The global economy requires transportation and logistics to support the trade that brings greater prosperity and higher living standards to those around the world. That’s why transportation companies—which are dependent largely on fossil fuels—generate a substantial proportion of greenhouse gases associated with human activity. The consequence for UPS is clear: we can definitely help customers reduce greenhouse gas emissions in their supply chains, yet the more we do this, the more our own emissions will tend to rise. Because our business performance and emissions performance are so thoroughly intertwined, we keep them conjoined in our management approach to the environment.
For example, our primary strategy for slowing the growth in our emissions relative to revenue is to make our logistics network more efficient, which also helps us serve customers and reduce operating costs. We take the same approach with other natural resources. In all cases, we strive to make responsible business decisions based on accurate, transparent, comprehensive information, including detailed data regarding:
- The fuels used in our air and ground vehicles.
- The techniques we use to optimize fuel usage, such as intermodal shifting, next-generation air traffic management, telematics, and proprietary routing technology.
- CO2e emissions related to both mobile and fixed sources.
- Our use of water and mapping of water risk assessment.
- All aspects of our waste stream, including both hazardous and non-hazardous types.
- Many other types and categories of data.
Along with gathering this data, we disclose a considerable amount of it in this Report each year.
Another essential aspect of our management approach to the environment is contributing actively to society’s public discussion about environmental sustainability. As part of this approach, we:
- Continue to develop our capabilities for comprehensive and comparable measurement and reporting.
- Provide outside stakeholders with both third-party assurance and verification of our carbon inventory, so they can trust our reporting and compare it widely.
- Collaborate with leading NGOs, regulators and industry consortiums to propel the cause of environmental sustainability forward.
- Participate in public policy forums, where we advocate for prudent innovation and investment in new technologies and infrastructure development.
The activities summarized above are described in detail beginning in "Report Parameters".
Environmental Protection Investments and Expenditures
UPS has a long history of investments and expenditures that benefit environmental protection. Some stretch back decades, such as our work with alternative vehicles. UPS put its first such vehicle, powered by electricity, into service in the 1930s; today our alternative fuel/technology fleet numbers 2,688 vehicles around the world. In some cases, we selectively allow such investments more time to earn a return than we ordinarily would, because we recognize their larger benefit to society and the cause of sustainability.
Recent examples include our global IT system for tracking greenhouse gas emissions, solar power generation for facilities, and development of a liquefied natural gas (LNG) transport infrastructure in the U.S. in partnership with government agencies. In the latter two cases, we set the target date for required financial return on investment somewhat further in the future than we normally do for capital investment, because we are confident in eventual payback and recognize that we will generate significant environmental benefits for UPS and society well before that date and long afterward.
We do not report financial figures for such investments and spending because our financial systems do not provide breakouts based solely on environmental benefit. In nearly all cases, investments and expenditures that benefit the environment also directly benefit other aspects of our business such as safety, operating costs, and customer service.
In this Report, we focus instead on high-level, high-benefit environmental strategies and capabilities that show our determination to lead our sector toward greater sustainability. These include:
- Comprehensive measurement and reporting on fuel usage, greenhouse gas emissions, and water throughout our entire enterprise.
- Our global greenhouse gas reduction strategy, which embraces our ground and air fleets, facilities, customers, and suppliers.
- Continuous innovation in how we configure, equip, load, route, drive, monitor, and measure our mobile assets; and in how we design, organize, and operate our facilities.
- Engagement with other organizations that offer world-class initiatives, expertise, forums, and collaborations related to the environment.
Our environmental protection investments and expenditures enabled us to achieve numerous key successes in 2012, which are listed in the "Additional Contextual Information" section.
Policy and Responsibility
Organizational responsibility for executing our environmental policies and management approach, as outlined below, rests with Scott Wicker, Vice President of Corporate Plant Engineering and Chief Sustainability Officer. Mr. Wicker is responsible for managing all sustainability initiatives and strategies, including performance metrics. In addition, further accountability for specific performance metrics rests with managers of the relevant business units and departments throughout UPS.
Our management approach to the environment includes an Environmental Policy Statement and a set of Environmental Guidance Statements that specify how the policy is to be implemented. We include these Statements at ups.com/sustainability.
UPS has in place an extensive Environmental Management System (EMS) in the United States for monitoring environmental performance and following up on issues and opportunities that may arise from our monitoring activities (see “Facilities,”). We developed our EMS to mirror most of the principles of the ISO 14001 standard. To ensure that our policies are practiced, we employ Region Environmental Managers and District Environmental Coordinators throughout our operations. Their role is to monitor and maintain compliance with environmental regulations, to train other operational personnel, and to raise awareness regarding all environmental aspects of our operations.
Training programs to assist Environmental Coordinators cover a wide range of topics, including, among others:
- Water and air quality;
- Automotive environmental procedures;
- Hazardous waste management;
- Spill response plans; and
- Underground storage tanks.
Our environmental training and auditing programs identify areas for improvement and outline strategies. We use a number of metrics to manage our compliance effort; two KPIs are presented in “Compliance”.
Our international environmental programs are guided by our Global Environmental Standards Manual, which is largely consistent with the ISO 14001 structure. As of the end of 2012, we have implemented the programs specified in the Manual in 41 countries where UPS directly provides services. We plan to continue implementing the standards in other countries in 2013 and beyond. We are currently certified to ISO 14001 in a number of locations in Europe within our Supply Chain and Freight business segment in response to business demands. We are taking a similar approach in the U.S.
Environmental Metrics and KPIs
We have designated a number of our environmental metrics as Key Performance Indicators (KPIs) in recognition of their long-term value to UPS and our stakeholders. We use these KPIs to help us execute our other core environmental strategies, which include:
- Greenhouse gas reduction.
- Continuous innovation in technology, systems and processes, and workforce skills development.
- Engagement with world-class organizations for climate change and resource conservation.
Most of our environmental KPIs correspond to GRI performance indicators. They are presented together in summary form in the "Key Performance Indicators" section, and discussed individually in the relevant sections of this chapter.