniques for success based on lessons learned from real life case studies.

Impact: 69 attendees across three locations. Christa delivered a dynamic presentation that was impactful to all attendees. We saw experienced employees contribute by offering advice and examples of their special project experience.

Did you know?

Research shows that 83 percent of millennials are actively engaged when they believe the organization fosters an inclusive culture.

Source: The 2015 Deloitte Millennial Survey

Did you know?

According to the Selig Center for Economic Growth, Latino buying power increased from $1.2 trillion in 2013 to $1.6 trillion in 2018.

Illinois

Initiative: Leadership education luncheon with Senator Martin Sandoval, one of four minority elected officials in the Illinois senate.

Intention:To understand how D&I can positively impact the workplace and our community.

Impact: Event rated outstanding by attendees as noted in survey feedback.

Our mission To promote the Hispanic/Latino culture; provide a platform for broadening and deepening our understanding of business opportunities; support the recruitment and development of Hispanic/Latino people; and promote D&I within our communities.

Chapters: Florida, Illinois and New Jersey

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Florida

Initiative: Change management forum

Intention:To equip employees in understanding the principles behind change management to prepare and support employees as our business continues to evolve.

Impact: Event rated outstanding by attendees as noted in survey feedback.

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Workplace

New Jersey

Initiative: PROCEED hurricane relief support

Intention:To support victims of the catastrophic weather events impacting the U.S. Virgin Islands and Puerto Rico.

Impact: Together ¡HOLA! and PROCEED collected more than three palettes of water and 80 boxes of non-perishables.

Did you know?

Hispanics currently make up 16 percent of the overall U.S. labor market and will account for one out of every two new workers entering the workforce by 2025 and 66,000 are turning 18 every month.

Source: The Changing U.S. Workforce: The Growing Hispanic Demographic and the Workplace

Did you know?

According to the Equal Employment Opportunity Commission, in 2014 3.7 percent of senior management roles were held by Latinos and 3.3 percent of board of director roles were held by Latinos.

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Georgia

Initiative: Launched “It’s Our Business to Know Our Business” lunch and learn series. Topics included rates and regulatory affairs, technical training and natural gas operations

Intention:To bring to life the Learn pillar of the Inspire mission to inspire members to fulfill their personal and professional potential.

Impact: Approximately 100 members positively impacted by these learning experiences.

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Workplace

Our missionTo inspire women of Southern Company Gas to fulfill their personal and professional potential by providing a forum that is guided by the Inspire pillars – Learn, Lead and Leap.

Chapters: Georgia and Illinois

Illinois

Initiative: Created Women in Construction (WIC) special interest group to support women in Field Operations, Construction Operations, System Operations and other operating areas of the business

Intention:To engage women in field operations and construction roles to help fulfill Inspire’s mission.

Impact: Direct support and engagement of women professionals in the field.

Did you know?

Studies show that women who use both communal and agentic traits have significantly improved performance ratings and more career opportunities and receive more promotions than their peers. In Reducing the Backlash Effect: Self-Monitoring and Women’s Promotion, for example, researchers found that women who use both types of traits do better—much better—than women with agentic-only or communal-only traits.

Source: The Equality Equation, INSIGHT Magazine

Did you know?

Gender-diverse companies are 15 percent more likely to outperform companies that are not gender diverse on financial outcomes.

Source: McKinsey analysis: January 2015

Gender diverse teams make better decisions 73 percent of the time as compared to an all-male team or the average team.

Source: Forbes: Diversity + Inclusion = Better Decision Making At Work – Sept. 2017

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Initiative: Backpacks distributed to LGBT youth in need in partnership with Lost-n-Found Youth, a charity organization committed to ending homelessness for LGBTQ+ youth

Intention:To provide aid to the Street Outreach program that supports LGBT homeless youth in Atlanta.

Impact: 84 backpacks containing personal essentials distributed to homeless youth in Atlanta.

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Workplace

Our mission To foster an equitable and inclusive working environment where lesbian, gay, bisexual and transgender employees, and their supporters, feel a sense of community and opportunity, and their diversity contributes to the successful achievement of the company’s strategic priorities.

Chapters: Georgia

Did you know?

According to Deloitte University, 83 percent of LGB employees cover at work. Covering is a strategy through which individuals manage or downplay their differences. Covering can prevent an individual from bringing their authentic selves to work and hinder an organization from creating a true culture of inclusion. Respondents who cover feel considerably more negative about their workplace and work experience than those who do not cover.

Source: Uncovering Talent: A new model of inclusion; Deloitte University: The Leadership Center for Inclusion

Initiative: D&I Event featuring VetNet on Leveraging critical skills of military veterans

Intention:To complement the foundation laid with the Oct. 4 session to understand how to leverage skillsets of military service members.

Impact: Feedback from participant: “I thought today’s session was absolutely phenomenal. While the message was certainly clear about leveraging critical skillsets of military veterans, I think it was far more reaching. I’m very grateful for the book. We’ve been conducting monthly leadership meetings with that team, and this might be a good book for them to read and then we discuss.”

Our mission To be a community of veteran and military supporters who champion the support of active duty, reserve, and former military service members and their families and the creation of an environment where employees can establish and grow their careers, share their experiences and become leaders on the Southern Company Gas team.

Chapters: Georgia

Did you know?

There are 10.7 million veterans in the workforce, comprising 7 percent of all U.S. workers.

Source: U.S. Census Bureau

The unemployment rate of veterans grew from 3.9 percent to 18 percent over a four-year period (2005-2009). This is compared to non-veterans unemployment rate increase over the same period of time of 4.7 percent to 9.7 percent.

Source: Bureau of Labor Statistics

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Message from Randy Cobb

Gone are the days when a company’s competitive advantage was based only around capital, strategy or research and development. At Southern Company Gas, our competitive advantage includes our people. Our company’s success is powered by you – your talents, skills and energy.

How we relate to and engage with others – customers, colleagues and communities – must be intentionally guided by values and principles that will continue to drive our success. Values alone are not enough. Inclusion as an aspirational value is meaningless without action.

In reviewing this impact report, I hope you’re energized by the actions we’ve taken together toward our goal of creating a culture of inclusion. Through our cultural awareness events, sponsorship and community involvement, volunteer activities, leadership talks, and the strategic initiatives led by our employee resource groups, I’m proud of our progress. I look forward to continuing to build on this momentum.

Thank you for living Our Values and contributing to the remarkable strides we’ve made.

Randy Cobb Director, Diversity & Inclusion Southern Company Gas

The Diversity & Inclusion TeamRandy Cobb Director, Diversity & Inclusion

Tommi Paris Manager, Diversity & Inclusion

Tanay Hinkle Coordinator, Diversity & Inclusion

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Workplace

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Serving Others

Community

The average American employee spends more time engaging in work and work-related activities than any other activity, including eating and drinking, caring for others, sleeping, household activities, leisure and sports.

When you’re at work, we want to make the most and the best of your time and contributions. Inclusive workplace principles help us achieve this goal.

Source: Bureau of Labor Statistics, American Time Use Survey

An analysis of the impacts employee resource groups (ERGs) have on a variety of business areas shows significant effects of ERGs on recruitment and retention; community outreach; professional development; HR policy; marketing to employees; marketing to customers; cultural assimilation; government relations; product development; and global development.

Source: Employee Resource Groups that Drive Business; Jennifer Brown Consulting

Did you know?

Diversity matters because diversity can lead to increased innovation.

Diversity matters because it is linked to increased productivity, “collective intelligence,” and groups' problem-solving abilities.

Diversity matters because diversity and inclusion is connected to overall employee satisfaction/engagement.

Diversity matters because it has a positive impact on recruitment, retention, and an organization’s ability to attract the best people.

Diversity matters because it allows companies to fully represent their client base and better connect with different communities of people.

Source: Catalyst: Diversity Matters 31

External partnerships

Sponsorships

• American Association of Blacks in Energy

• Atlanta Diversity Managers Advocacy Group

• GA Hispanic Chamber of Commerce

• Hispanic Alliance for Career Enhancement

• Kennesaw State University

• Latin American Association

• Mary Parker Foundation

• oSTEM

• Spelman College

• The King Center

• The National Association of Chinese-Americans

• The United Negro College Fund

• Women’s Energy Network

• YWCA of Greater Atlanta

Employee Resource Group volunteerism

• American Heart Association

• Atlanta Beltline

• Habitat for Humanity

• Illinois-area Fire Stations

• Lost-n-Found Youth

• March of Dimes

• Museum of Science and Industry’s Science Works

• Nicholas House

• Northern Illinois Foodbank

• Sarah’s Inn

• Warren Sharpe Community Center

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Community

Recognition

$227MIncrease in Diverse Spend over the last 3 years

42%Year over year increase in Diverse Spend

69%Year over year increase in Tier 2 Spend

207New Diverse vendors added to our Procurement database

Named one of the Top Companies for Supplier Diversity by Black Enterprise Magazine (October 2017)

$474MTotal MWVBE spend

29.1% of total spend in 2017

Advocacy effortsAchievements

Supplier diversity metrics

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Message from Jerrold Hill

As the needs of our people and customers continue to evolve, so does our ability to embrace and respond to these changes. Some say that change is part of the DNA of our ever-growing and evolving family of companies. If this is the case (and I happen to believe it is), our ability to adapt, respond and grow in the face of change is paramount.

Accepting and managing diversity through inclusive leadership principles is more important now than ever. Remember, leadership doesn’t just fall squarely on the shoulders of those who are in formal leadership positions. Inclusive leadership represents a call to action for us all to implement what we learn in how we relate to one another. Here are three easy ways we can challenge ourselves to exercise our inclusive leadership muscles:

• Educate ‒ Continue to elevate our D&IQ to provide resources and experiences that contribute to our understanding of the inherent differences of our more than 5,000 employees.

• Equip ‒ Find new ways to leverage the different skills of our people for continued business success.

• Engage ‒ Consider and involve others in the decisions we make. This is at the heart of our goal to ensure we put the needs of others at the center of all we do.

This report is only a snapshot of contributions you’ve made to our business. I hope you’re inspired by the progress we’ve made.

Jerrold Hill Vice President, Human Resources Southern Company Gas

Community

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