Materiality and Stakeholder Engagement Loading...

We determine materiality for the information in this Report with two nested processes. The larger process is our overall stakeholder engagement process, which considers our touch points with outside organizations and employee representatives. The process includes commitments to external initiatives in the areas of sustainability advocacy, public policy, and humanitarian relief, among others. 

Within the stakeholder engagement process, every two to three years we conduct a more focused, structured materiality analysis with management, employees, and selected stakeholders. These individuals and organizations have substantial knowledge and expertise regarding UPS, materiality, sustainability, and corporate reporting. 

Both these processes are discussed below, followed by a discussion of actions taken in 2012 as a result of our materiality and stakeholder engagement processes. 

Stakeholder Engagement Process 

We consider stakeholder engagement an essential aspect of corporate governance and therefore conduct regular dialogue with employees, customers, investors, community leaders, universities, and public officials through formal and informal channels. Because of our long history, we have been engaged with many of these stakeholders for decades. 

Based on this experience, we believe that long-term commitment by UPS, personal involvement by its employees, and focused action on shared priorities are the best ways to build trust and communication with external and internal groups. We also welcome feedback and diverse points of view. In fact, one of our guiding principles is to be “constructively dissatisfied” with our own performance as a company. This in turn compels us to listen carefully to others, who may have different or better ideas than our own. 

For example, we: 

  • Participate in scores of assessments, surveys, and inquiries by non-government organizations and research firms as a way to learn about how we compare to our competitors and other sustainability leaders; 
  • Actively seek and gather feedback from our employees through the use of internal surveys, focus groups, and confidential hotlines; 
  • Engage respectfully in open dialogue with our labor unions to answer their concerns; 
  • Solicit insights from regulators, non-profits, academics, and community leaders on a variety of emerging issues or concerns; 
  • Review performance scorecards, reporting standards, and other benchmarking tools, such as awards submissions, to identify areas where we can improve; 
  • Respond directly to inquiries and comments from groups concerned about our business practices; 
  • Conduct proactive monthly surveys with customers; 
  • Catalogue, review, and address customer comments about service issues or concerns regarding UPS’s actions; 
  • Hold benchmarking sessions with other companies to determine best practices that can be implemented at UPS; 
  • Require managers to respond to critical employee concerns; 
  • Communicate transparently, consistently, and frequently with shareowners; and 
  • Audit media coverage of our company and our industry, including online commentary, to identify emerging issues or trends regarding UPS’s operational impact, customer service levels, and other aspects of our business. 

In summary, we appreciate feedback on our own operations and seek to share our expertise with others. 

Commitments to External Initiatives 

We participate actively in organizations influential in environmental issues, such as the World Resources Institute (WRI), World Business Council for Sustainable Development (WBCSD), BSR, Corporate Responsibility Officers (CRO), the World Economic Forum (WEF), Corporate Eco-Forum (CEF), and others. 

UPS employees serve on a number of technical committees for WRI and WBCSD that develop environmental and climate standards and guidelines. 

To help encourage and guide development of a new generation of lower-emission fuels for air transport, we are working with other members of the Airlines for America (A4A), formerly Air Transport Association of America (ATA). 

We are active in a number of programs with the U.S. Environmental Protection Agency (EPA) aimed at influencing or executing U.S. climate change policy, and we are a member of the National Clean Fleets Partnership. 

We participate in a number of industry councils and consortiums involved with environmental sustainability, including the North American Council on Freight Efficiency (NACFE). 

In 2012, UPS continued to execute a multi-year, multimillion- dollar initiative to improve the capabilities of relief organizations to respond to global emergencies. The effort, which involves both UPS and The UPS Foundation, began with a 2009 commitment of up to US$9 million over two years in the form of financial grants, in-kind services, and the deployment of logistics expertise. The commitment benefits some of the world’s most respected relief organizations, including the American Red Cross, UNICEF, the U.N. World Food Programme, and CARE. 

We provide additional information on related topics in “Engagement,” beginning in Materiality and Stakeholder Engagement.. 

Materiality Analysis 

UPS worked with the non-profit organization BSR to evaluate 61 significant sustainability issues. These issues generally fall into the following broad categories: community impact, emissions/fuel/carbon, employee impact, environmental impact (emissions, facilities, noise, fleets, waste, water), ethics and governance, global social and economic trends, human rights, privacy and security, products and services for customers, and supplier practices. We then ranked each issue’s importance based on feedback from our management and multiple stakeholders. We reported on the results of this process in our UPS 2011 Corporate Sustainability Report and reprinted relevant material in this Report. 

Actions Corresponding to the Materiality Matrix in 2012 

In this Report, we note actions taken in 2012 that correspond to issues that appear in the upper right quadrant, which means they have high importance both for UPS business success and for our stakeholders. 

Note that most of the items reported here are described in more detail in other areas of this Report. Because the issues in the upper right quadrant of the matrix have been material for UPS for years, if not decades, we began reporting about them previously and continue to do so this year. We also note actions we took that were new in 2012, related to the upper quadrant of our matrix. 

- Transparency, Accountability & Reporting 
We devote an entire chapter in this Report to transparency, accountability, and reporting. Please see “Report Profile” beginning in Report Parameters. 

- Greenhouse Gas Policy & Advocacy 
We devote considerable space in this Report to issues associated with greenhouse gas reduction policy and advocacy. Please see “Engagement” beginning in Materiality and Stakeholder Engagement.

- Ethics 
NEW We initiated a new communications strategy in 2012 with an inclusive, personalized theme: “Compliance and Ethics…It Begins With You.” The strategy included a newly designed intranet site that contained refreshed messaging on compliance, a web reporting tool for employee concerns, and interactive online training courses on compliance topics such as anti-corruption, antitrust, boycotts, embargoes and restrictive trade practices, business continuity management, conflicts of interest, contract compliance, employment law compliance, information privacy, political activities, and the help line, among others. Every quarter we publish a newsletter highlighting a compliance or regulatory area and changes to recent legislation. (See “Operating Responsibly in Society”) 

- Megacities/Infrastructure 
UPS is engaged with numerous non-governmental organizations (NGOs) addressing sustainability issues associated with urban infrastructure and the growing number of so-called “megacities.” This term refers to cities with more than 10 million inhabitants. We are fully aware that transportation of goods within and between megacities has implications for climate change, society, and the economy. This is one of the reasons we: 

  • Devote considerable resources to making our ground vehicles more efficient with regard to fuel and emissions. 
  • Devote considerable resources to limiting the amount of miles we drive to the minimum required to meet commitments to customers. 
  • Operate a large and growing fleet of vehicles using alternative fuels and advanced technology. 
  • Invest substantially in vehicles configured to use domestically produced natural gas, which has a lower emission profile than imported/processed diesel fuel. 
  • Participate in multi-stakeholder efforts to advance the development and availability of lower-emission fuels. 

In 2012, we took a number of new steps or reached significant new milestones with regard to urban transportation challenges. These included the following:
  • In the United States, we completed a massive, multi-year deployment of telematics technology in the ground vehicles of our U.S. Domestic Package segment (see "Practical Innovation") and continued to expand our telematics deployment in our International segment. 
  • NEW In the U.K., we demonstrated the viability of humanpowered vehicles and river barges during the London 2012 Olympic Games, to address traffic congestion in one of the world’s densest urban cores, and deployed biomethane-fueled heavy-duty vehicles with dramatically reduced emissions. 
  • NEW In Germany, we demonstrated a prototype electrically-assisted tricycle to address issues of air quality, noise, and congestion in urban centers, and an electric version of a downtown delivery vehicle that brings low-noise, zero-tailpipe-emission delivery capability to city centers.
- Trade Barriers 
UPS CEO Scott Davis serves on the President’s Export Council, a non-partisan body that serves as the United States’ principal national advisory committee on international trade. As in past years, Mr. Davis gave a number of public speeches on the benefits of free trade, as did other senior executives. (See “Public Policy Engagement”) 

- Labor Relations 
2013 includes a contract negotiation round with the union representing the largest number of UPS employees, the International Brotherhood of Teamsters. We devoted considerable time and attention in 2012 to preparing for this negotiation and others that will take place in 2013. 

- Responsible Marketing 
NEW Based on stakeholder feedback from our materiality exercise, responsible marketing is primarily defined as environmental packaging, customer privacy, and transparent and accurate environmental claims. We report extensively on our packaging in "Product and Services". For transparent and accurate environmental claims, we show as evidence the extensive disclosures we have about our operations throughout this Report and the appendixes that follow. For privacy, we cite our new privacy initiatives listed in the Marketplace chapter. Additionally, we offset the carbon emissions associated with our operations as Official Logistics and Express Delivery Supporter of the London 2012 Olympic and Paralympic Games, including the travel and hospitality for more than 700 customers and their guests. (See “News from 2012”).
- Health & Safety 
Our deep and comprehensive commitment to health and safety is described in multiple areas of this Report. In 2012, we: 
• Maintained our substantial resource commitment to safety training (see "Products and Services") 
• Maintained generous health benefits for employees (see "Occupational Health and Safety"). 
• Added safety training content to UPS University for easier access by employees (see "Building a Virtual University"). 
• Implemented new cockpit safety measures in cooperation with our pilots’ union (see "Occupational Health and Safety"). 
• Expanded implementation of NextGen technologies and techniques for increased air safety (see "Ground Fleet Efficiencies")

- Emerging Markets 
Emerging markets are important for UPS’s future, because continuing their rapid growth and development will generate demand for efficient and responsible logistics services. In 2012, we continued to build relationships and donated funds and in-kind transportation relief in 35 countries. We added three dedicated healthcare facilities in Asia to serve both mature and emerging markets (see "Helping Customers Save Lives"). In 2013, we plan to add dedicated resources to emerging market expansion. 

- Global Unrest 
UPS is affected by global unrest largely in the form of threats to our business continuity. We mitigate the risk of such interruptions by operating a global logistics network that is as flexible and resilient as possible, so that we can keep our commitments to customers and still protect the safety of our employees. 

At a high level, we view global unrest as often resulting from economic disparity or disaster. UPS can play a role in creating economic opportunity as a good employer, as a catalyst for economic development, as a provider of disaster relief services, and as a partner for growing businesses.