01 // WHAT IS YOUR OVERALL ROLE IN SEMPRA’S ETHICS AND COMPLIANCE PROGRAM?

Values have to be the DNA of the company, and from that derives our success both as a business enterprise and as an important company and stakeholder in the communities where we operate.

Compliance is obviously just keeping track of making sure that we are living by those values and by those ethics. There have been times in my life when I was an outside lawyer when I worked on behalf of clients who I wasn’t entirely thrilled with. On occasion I got fired, I have to say, because I let that be known. But the great thing about Sempra is that there is no daylight between what I believe, what my colleagues believe and what the company stands for. I happen to wear the hat right now of coordinating compliance and ethics, but it is really everybody’s job at the company and our senior management team fully believes and promotes that point.

02 // WHAT MAKES SEMPRA’S ETHICS AND COMPLIANCE CULTURE UNIQUE?

I think a good way to answer that question is to discuss Randall Peterson who, until recently, was our Chief Compliance Officer. He used to report to me until a few weeks ago when we decided that he would be very valuable to serve as the chief transition officer at a company we bought called Energy South, which has gas storage operations in the Gulf as well as a gas utility in Mobile, Alabama. We thought that somebody who could deliver our ethics and value system to a company that we just bought some weeks ago would be very important, so Randall has moved to Mobile for that purpose as well as integrating that company into Sempra as a whole.

We also have a corporate-wide compliance committee which I chair, and whose members include all the business unit and function heads. I will tell you that the person who really runs the committee in terms of passion is our Chief Operating Officer and President, Neal Schmale.

The fact is that he feels very strongly that operational excellence in every sense of the word, from the most minor safety issue, to larger compliance matters, are integral to running our business efficiently, effectively and in the best interest of all of our stakeholders.

03 // IT SOUNDS KIND OF LIKE A COLLABORATIVE EFFORT BETWEEN THE ENTIRE EXECUTIVE TEAM?

I think that’s a perfectly fair summary of it. But to the extent that it is important to have some accountability to ensure that there is continual focus on the subject, I would say that Neal Schmale, our COO/President, and I are the point people.

04 // WHAT PART OF YOUR BACKGROUND HELPED PREPARE YOU FOR YOUR ROLE THAT YOU HAVE NOW?

I’m a biochemist who ended up going to environmental studies school and eventually to law school. I think, honestly, the fact that I have both a natural sciences and technical background helps me to not just be some guy sitting in an ivory tower when it comes to issues of compliance.

For example, I just spent the last two days with the leadership of all of our businesses across the board at an environmental training and compliance workshop. We spent two days on a refresher course put on by an outside consultant. We focused on federal and local environmental rules and regulations. We got down to such nitty-gritty things as how you fill out hazardous materials manifest. We also did some case studies and exercises. For example, we went to one of our locations where we have a power plant and pretended that we were going to be buying it. So that we would have to go through the process of understanding all the compliance and due diligence issues and questions relating to the property and its assets.

05 // WHAT DO YOUR DUTIES ENTAIL IN THE COMPANY’S CHIEF ENVIRONMENTAL OFFICER ROLE?

We individually, and as a company, do a lot of work that is community oriented and one of the main focuses is the environment. That includes everything from cleaning the beaches and the bay and the parks, to sponsoring various non-profit projects and programs in our communities.

We have had chief environmental officers throughout the various business units. We tend to divide our business up into the portions that are regulated by the California Public Utilities Commission, the CPUC as we refer to it, and the businesses that we describe as the unregulated or global businesses. So we’ve historically had environmental officers at each side of the business and line individuals at any site where we do large chunks of our business.

Sempra’s board of directors decided a few years ago that it would be good governance to have a specific committee that focuses on environmental issues. I was elected to serve as the Chief Environmental Officer to assist the committee in certain areas. The role and its functions are really three fold.

First, I am the proponent for this whole concept that environmental stewardship is a very important part of our company’s values. That is to say, we not only make nice speeches about it, but that we actually try to live it.

In my case I have two little girls who are 10 and 6. It’s a personal ethic that I want to expose them to. So my wife takes them to a shelter for battered women, and we take toys down to Mexico, and so forth as part of a personal belief system. Part of that is a commitment to environmental stewardship and that’s everything from three-minute showers to recycling. For example, I take all these unnecessarily long legal briefs that I have to occasionally print out so that my daughter can re-use them for her art doodling.

Second, I work to tie our environmental commitment to environmental compliance, along with more broadly defined compliance. We work hard at meeting environmental rules and aspirations.

The third element, which is the most important, is our business strategy. This is, of course, an area of immense focus of the Board and our senior management team as a whole. As we have grown and evolved as a business, we have looked at the world around us and said that for good business reasons we should try to be in the business arenas that are good for the environment. By the way, these are also good things for our shareholders and our rate payers. We used to have some coal power plants several years ago. We sold them all off. The short hand summary of our business strategy is that natural gas, when used in efficient, combined-cycle gas turbine power plants, is the most efficient fossil fuel.

So until that glorious day when you and I can throw some banana peels into a little fusion unit in the back of our house, we need to have a bridge fossil fuel. We believe that bridge fuel is natural gas from an environmental perspective. So we’re in the natural gas business along with the growing field of renewable energy, both centralized and distributed.

We’re investing in renewables projects. For example, we’re putting up solar panels in Nevada and we also have a lot of land lined up around our power plants in Arizona. The logic being, “Hey the transmission is already there, the climate is right, so if we can put in a few hundred acres of solar panels, we can get the energy to where it is needed.”

06 // HOW DO EMPLOYEES RESPOND TO THE VARIOUS ENVIRONMENTAL AND PHILANTHROPIC INITIATIVES PERFORMED BY SEMPRA?

We get exactly the kind of positive feedback you’d like to get. I think employees feel good about the fact that we’re being responsible in an environmental sense and, as you bring it up, in a larger philanthropic way.

I have to tell you it’s personally really gratifying when I send out an email and we get a thousand people coming out to help clean up our beaches from Santa Barbara all the way into Mexico. I’m grateful that it’s not just me and my kids, but all these other employees throughout the system who participate. The feedback is overwhelming.

VALUES HAVE TO BE THE DNA OF THE COMPANY, AND FROM THAT DERIVES OUR SUCCESS BOTH AS A BUSINESS ENTERPRISE AND AS AN IMPORTANT COMPANY AND STAKEHOLDER IN THE COMMUNITIES WHERE WE OPERATE.

The other thing we’re able to do, and candidly it’s a helpful aspect of being a successful company, is that we make really significant contributions to all kinds of appropriate educational, civic and charitable entities in the territories we work in. But what we try to do is leverage. We think it’s more useful if we can leverage a charitable contribution with people from our companies and their families. Getting our employees engaged and their hands dirty, like with our beach clean ups, is a better way to go than just donating money to an organization.

I’ll give you an example. I recently went on the foundation board of the San Diego Zoo. The reason was we had heard a lot from the zoo that they were concerned about the issue of condors. you know condors are coming back quite nicely in Mexico and throughout California. I can’t tell you they are off the endangered list but they are coming back. The folks at the zoo, who are very professional research folks, are concerned about windmills and the potential effect on condors.

I AM THE PROPONENT FOR THE CONCEPT THAT ENVIRONMENTAL STEWARDSHIP IS A VERY IMPORTANT PART OF OUR COMPANY’S VALUES. THAT IS TO SAY, WE NOT ONLY MAKE NICE SPEECHES ABOUT IT, BUT THAT WE ACTUALLY TRY TO LIVE IT.

We said we would help fund how they might study that issue and see if there are ways to minimize the risk—if in fact there is risk, and I’m not clear that there is.

07 // IS THERE ANYTHING THAT YOU WOULD LIKE TO SHARE WITH OTHER GENERAL COUNSEL OR OTHER COMPLIANCE OFFICERS THAT COULD HELP THEM OUT IN THE AREA OF THE ENVIRONMENT, SUSTAINABILITY OR ANY OTHER ASPECT OF BUSINESS ETHICS?

I don’t have any sort of formula or epiphany here as to how different business models work, but I think the one thing is I’m just a foot soldier in this company’s perspective on this. I didn’t invent it. I just continue it. The fact is that we can all do our day jobs and go home and only focus on our own personal selves, but that’s neither rewarding nor really at the end of the day consistent with our obligation to the greater good —which is more than just our shareholders.

So we all in our own ways, with our own limitations, try to define our jobs more broadly. I have 75 lawyers in house reporting to me. I have a big law department. I have lots of obligations as being the general counsel.

I tell my lawyers that our job in the company is help the company work efficiently and in a compliant manner. We have to pick up the pieces sometimes, we make transactions happen, we manage the regulatory process and do all the things that lawyers do. However, the really most important thing we can do is to set an example in terms of the fact that there is the rule of law and there is also a higher rule which is about our values and the ethics that go with them. One way I can convey that message, apart from living it in the company everyday, is to urge our employees to go out individually and collectively do things that are more than just the required minimum day job. I think that for this reason you will find the people at Sempra are pretty across the board active in communities and civic communities.