Priorities and Goals Loading...
Our priorities in environmental measurement and reporting include the following:
- Measure globally with an all-inclusive scope and boundary.
- Adhere to the Accounting and Reporting Standards set forth in the GHG Protocol developed by World Resources Institute (WRI) and World Business Council for Sustainable Development (WBCSD), and comprehensively report all three Scopes in the GHG Protocol.
- Focus on areas where good data can have the most positive impact.
- Be alert to small steps forward in data accuracy that can create large opportunities for action.
- Use robust sustainability performance management software to manage the data.
- Engage third-party assurance and verification, because it increases our competence, our confidence in our reporting, and the credibility of our reporting for outside stakeholders including customers.
Some of our peers and stakeholders have asked about the return on investment in comprehensive measurement and reporting, particularly with regard to Scope 3 of the Greenhouse Gas Protocol. Scope 3 measures carbon emissions associated with 15 sources of emissions other than the operations of the reporting company itself. Getting good data for these categories, such as suppliers, can be difficult and takes time. Furthermore, reporting on them results in a higher overall carbon inventory at a time when society is paying closer attention to greenhouse gases. For all these reasons, many companies hesitate to commit to comprehensive Scope 3 reporting.
At UPS, we take a different view. The carbon emissions from any company’s value chain are emitted whether or not the company measures them. If they’re not measured, they’re hard to manage. That’s why UPS was one of the first companies in the transportation and logistics sector to report Scope 3 emissions on a global basis, and why we adopted the Greenhouse Gas Protocol Corporate Value Chain (Scope 3) Accounting & Reporting Standard as soon as it was available. We are currently reporting on seven categories in 2012, and we plan to report on the remaining four applicable categories in the future.
One consequence of our commitment to comprehensive measurement is that our Scope 3 emissions and overall carbon inventory will continue to rise in the years ahead. We understand—and urge our stakeholders to recognize—that this is a near-term reporting effect. What matters is our long-term success in reducing our actual carbon intensity.
Once our Scope 3 reporting reaches maturity, the short-term additive effect will diminish substantially. Not only that, we expect to be in a much stronger position for addressing overall Scope 3 CO2e emissions. The more we know about how our business interacts with the environment, the more we can do to optimize the relationship.
We describe our 2012 Scope 3 results in more detail beginning in the "Supply Chain Transparency and Scope 3 Reporting" section.
Global Reporting on Energy and Emissions
In this Report, we include full statements regarding our emissions and energy use according to the latest standards included in the Greenhouse Gas Protocol developed by the World Resources Institute (WRI) and World Business Council for Sustainable Development (WBCSD). These statements are presented as Appendixes B (“Statement of Greenhouse Gas Emissions”) and D (“Initiatives to Reduce Greenhouse Gas Emissions and Reductions Achieved”), respectively. A summary statement of our global enterprise CO2e for 2012 and 2011 by business segment is provided on the opposite page. CO2e emissions (abbreviation for “CO2 equivalents”) is a metric that includes all gases named in the Greenhouse Gas Protocol. Because CO2 is by far the most prominent, the other gases are expressed in CO2 equivalents of global warming potential in order to create a unified metric.
UPS has set sustainability goals related to the environment since 2003, when we set a number of goals for 2007. These goals were based on Key Performance Indicators (KPIs) that our management uses to monitor our environmental performance and progress with environmental initiatives. After reaching and retiring the first set of goals in 2007, we established the following environmental goals:
- A 2016 goal for normalized airline emissions (our KPI that measures aircraft emissions per payload capacity) set in 2011.
- A 2016 goal for transportation-related CO2e emissions (our “Transportation Intensity Index”) set in 2010.
- A 2020 goal for normalized airline fuel efficiency (our KPI that measures aviation gallons burned per 100 available ton miles) set in 2008.
- A 2020 goal for normalized airline emissions (our KPI for CO2 pounds per available ton mile) set in 2008.
- A 2020 goal for normalized vehicle emissions (our metric kg of PM2.5 per vehicle and kg of NOX per vehicle) set in 2012.
Absolute Reduction in Scope 1 and 2 Emissions as Volume Grows
This achievement is a reflection of our greenhouse gas reduction strategy (see "Greenhouse Gas Reduction Strategy"), which helps us decouple GHG emissions performance from business growth. UPS Airlines, which is responsible for more than half of our Scope 1 and 2 emissions, played a major role by successfully employing the air fleet efficiencies described later in this chapter (see "Success in Air Fleet Efficiency") to decrease its consumption of jet fuel. Results for 2012 also benefited from a more favorable business mix compared to 2011.
On a segment basis, we reduced absolute CO2e emissions in our largest segment, U.S. Domestic Package, by 1.3 percent, even as segment volume rose 2.8 percent. This is equivalent to cutting 91,000 metric tonnes of emissions while carrying 95 million more packages—a result that drove significant improvement in our KPI for CO2e emissions normalized to package volume in the segment (see "Key Performance Indicators"). We provide more information on ground fleet efficiencies in "Greenhouse Gas Reduction Strategy" and "Ground Fleet Efficiencies".
Our Supply Chain & Freight segment also made an important contribution to reducing our emissions on an absolute basis compared to 2011. The segment recorded a 6.4 percent reduction in Scope 1 and 2 emissions. This major driver was the UPS Freight business, which accounts for approximately 85 percent of the segment’s emissions. As we describe in "Ground Fleet Efficiencies" and in our 2011 Report, we have been aggressively increasing fuel and emissions efficiency in the freight business in recent years.
A list of all Scope 3 categories is included in this Report in Appendix B (“Statement of Greenhouse Gas Emissions,” beginning in Appendix B), which also provides a complete description of all our emissions sources in all categories for our entire global enterprise. We also provide a narrative update on our Scope 3 reporting in "Supply Chain Transparency and Scope 3 Reporting".
Transportation Intensity Index
As we explained earlier in this Report, in “Intensity Metrics Are Part of the Solution,” it’s important for UPS to measure the amount of emissions we generate relative to our customers’ shipping volume. This type of measurement tells us—and the world—how well we are accomplishing our ultimate mission of holding back emissions growth for the global economy and the planet—even if our own absolute emissions should rise. (They actually declined in 2012 compared to 2011, as we explained previously.)
This type of measurement is known as “carbon intensity.” Measuring carbon intensity is a significant challenge for a company carrying all kinds of shipments, using multiple modes of transportation. We therefore focused on gathering together the emissions data that we believe offers the best possible balance of comprehensiveness, accuracy, and comparability over time.
The metric we developed is called the Transportation Intensity Index. We originally developed this Index as part of the former Climate Leaders Program of the EPA. It includes all Scope 1 and 2 emissions for our largest segment, U.S. Domestic Package, and for UPS Airlines, which generates more than half the emissions for our company. The Index also includes Scope 1 and 2 emissions from our Supply Chain & Freight segment in the United States, where the segment does most of its business and where our measurements systems for ground transportation are most thorough, accurate, and comparable over time. In 2012, these three components of the Index represents 96 percent of all Scope 1 and 2 CO2e emissions generated by UPS worldwide.
We succeeded in reducing absolute Global Scope 1 and 2 CO2e emissions by 2.1 percent in 2012 compared to 2011, even though shipping volume increased 2.3 percent.
The Transportation Intensity Index combines three separate carbon intensity ratios, one for each of the three components mentioned above:
- For our U.S. Domestic Package segment, we use the ratio of CO2e emissions (in pounds) per package. This closely resembles the carbon intensity KPI we use for this segment (see "Key Performance Indicators").
- For UPS Airlines, we use the ratio of CO2e emissions (in pounds) per “available ton mile” (ATM). This is the same ratio we use in our carbon intensity KPI for UPS Airlines (see "Key Performance Indicators").
- For our Supply Chain & Freight segment, we use the ratio of CO2e emissions (in pounds) per pound of freight carried.
We assign each of these ratios a percentage weight within the Transportation Intensity Index. The proportions are 48 percent for U.S. Domestic Package, 37 percent for UPS Global Airlines, and 15 percent for the United States operations of the Supply Chain & Freight segment.
After defining the ratios and their proportional weights, we calculated them for 2007, which serves as a good baseline year because we made significant commitments to carbon measurement and goal-setting in that year.
We then gave that sum a value of 100 and made it the baseline for the Transportation Intensity Index. Finally, we set a goal to reduce the Index by 10 percent by 2016.
It is important to understand that the result for the Transportation Intensity Index that we report each year represents that year’s performance compared to the 2007 baseline, not the previous year. The cumulative effect of maintaining and improving the Index below the 2007 level ensures that the total amount of CO2e that we emit in future years will be below the amount that we would have emitted in 2007, given the same business conditions.
In 2012, the Index came in 11.7 percent below the baseline—the first time we have achieved the target reduction of 10 percent. For comparison, the Index came in 7.8 percent below the baseline in 2011 and 6.1 percent below the baseline in 2010.
This confirms that our transportation carbon intensity for the year was lower than in the baseline year, and consequently, we performed better for the environment. Our improvements in the Transportation Intensity Index (see table below) are a direct reflection of our greenhouse gas reduction strategy, including the "Ground Fleet Efficiencies" and "Air Fleet Efficiencies" described in this Report.