Southwest recognizes the importance of key topics in its CSR and ESG efforts, as it helps us strategically address ESG issues that matter most to our business and our Stakeholders.

In 2020, Southwest completed a formal key topics assessment, conducted by an independent third party, to identify the most relevant CSR/ESG topics according to our Stakeholders [Communities, Customers, Employees, Governments and Nongovernmental Organizations (NGOs), Investors, and Suppliers]. The 2020 assessment examined 28 topics and helped guide the creation of the One Report. Topics were grouped into five categories: Economic, Employees, Environment, Governance, and Social.

Based on Global Reporting Initiative (GRI) guidelines, Southwest identified priority topics using a systematic process for Stakeholder engagement and feedback prioritization that consisted of:

• Evaluating relevant CSR/ESG topics
• Identifying internal and external Stakeholders
• Assessing the organization’s impacts
• Evaluating the influence on the Stakeholder groups
• Prioritizing topics

We engaged both internal and external Stakeholders to determine which ESG topics they perceive are most important to our business. We then consolidated topics raised through Stakeholder engagement inputs, assigned rankings, appraised significance of business impact for each topic, prioritized topics, evaluated the risk, and developed our key topics matrix (see below).

Our 2020 key topics assessment illuminated areas for potential opportunities to enhance our CSR/ESG reporting approach, and helped us align our CSR/ESG activities with the United Nations Sustainable Development Goals (SDGs), Global Reporting Initiative (GRI), and Sustainability Accounting Standards Board (SASB) reporting frameworks.

Stakeholder	How We Engage
Employees	Employee surveys Company intranet (SWALife) Other internal communication channels Weekly podcasts from our Chairman and CEO Companywide Culture Committee Culture and Engagement Department Diversity, Equity, and Inclusion Department
Customers	Customer surveys Social media listening Customer call centers Customer emails
Suppliers	Supplier Diversity Commitment Online supplier portal ESG-focused questions in supplier RFPs Engagement with internal participants in the procurement process Engagement with external participants in the procurement process (suppliers)
Non-Governmental Organizations (NGOs)	Research and publications from the following NGOs help inform our citizenship approach: Commercial Aviation Alternative Fuels Initiative (CAAFI) World Economic Forum's Clean Skies for Tomorrow Coalition Airport Cooperative Research Program (ACRP) Sierra Club
Airports/Government	Engagement with internal participants from Governmental Affairs Department Developing public policy positionsintended to benefit our Employees, Customers, and communities
Investors	Engagement with internal participants in Investor Relations Department Informal investor interviews Investor-focused standards such as Sustainability Accounting Standards Board
Regulators	We take regulatory compliance seriously, including with respect to standards and requirements established by: Department of Transportation (DOT) Environmental Protection Agency (EPA) Federal Aviation Administration (FAA) Securities and Exchange Commission (SEC)
Communities	Employee volunteerism Charitable contributions and donations Nonprofit partnerships Community Relations Team Medical Transportation Grant Program (MTGP)
ESG Raters	Additionally, we reviewed multiple sustainability reporting standards, and frameworks, and results from independent ESG research firms to inform our reporting efforts, including: CDP (formerly Carbon Disclosure Project) S&P Global Corporate Sustainability Assessment Institutional Shareholder Services (ISS) Sustainalytics EcoVadis
To better understand the effects of our citizenship initiatives upon our business, we also conducted interviews with: Southwest Executive Leadership Southwest Citizenship Executive Steering Group Southwest Cross-Functional Working Groups

The business and affairs of Southwest Airlines Co. (Southwest or the Company) are managed under the direction of the Company’s Board of Directors (Board of Directors). The fundamental responsibility of the Board of Directors is to promote the best interests of the Company and its Shareholders by overseeing the management of the Company’s business. Among other duties and responsibilities, the Board of Directors is responsible for (i) overseeing the selection, evaluation, development, and compensation of senior management; (ii) assessing major risks facing the Company and reviewing options to mitigate such risks; (iii) reviewing, approving, and monitoring significant financial and business strategies and major corporate actions; and (iv) overseeing the processes to maintain the utmost integrity and proper management of the Company.^{33) Corporate Governance guidelines}

Pursuant to Texas law, the Board of Directors is required to elect a President and a Secretary and may elect such other officers as the Board of Directors deems appropriate, which currently include, among others, the Company's Chief Executive Officer (CEO). The Company's CEO has responsibility for the general management and direction of the Company’s business. The duties and powers of the Company’s CEO and other officers are set forth in the Company’s bylaws.^{44) Second amended and Restated Bylaws}

The Company’s bylaws and other information about the Company’s governance practices, Board of Directors, and officers are available on southwest.com in the Investor Relations section.

The Southwest Airlines Citizenship Executive Steering Group (CESG) provides input and guidance on social, economic, and environmental topics to the Company's CEO, President, Chief Financial Officer, and Executive Vice President of Corporate Services, all of whom contribute to the Company’s policy development and decision-making efforts with respect to these topics. The CESG meets regularly comprises Officers and Leaders from various departments throughout the Company. The CESG considers feedback from various Stakeholders and works collaboratively with other executive steering groups to take a holistic approach when considering social, economic, and environmental topics. Other internal groups that address CSR and ESG actions and initiatives include our Social Topics Committee; Enterprise Risk Management Team; Diversity, Equity, and Inclusion Executive Steering Group; and Environmental Steering Group.

Southwest’s Enterprise Risk Management (ERM) Team assists management in addressing the Company’s risk portfolio by collaborating with internal Stakeholders to identify, evaluate, and document risk and mitigation efforts. The ERM team conducts risk assessments, produces internal reports, defines risk focus areas, and escalates critical risks to Executive Leadership.

Southwest is committed to continually improving the awareness and transparency of our governance of environmental and social topics. Some of our recent efforts in this regard include:

• Expanding disclosure of how our environmental stewardship goals will be compatible with our long-term strategy
• Enhancing integration of diversity, equity, and inclusion (DEI) principles in our hiring and development practices to support goals as outlined in the People section of the One Report
• Expanding governance reporting within the One Report’s GRI General Disclosure section

The Board of Directors also recently updated its Compensation Committee’s Charter to reflect the Compensation Committee’s existing practice of assisting the Board of Directors with its oversight of human resources policies and practices, including the Company's DEI philosophy, practices, and initiatives.

Southwest believes in a sustainable future where a balance exists between protecting the world for future generations and serving the interests of our Shareholders, Employees, Customers, and other Stakeholders, serving as good environmental stewards, fostering a creative and innovative workforce, and giving back to the communities it serves.^{55) The 2020 Southwest Airlines One Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Specific forward-looking statements include, without limitation, statements related to (i) the Company’s environmental sustainability beliefs, plans, and expectations; (ii) the Company’s plans, goals, objectives, and initiatives related to diversity, equity, and inclusion; (iii) the Company’s plans and expectations with respect to Employee training, development, benefits, (including post-retirement benefits) pay, and staffing (including with respect to avoiding furloughs or pay cuts); (iv) the Company’s Vision; (v) the Company’s network plans, expectations, and opportunities, including factors and assumptions underlying the Company’s plans and expectations; (vi) the Company’s initiatives and related goals with respect to global distribution system access and related alliances and capabilities; (vii) the Company’s financial position, outlook, plans, strategies, goals, targets, and projected results of operations; (viii) the Company’s fleet plans and expectations; and (ix) the Company’s initiatives and expectations with respect to fuel efficiency and emissions. These statements involve risks, uncertainties, assumptions, and other factors that are difficult to predict and that could cause actual results to vary materially from those expressed in or indicated by them. Factors include, among others, (i) the extent of the COVID-19 pandemic, including the duration, spread, severity, and any recurrence of the COVID-19 pandemic, including through any new variant strains of the underlying virus; the effectiveness and availability of vaccines; the duration and scope of related government orders and restrictions; the duration and scope of the Company’s actions to address Customer and Employee health concerns; the extent of the impact of the COVID-19 pandemic on overall demand for air travel and the Company’s related business plans and decisions; and any negative impact of the COVID-19 pandemic on the Company’s access to capital; (ii) the impact of fears or actual outbreaks of other diseases, economic conditions, fuel prices, extreme or severe weather and natural disasters, fears of terrorism or war, actions of competitors, consumer perception, and other factors beyond the Company's control, on consumer behavior and the Company's results of operations and business decisions, plans, strategies, and results; (iii) the impact of governmental actions and governmental regulations on the Company’s plans, strategies, and operations; (iv) the Company's dependence on Boeing with respect to the Company's fleet order book and delivery schedule; (v) the Company’s dependence on other third parties for products and services, in particular with respect to global distributions systems and related alliances and capabilities, and the impact on the Company’s operations and results of operations of any third party delays or non-performance; (vi) the Company’s ability to timely and effectively implement, transition, and maintain the necessary information technology systems and infrastructure to support its operations and initiatives; (vii) the impact of labor matters on the Company’s result of operations, business decisions, plans, and strategies; and (viii) other factors, as described in the Company's filings with the Securities and Exchange Commission, including the detailed factors discussed under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2020.}

To create the best possible work environment and continue our investment in human capital, Southwest seeks to provide a stable work environment with equal opportunity for learning and personal growth. We focus on bringing the best People into the Southwest Family by investing in human capital with a competitive total rewards package and providing on-the-job training and encouragement to help Employees succeed. DEI has always been rooted in our Company values, and we strive for our Employee population to represent the diverse communities we serve.

Employees are treated with the same concern, respect, and caring attitude within our organization that they are expected to share externally with every Southwest Customer. Our strategy for employment and labor practices is guided by our Executive Vice President Corporate Services, our People Department, and our Legal Department, which includes a section devoted solely to Labor and Employee Relations.

Our People Department’s priorities include (but are not limited to): attracting, developing, and retaining a diverse talented workforce; providing opportunities for learning, development, career growth, and movement within the Company; evaluating compensation and benefits, and rewarding performance; investing in physical, emotional, mental, and financial health and well-being of Employees; obtaining Employee feedback; maintaining and enhancing Company Culture; and communicating with the Board of Directors on a routine basis on key topics, including Executive succession planning. This work is carried out in collaboration with Southwest Airlines University (SWA U); Culture & Engagement, and Diversity, Equity, & Inclusion Departments.

We conduct Companywide surveys of our Employees throughout the year to assess their job satisfaction. Survey feedback allows us to better improve our ability to attract, develop, and retain Employees who will help us achieve Southwest’s business objectives. Our dedicated Employee Experience Team actively evaluates and maps the Employee Experience to identify opportunities to improve—such as onboarding new Employees, identifying moments that matter to current Employees, and offboarding Employees leaving the Company.

To create the best possible work environment, we strive to provide our Employees with advanced notice of significant operational changes through proactive communication. For example, we provided notice to our Contract Employees (and their respective Unions), as well as Noncontract Employees when we made operational changes to our flight schedule and policy updates related to mask requirements, refund changes, enhanced aircraft cleaning procedures, and Customer and Employee health declarations as a result of the COVID-19 pandemic.

We implemented Company procedures that support and respect the protection of human rights within our sphere of influence, and we provided notice and training opportunities to our Employees on subjects like Human Trafficking awareness. We recognize lawful rights of Employees to choose or not choose collective bargaining representation. Our approach focuses on negotiating labor agreements that achieve positive outcomes for our People and Company.

To support our operation, we purchase goods and services from nearly 4,000 sources across multiple continents and countries, but the majority of our supply base and spend is in the U.S. domestic market since our network footprint is primarily as a North American carrier. We maintain relationships directly with various types of suppliers, including service providers, contractors, manufacturers, brokers, and wholesalers.

We strive to provide Southwest with the highest quality products and services at the lowest total costs. While we have dedicated Teams within our Supply Chain Management Department, such as Fuel Management, Aircraft Maintenance, Technology, and Enterprise Supply Chain, we aim to manage our supply chain holistically and by utilizing analytically rigorous and dynamic approaches to optimize system efficiency. Our Supply Chain Management Department monitors supplier performance, assesses risk and plans for potential supply chain disruptions, and analyzes our supply chain spend so we can continuously improve performance.

Southwest is committed to maintaining our lowcost Leadership through effective and efficient procurement practices and spending our capital wisely. All suppliers are treated fairly and impartially during the evaluation and selection process. We use more than one selection process, depending on Company requirements and supply market conditions. Each selection process is focused on finding the best combination of quality, reliability, efficiency, and service for Southwest at the lowest total cost. Internally, our Employees are expected to adhere to a Procurement Policy for Employees and we expect all internal and external participants in the procurement process to observe the highest standards of ethical conduct. We also have a supplier assessment questionnaire as a crucial part of the vetting process and expect suppliers to comply with applicable laws, including those regarding child and/or forced labor.

Our efforts to respect and protect human rights also extends to our supply chain. We partner with our suppliers to have a positive impact with the products and equipment we use in the skies, on the ground, and in our offices. We seek to build sustainable relationships with our suppliers to help fulfill our operational needs, stimulate economic growth in the communities we serve, support small and minority-owned businesses, and satisfy the expectations of our Stakeholders. Our Supplier Diversity Program looks to build sustainable, diverse suppliers that are: Small, Small Disadvantaged, Women-owned, HUBZone, Veteran-owned, Service-Disabled Veteran-owned, Minority-owned, Disabled-owned, and LGBT+-owned. A diverse workforce, which includes our suppliers, helps keep Southwest strong and inspires unity.

At Southwest, we understand that our business impacts the markets we serve. We strive to positively affect these communities by way of our outreach and engagement initiatives to build longstanding relationships with our community partners and suppliers.

Southwest recognizes, respects, and values differences. By fostering a Culture that embraces and utilizes diversity, we promote Teamwork and innovation that contributes to our overall success. Since 1971, inclusion has always been at the Heart of Southwest Airlines, utilizing diversity of thought and experience. As the underdog creating a new way to fly, we needed everyone and their point-of-view to make that goal a reality.

Southwest is committed to advancing diversity, equity, and inclusion (DEI), and as we continue our journey, we will maintain our efforts to cultivate a workforce and Leadership Team to reflect the diversity of the communities we serve. We will also support learning and development efforts that are democratized and inclusive of various career growth paths.

Our Diversity, Equity, and Inclusion Department’s vision is to cultivate a diverse and inclusive experience for all our People to thrive—Employees, Customers, and Partners. The department leads actions and measures to promote an inclusive Culture and environment by:

• Assisting with crafting the enterprise’s DEI vision
• Leading strong communication efforts to build shared language, meaning, and understanding
• Managing DEI as a strategic asset
• Auditing and monitoring equity
• Tracking and assessing progress and improvements
• Reporting to the Board of Directors
• Championing informal and formal conversations and perspectives on DEI

Southwest is built on a network of relationships. Building diverse, equitable, and sustainable relationships is a top priority. We believe our DEI Promise is a key tool in nurturing inclusion.

• It’s about Team: The collaboration of thoughts, backgrounds, and experiences helps us achieve our common goal as a Team
• It’s about value: Our Employees value the ability to bring their authentic selves to work each day while meeting our Southwest expectations
• It’s about respect: Our pride in Southwest Airlines fuels our unity. The respect we show our Fellow Employees matters to our work, our Team, and our Company

Prior to 2020, we had been on a years-long journey to advance DEI and build the cultural competency of our organization. Key performance indicators (KPIs) to track success of these efforts came from DEI feedback tools and activities, such as:

• Employee surveys
• DEI-focused “Pulse Point” intranet surveys
• Event attendance
• Participation in DEI training

We offer anonymity for Employees to share if other Employees are not aligning to our Company values. We are committed to our DEI Promise, and we do not tolerate discrimination, bullying, retaliation, or harassment.

We have established a five-year roadmap with respect to our objectives, so that we can harness the power of diverse backgrounds and experiences that will contribute to our overall success. In 2021, we seek to continue to build a solid foundation and cultivate shared understanding among all Employees. As we move forward, we strive to understand and establish metrics to track results and progress that will feed the organizational expectation and provide solid results for feedback.

Southwest Airlines University (SWA U) provides a variety of training and curriculum options such as classroom training, distance learning, on-the-job training, mentoring, and blended learning for our Employees. We regularly evaluate skill sets needed by our Employees to stay competitive in an ever-changing, highly regulated environment.

Traditionally, our Employees received the majority of their training at our Dallas campus, but our training approach shifted in 2020 due to the pandemic. SWA U launched the Southwest Learning Center in June to provide Leaders and Employees with a clean, simple catalog of virtual training opportunities—addressing both required training needs and optional curriculum.

In 2020, we also launched Career Mobility as a centralized resource for our Employees to learn about the skills, experiences, and education needed for their next career step at Southwest. Career Mobility allows Employees to meet with Career Mobility Partners who can direct them to specific SWA U classes, temporary opportunities, or interview preparation techniques in order to increase diversity and vertical and lateral mobility for all Southwest Employees.

In 2019, Southwest Airlines partnered with Gallup® to launch CliftonStrengths, which allows Employees to discover their own strengths and helps them empower others to develop theirs. As of March 1, 2021, we have introduced CliftonStrengths to nearly 90% of our departments and plan to expand the program’s reach to every Employee.

Southwest believes our focus on diversity training enables enhanced Teamwork and innovation. In 2020, we partnered with Mind Gym to launch their Fearlessly Authentic curriculum, which supports our commitment to foster an inclusive environment where Employees embrace differences and feel a sense of belonging.

Southwest Airlines’ Operational Philosophy defines key principles and expectations for Frontline Employees. Most importantly, and without compromise, we put Safety first. Employees follow Company policies and procedures designed to enable operations at an acceptable level of risk for Southwest. Next, and only after operating safely, we balance low cost and Reliability, all delivered with world-class Hospitality. The Operational Philosophy provides a framework to operate safely, and in turn, position Southwest Airlines for success.

Our Safety Management System (SMS) is the foundation that enables Southwest to operate safely. The SMS framework has four main components: Safety Policy, Safety Risk Management, Safety Assurance, and Safety Promotion. Each of these components is woven into our processes and establishes the structure for Safety at Southwest.

Southwest’s Safety Policy is reflected in our Safety and Security Commitment. The commitment is a pledge of all Southwest Employees and Senior Leadership to the Safety and Security of our Customers and Employees—it establishes clear Employee expectations and associated accountability. Southwest Employees are expected to demonstrate their commitment to Safety by:

• Following Company policies and procedures
• Identifying anything that could cause damage or injury
• Reporting hazards through Companywide reporting tools
• Knowing and understanding our Safety and Security Commitment

Our operational processes incorporate participation from Employees to help identify, develop, and implement procedural changes, including those specific to mitigating hazards.

The Safety Risk Management function of our SMS provides a proactive, systemic, and standardized process designed to identify hazards and risks to the operation and workplace before they become injuries, accidents, or incidents. Safety Risk Management is designed to mitigate risk through the implementation of effective risk controls.

The Safety Assurance function of the SMS relies on data and analytics to continuously measure and analyze the effectiveness of risk controls and overall Safety performance. Southwest monitors Safety performance using a variety of data including Employee reporting, aircraft information, Safety investigations, fatigue programs, and audits. Using the data, we conduct root cause analyses, execute audits, and perform procedural change analysis to recommend work process and equipment changes.

All areas of the SMS receive Companywide and department-specific Safety Promotion support, which includes both training and communication related to Safety. Southwest has developed specific job function training built around comprehensive standards intended to provide Employees the skills they need to operate safely.

Southwest's Community Outreach efforts consist of authentic civic and business relationships across the more than 100 communities within the Southwest system. In 2020, we contributed to 95 national, state, and local membership organizations including, but not limited to, the U.S. Chamber of Commerce, Greater Baltimore Committee, Downtown Denver Inc., Dallas Regional Chamber of Commerce, Hawaii Lodging and Tourism Association, Los Angeles Area Chamber of Commerce, Greater Houston Partnership, and Florida Economic Development Council. We uniquely contribute to each community focusing on gaps and opportunities that will help drive economic, social, or environmental benefits.

We provide life-changing transportation for families in need and medical professionals during times of crisis, and humanitarian relief cargo shipments that aid in life-saving efforts. We advance DEI through many of our efforts and promote environmental stewardship through many conservation-focused projects. And we concentrate on building resilience in the communities we serve by engaging in civic and community partnerships and investing in disaster preparedness, recovery and response, and education.

We remain diligent in monitoring emerging societal issues and topics. Our response to these circumstances is based on a number of factors, including the potential impact on our Employees, brand and reputation, business operations, and Customers.

We regularly review our annual community contributions and continue to evaluate their effectiveness through impact reports and ongoing touchpoints with key partners and Stakeholders. We regularly solicit reports and metrics from our Partners, and we continue to hone our own reporting process to further refine our overall citizenship progress and results.

Jobs and benefits, returns on investment, business partnerships, and Customer Service and Safety are all ways in which our economic performance matters to our Employees, Customers, Shareholders, suppliers, and the communities in which we operate. We strive to continuously improve our Performance by focusing on our Purpose, and our People are dedicated to fulfilling our Vision. Southwest is known for a triple bottom line approach that contributes to our Performance and productivity. Employees share in Southwest’s success with our ProfitSharing Plan, the first in the airline industry. This approach helps us retain Employees, reducing turnover costs. We expect our market presence to generate substantial savings for our Customers through the well-known “Southwest Effect” of invigorating competition by reducing fares and stimulating additional passenger traffic in the cities where we fly.

Our commitment to the Planet helps us manage costs by using resources efficiently and identifying emerging environmental trends and risks. In the air, we strive to responsibly manage our fuel consumption and improve our emissions intensity. Given fuel is one of our largest expenses, managing fuel consumption is not only good for the environment, it’s also good for our bottom line. Regarding our position on potential risks associated with climate change, in our CDP (formerly the Carbon Disclosure Project) response, we identified risks associated with regulatory change and physical climate risks like extreme weather events as having the potential to create operational complexities. These complexities may affect airline operations, which could result in impacts to operational and capital costs and ontime performance.

Southwest has defined contribution plans covering most of its Employees. The Company sponsors Employee savings plans under section 401(k) of the Internal Revenue Code of 1986, as amended. The Southwest Airlines Co. 401(k) Plan includes Company matching contributions subject to limits specified by the Board of Directors, the Internal Revenue Code, and applicable U.S. Treasury regulations, and the Southwest Airlines Pilots Retirement Saving Plan has nonelective Company contributions. In addition, the Company may contribute a percentage of its eligible pre-tax profits, as defined, on an annual basis to the Southwest Airlines Co. ProfitSharing Plan (ProfitSharing Plan)—a defined contribution plan. No Employee contributions to the ProfitSharing Plan are allowed. The amount associated with the Company's defined contribution plans expensed in 2020 was $561 million.

Additionally, the Company provides post-retirement benefits to qualified Retirees in the form of medical and dental coverage. Employees must meet service and age requirements as set forth by the Company, or as specified in collective bargaining agreements with specific workgroups. Employees meeting these requirements, as defined, may use accrued unused sick time to pay for medical and dental premiums from the age of retirement until age 65. All medical plans are unfunded, and Southwest pays benefits as they become due. Estimated future post-retirement benefit payments expected to be paid are $24 million in 2021, $25 million in 2022, $24 million in 2023, $24 million in 2024, $26 million in 2025, and $146 million for the next five years thereafter.^{66) The 2020 Southwest Airlines One Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Specific forward-looking statements include, without limitation, statements related to (i) the Company’s environmental sustainability beliefs, plans, and expectations; (ii) the Company’s plans, goals, objectives, and initiatives related to diversity, equity, and inclusion; (iii) the Company’s plans and expectations with respect to Employee training, development, benefits, (including post-retirement benefits) pay, and staffing (including with respect to avoiding furloughs or pay cuts); (iv) the Company’s Vision; (v) the Company’s network plans, expectations, and opportunities, including factors and assumptions underlying the Company’s plans and expectations; (vi) the Company’s initiatives and related goals with respect to global distribution system access and related alliances and capabilities; (vii) the Company’s financial position, outlook, plans, strategies, goals, targets, and projected results of operations; (viii) the Company’s fleet plans and expectations; and (ix) the Company’s initiatives and expectations with respect to fuel efficiency and emissions. These statements involve risks, uncertainties, assumptions, and other factors that are difficult to predict and that could cause actual results to vary materially from those expressed in or indicated by them. Factors include, among others, (i) the extent of the COVID-19 pandemic, including the duration, spread, severity, and any recurrence of the COVID-19 pandemic, including through any new variant strains of the underlying virus; the effectiveness and availability of vaccines; the duration and scope of related government orders and restrictions; the duration and scope of the Company’s actions to address Customer and Employee health concerns; the extent of the impact of the COVID-19 pandemic on overall demand for air travel and the Company’s related business plans and decisions; and any negative impact of the COVID-19 pandemic on the Company’s access to capital; (ii) the impact of fears or actual outbreaks of other diseases, economic conditions, fuel prices, extreme or severe weather and natural disasters, fears of terrorism or war, actions of competitors, consumer perception, and other factors beyond the Company's control, on consumer behavior and the Company's results of operations and business decisions, plans, strategies, and results; (iii) the impact of governmental actions and governmental regulations on the Company’s plans, strategies, and operations; (iv) the Company's dependence on Boeing with respect to the Company's fleet order book and delivery schedule; (v) the Company’s dependence on other third parties for products and services, in particular with respect to global distributions systems and related alliances and capabilities, and the impact on the Company’s operations and results of operations of any third party delays or non-performance; (vi) the Company’s ability to timely and effectively implement, transition, and maintain the necessary information technology systems and infrastructure to support its operations and initiatives; (vii) the impact of labor matters on the Company’s result of operations, business decisions, plans, and strategies; and (viii) other factors, as described in the Company's filings with the Securities and Exchange Commission, including the detailed factors discussed under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2020.} Learn more about our post-retirement benefits on page 143 of the Company's 2020 Annual Report.

As a result of the COVID-19 pandemic, the Company entered into definitive documentation with the United States Department of Treasury (the Treasury) with respect to funding support pursuant to the Payroll Support Program (Payroll Support) under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). During 2020, the Company received a total of $3.4 billion of relief funds under the CARES Act. As consideration for the Payroll Support, the Company issued a promissory note (the Note) in favor of the Treasury and entered into a warrant agreement with the Treasury (the Warrant Agreement), pursuant to which the Company agreed to issue warrants (each, a Warrant) to purchase common stock of the Company to the Treasury. During 2020, the Company provided a Note in the aggregate amount of $976 million and issued Warrants valued at a total of $40 million to purchase up to an aggregate of 2.7 million shares of the Company's common stock, subject to adjustment pursuant to the terms of the Warrants. Pursuant to the terms of the Payroll Support Program agreement and the CARES Act, the Payroll Support funds could only be utilized to pay qualifying salaries, wages, and benefits, as defined in the CARES Act. In addition, the CARES Act provided a temporary tax holiday from collecting and remitting certain government ticket taxes for tickets purchased between March 28, 2020 and Dec. 31, 2020.

Our market presence and low fares are designed to stimulate economies in cities where we fly. We also make investments in infrastructure and services that more broadly affect the communities we serve in terms of jobs, access to services, or other impacts. By working with local communities and regulators, we strive to maximize our total investments to benefit and enhance local and regional economies. To steward our resources responsibly, we regularly review our annual investments and continue to evaluate their effectiveness through impact reports and ongoing touchpoints with key Partners and Stakeholders.

We recognize the importance of environmental stewardship and believe it’s our responsibility to protect our Planet now and for future generations. We do our part to make environmentally responsible decisions; minimize our environmental impact by collecting and analyzing information on our energy consumption, emissions, and waste; and improve the actions we take to mitigate our impacts.

In 2020, a third-party assessment of Southwest’s Greenhouse Gas (GHG) emissions inventory was completed in accordance with the AA1000 Assurance Standard. This assurance engagement included our Scope 1, Scope 2, and Scope 3 GHG emissions.^{77) Emissions from refrigerant losses are not included in our emissions inventory due to their de minimis impact on our overall emissions. Reference: Assurance Statement for 2020 Greenhouse Gas Inventory.}

As of Dec. 31, 2020, we are meeting our GHG emissions targets without using carbon offsets.

We have evaluated and implemented ways we can improve environmental stewardship. We have aggressive efforts in place to reduce emissions intensity, manage waste, use fuel more efficiently, and repurpose materials to minimize impact on landfills. This includes:

• Partnering with different organizations including Red Rock Biofuels and The Department of Energy’s National Renewable Energy Laboratory (NREL) to support sustainable aviation fuel (SAF) development and production
• Returning the Boeing 737 MAX 8 to service, our most fuel-efficient aircraft
• Expanding our Boeing order book through 2031, including 100 additional Boeing MAX 7 aircraft, which are expected to replace less fuel-efficient Boeing 737-700 aircraft
• Continuing ongoing work of our Repurpose with Purpose program, which diverts materials and items traditionally destined for landfills while generating social and economic opportunities for communities

During 2020, Employees from across the Company reviewed existing plans and developed new ideas to strengthen our environmental commitment:

• Focusing on the goal of carbon neutrality by 2050 and are looking to incorporate more Sustainable Aviation Fuel (SAF) partners and introduce carbon offsetting into our operation^{88) The 2020 Southwest Airlines One Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Specific forward-looking statements include, without limitation, statements related to (i) the Company’s environmental sustainability beliefs, plans, and expectations; (ii) the Company’s plans, goals, objectives, and initiatives related to diversity, equity, and inclusion; (iii) the Company’s plans and expectations with respect to Employee training, development, benefits, (including post-retirement benefits) pay, and staffing (including with respect to avoiding furloughs or pay cuts); (iv) the Company’s Vision; (v) the Company’s network plans, expectations, and opportunities, including factors and assumptions underlying the Company’s plans and expectations; (vi) the Company’s initiatives and related goals with respect to global distribution system access and related alliances and capabilities; (vii) the Company’s financial position, outlook, plans, strategies, goals, targets, and projected results of operations; (viii) the Company’s fleet plans and expectations; and (ix) the Company’s initiatives and expectations with respect to fuel efficiency and emissions. These statements involve risks, uncertainties, assumptions, and other factors that are difficult to predict and that could cause actual results to vary materially from those expressed in or indicated by them. Factors include, among others, (i) the extent of the COVID-19 pandemic, including the duration, spread, severity, and any recurrence of the COVID-19 pandemic, including through any new variant strains of the underlying virus; the effectiveness and availability of vaccines; the duration and scope of related government orders and restrictions; the duration and scope of the Company’s actions to address Customer and Employee health concerns; the extent of the impact of the COVID-19 pandemic on overall demand for air travel and the Company’s related business plans and decisions; and any negative impact of the COVID-19 pandemic on the Company’s access to capital; (ii) the impact of fears or actual outbreaks of other diseases, economic conditions, fuel prices, extreme or severe weather and natural disasters, fears of terrorism or war, actions of competitors, consumer perception, and other factors beyond the Company's control, on consumer behavior and the Company's results of operations and business decisions, plans, strategies, and results; (iii) the impact of governmental actions and governmental regulations on the Company’s plans, strategies, and operations; (iv) the Company's dependence on Boeing with respect to the Company's fleet order book and delivery schedule; (v) the Company’s dependence on other third parties for products and services, in particular with respect to global distributions systems and related alliances and capabilities, and the impact on the Company’s operations and results of operations of any third party delays or non-performance; (vi) the Company’s ability to timely and effectively implement, transition, and maintain the necessary information technology systems and infrastructure to support its operations and initiatives; (vii) the impact of labor matters on the Company’s result of operations, business decisions, plans, and strategies; and (viii) other factors, as described in the Company's filings with the Securities and Exchange Commission, including the detailed factors discussed under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2020.}
• Improve our owned facilities’ environmental footprint
• Create a sustainable inflight experience for our Customers
• Continue our work with a variety of organizations, nonprofits, and government entities, including Airlines for America (A4A), whose work complements our efforts to advance our environmental commitment
• Invite individual and Corporate Customers to participate in any future carbon offset program

Maintaining compliance with local, state, and federal environmental laws and regulations is fundamental to our environmental policy. We continually work to meet our annual goal of zero recorded environmental violations. Our Environmental Services Team regularly conducts audits to review compliance, and works to improve our performance by utilizing our environmental management system (EMS), following environmental guidelines and procedures, implementing corrective action, and training our Employees to meet our compliance goals.

Our standard auditing protocol assesses a location’s recordkeeping, permit status, and compliance with requirements of regulatory plans such as Storm Water Pollution Prevention Plans, Spill Prevention Control, and Countermeasure Plans. We perform a visual walk-through inspection to confirm that key compliance practices are enacted in each of the cities we serve. At all of our locations, we also track spills, audit findings and corresponding corrective action, and information about permits and their expiration dates. We set goals and use an EMS and chemical management system (CMS) to aid in our effort to maintain compliance with environmental regulations, minimize costs and risk, and measure our efforts to improve our environmental performance. Southwest’s Leaders and Employees are also responsible for:

• Auditing our environmental vendors to verify their operations are compliant, and they demonstrate a commitment to environmental stewardship
• Continuing to improve our performance for reducing GHG emissions intensity
• Providing transparency of our environmental performance to our Stakeholders through public reporting and third-party verification and assurance of our GHG emissions inventory

Given that fuel is one of our largest expenses and the burning of it produces GHG emissions, we strive to reduce future emissions while continuing to provide safe, reliable, and affordable air transportation for our Customers.

Southwest commits to explore environmental policies and practices of potential sustainable aviation fuel suppliers, specifically with respect to mitigating deforestation and forest degradation in the production of sustainable aviation fuels.

While these topics are outside the boundary of key topics for Southwest, we continue to report on our waste and recycling efforts as they minimize our environmental impact by:

• Conserving natural resources, including efficient water and raw materials use, while continuing to meet our operational requirements
• Minimizing waste and pollution from our operations and preventing it where possible, while remaining true to the triple bottom line of People, Performance, and Planet

Legislative and regulatory changes have the potential to limit our opportunities for growth, and government policies and legislation can have a deep impact on how we do business. Our Governmental Affairs Team works to stay on top of proposed statutory and regulatory changes and to educate a wide range of policymakers and Stakeholder groups directly. We also present our views on these topics through trade associations, chambers of commerce, and interactions with public officials at the federal level and in the states and communities we serve.

One trade association in which we participate is Airlines for America (A4A), which allows us to gain insight into core issues for the airline industry as a whole and to advocate jointly for regulations that support a healthy, competitive industry. We also benefit from the opportunity to share technical expertise and operational knowledge that leads to improved margins of Safety and Security, greater Employee and Customer Satisfaction, and better overall operational efficiency and Reliability.

Southwest has adopted a policy that it will primarily use its affiliated political action committee, the Southwest Airlines Co. Freedom Fund (Freedom Fund), financed by voluntary Employee contributions, to support political campaigns. Company funds will be limited to supporting selected political campaigns at the state and local level in compliance with the laws of the relevant states and localities. We hold in high regard the responsibility of managing the Freedom Fund and being good stewards of our Employees’ hard-earned dollars. We have a time-tested evaluation process when considering Freedom Fund contribution requests and our criteria for giving are evaluated annually. Additionally, the criteria, as well as all political campaign contributions from the Freedom Fund or by the Company directly, are approved by the Senior Vice President of Governmental Affairs and Real Estate, and overseen by Southwest’s Executive Vice President, Chief Legal and Regulatory Officer, with an annual summary of those contributions provided to the Southwest Board of Directors. All political contributions are intended to promote the interests of the Company and are not guided by any private political preferences of any Employee. All contributions by the Freedom Fund are disclosed via publicly available reports filed monthly with the Federal Election Commission. The Company strives to comply with all applicable federal, state, and local campaign finance restrictions and disclosure requirements.

In 2020, contributions from the Freedom Fund totaled $145,000 to political committees at the federal level and $23,500 to political committees at the state and local levels. Moreover, the Company contributed $2,000 directly to political campaigns at the state and/or local level in one state (California). In 2020, the Company did not support or finance any state or local ballot measure before voters. At the federal level, no Company funds were used to support or finance any political campaign, nor did the Company support or finance any so-called “Super PACs” or any political committees organized under section 527 of the Internal Revenue Code. The Company made no contributions to a politically-affiliated 501(c)(4) organization in 2020.

In 2020, A4A, our airline industry trade association, determined that $931,559 of the total dues paid by the Company to A4A were nondeductible lobbying expenses. Southwest also paid dues to several other national, state, and local trade associations, and chamber organizations, in which a portion of those dues were used by these organizations for nondeductible lobbying activities. However, in all cases, that portion was not more than $1,500 annually for each organization.