Environmental and Social Risk Report

Resolution Text

Resolved: Shareholders of Southwest Airlines Co. (“Southwest” or the “Company”) ask the Board of Directors to report on the Company’s due diligence process to identify and address environmental and social risks related to climate change, greenhouse gas emissions and other pollution resulting from the operation of aircraft. The report should:

Explain the types and extent of stakeholder consultation; and
Address how Southwest tracks effectiveness of measures to assess, prevent, mitigate, and remedy adverse impacts on the environment and human health

Supporting Statement

Southwest’s operations have meaningful environmental and social impacts, and those impacts are likely to increase. The FAA forecasts that annual U.S. carrier domestic passenger growth will average 4.7% over the next 20 years.1 Globally, Boeing projects that traffic will increase by 3.8% per year through 2041.2 In 2021, Southwest had 17.4% of the domestic market share among U.S. carriers, second only to American.3 Southwest also flies to cities in Mexico, Central America, and the Caribbean. 4

The global airline industry contributes significantly to pollution and climate change. According to the EPA, commercial airplanes and large business jets accounted for 10% of U.S. transportation emissions. If the industry were a country, its greenhouse gas emissions would put it in 6th place, between Japan and Germany. Aircraft also contribute to climate change through the warming effect of contrails.5

When aircraft burn fuel, they emit ultrafine particulate (“UFP”) matter, which is “much more toxic” than larger size particulate matter.6 Although UFPs are linked to serious health conditions and problems with fetal development,7 they are unregulated. UFP levels are higher near airports.8 Research shows that people living in airport flight paths experience higher rates of asthma and cardiorespiratory hospitalizations.9 A 2018 study found asthmatics experienced acute inflammation after walking at a site near Los Angeles International Airport (“LAX”), which the author attributed to UFPs, and no effects when they walked at a control site not near the airport.10

The impacts of pollution generated by aircraft are not distributed equitably. Residents of communities that have the greatest exposure to aircraft emissions are more likely to be nonwhite and have lower income and education levels. 11 Most of the neighborhoods east of LAX, where Southwest has the fourth-highest volume of passenger traffic,12 with the highest rates of respiratory illness are communities of color. (Ninety-five percent of traffic in and out of LAX “take[s] off and land[s] into winds blowing west to east because that’s the typical wind direction of the area.”13)

Failure to adequately address environmental and social risks poses regulatory and reputational risks to Southwest and its shareholders. Residents may object to airport expansions due to environmental and/or social impacts, as has occurred at LAX.14 Investors lack sufficient disclosure on how Southwest identifies and addresses environmental and social risks associated with its operations.

1. https://www.faa.gov/sites/faa.gov/files/2022-06/Forecast_Highlights.pdf,at2.

2. https://www .boeing.com/commercial/market/commercial-market-outlook/index.page

3. https://www.statista.com/statistics/250577/domestic-market-share-of-leading-us-airlines/

4. https://www .southwest.com/international/

5. https://agupubs.onlinelibrary.wiley.com/doi/full/10.1002/2015JD024696

6. https://envhealthcenters.usc.edu/2019/02/ultrafine-particle-pollution-lax.html

7. https://www.theguardian.com/environment/2022/feb/11/pollutionwatch-ultrafine-particles-from-aircraft-engines-endanger-lives; https://www.sciencedirect.com/science/article/pii/S2590252021000118?via%3Dihub

8. https://www .sciencedirect.com/science/article/pii/S2590252021000118?via%3Dihub

9. https://www .lawa.org/-/media/lawa-web/lawa-communityrelations/files/laxaac/presentations/habre_laxufps_laxaac_2019.ashx, slide 11.

10. https://www .sciencedirect.com/science/article/pii/S2590252021000118?via%3Dihub

11. https://repository.upenn.edu/cgi/viewcontent.cgi?article=3887&context=edissertations, at 49.

12. https://www .lawa.org/-/media/lawa-web/statistics/market-share-statistics/aircarrier-2022.ashx

13. https://abc7.com/lax-air-pollution-respiratory-illness-inequities-los-angeles/11174361/

14. See spectrumnews1.com/ca/la-west/environment/2021/09/15/maxine-waters-opposes-lax-gate-expansion–citing- noise–pollution; labusinessjournal.com/infrastructure/el-segundo-opposes-lax-terminal-plan