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					                                                       SMALL BUSINESS
     MARKETPLACE
                                                       SOLUTION




                                         ENVIRONMENT




  SMALL BUSINESS
  CHALLENGE




                                                       GREEN
                             WORKPLACE                                  COMMUNITY
                                                       SOLUTIONS




Delivering the World.
SUSTAINABILITY AT UPS 2009
UPS links million of organizations         With more than 100 years in business,
and individuals together every day, by     we know that what’s good for our
delivering a daily average of 15 million   customers and our communities is
packages and documents in more             good for UPS and our people, so
than 200 countries and territories.        even in the challenging economy of
By connecting our customers to one         2009, we continued to find new ways
of the world’s most fuel-efficient          to make the world more sustainable.
corporate logistics networks, we help
reduce and mitigate their indirect
carbon footprint. We also provide
them with products, services, expertise
and consulting support for greening
their own supply chains.
Table of Contents                                                                                                                       2009 UPS CSR | 3


OVERVIEW
                       04                                06                              19                         20
                       LETTER FROM THE                   2009 HIGHLIGHTS                 2009 RECOGNITION           2009 ACHIEVEMENTS
                       CHAIRMAN




FORMAL REPORTING
                       22                                24                             29                          31
                       GRI-G3 REPORTING                  PROFILE                         MARKETPLACE                ENVIRONMENT
                       INTRODUCTION




                       55                                60                             64
                       WORKPLACE                         COMMUNITY                       GRI INDEX




ABOUT THIS REPORT   This UPS Sustainability Report covers the calendar year 2009,       We invite readers to send
                    which corresponds to our fiscal year. UPS has issued a Corpo-        comments or questions
                    rate Sustainability Report every year since 2003. For all past      regarding this Report to:
                    reports, and for extensive additional material not included in      UPS
                    this Report, please visit ups.com/sustainability.                   Attention:
                    The Report begins with an overview of sustainability at UPS,        Rebecca Treacy-Lenda
                    including highlights from 2009. Our formal sustainability report-   55 Glenlake Parkway, N.E.
                    ing, which begins on page 22, is prepared in accordance with        Atlanta, GA 30328
                    the G3 guidelines of the Global Reporting Initiative (GRI), an      pr@ups.com
                    independent institution that provides a standard framework
                    for sustainability reporting across companies and industries.
                    Formal sustainability reporting at UPS covers the full range of
                    G3 topics in the order specified by GRI. We provide a G3 index
                    to this Report’s contents on page 64. The entire Report was pre-
                    pared at the B level and we obtained an independent review by
                    Deloitte and Touche LLP to achieve the level B+. As indicated
                    by the icon to the right, GRI checked the Report and confirmed
                    its adherence to the guidelines for B+ level reporting.
Letter from the CEO                                                                                                                    2009 UPS CSR | 4




D. Scott Davis
Chairman and CEO




In light of the global recession,   It would have been easy to respond to hard times
                                    with a heavy hand aimed solely at cutting costs and
                                                                                            This is especially important for our workforce
                                                                                            because 43% of full-time employees are also share-
2009 proved to be one               jobs. Instead, we were prudent and very conscious       holders. Nevertheless, we were forced to take
                                    of the responsibilities that we had to our 408,000      some cost-cutting measures: freezing new hires and
of the most difficult economic       employees, the thousands of communities where we        pay raises, lowering annual bonuses, and suspending
                                    operate, the customers we serve, and the shareholders   retirement plan (401k) matches by the company.
years in UPS’s 103-year             who have invested in us.                                Some of these measures have continued into 2010,
                                                                                            but will be reconsidered as the economy strengthens.
history. In response, we took       Our decision-making was led by sustainability
                                    principles that have served us well for over a          With an eye on the long term, we took advantage
the necessary steps to manage       century—a balance of economic prosperity, social        of our financial strength during the downturn to

the business well, while            responsibility and environmental stewardship.
                                    This Report recounts the actions we took and the
                                                                                            make strategic investments that support future
                                                                                            global growth. These included expanding our larg-
focusing on the long-term           plans that we continue to pursue.                       est international air hub in Louisville, Ky., continuing
                                                                                            construction on an international air hub in Shenzhen
sustainability of the company.      FINANCIAL STRENGTH
                                                                                            China that opened in 2010, completing new facilities in
                                    Even with the pressures of a severe recession,          Puerto Rico and the Netherlands that serve the special-
                                    UPS maintained its outstanding financial position.       ized logistics needs of the healthcare sector, acquiring
                                    In 2009, the company again generated superior           our service agent in Turkey and establishing a joint ven-
                                    free cash flow, producing $4.1 billion. UPS also         ture to serve the Middle East based in Dubai.
                                    held its dividend to 2008 levels, marking 40 years
                                    of maintaining or increasing dividend payments.
                                                                                                                                                           2009 UPS CSR | 5


GENEROUS CHARITABLE GIVING                                TRANSPARENCY                                            LOOKING AHEAD

In these challenging times, we recognized that social     As in previous years, we continue our pledge to be      We believe that 2010 will be the turning point for
needs were even greater than normal. While delivering     as transparent as possible about our environmental      a steady but slow economic recovery. This situation
on their routes, our drivers around the world have        impact and to quantify how our efficiency and            is nothing new for us…we have endured 21 recessions
seen the faces of business people and individuals         conservation initiatives are mitigating our energy      and 1 depression during our 103 year history. Yet, our
deeply impacted by economic stress. Employees             use and emissions. Our industry-leading reporting       strategy for recovery remains the same: focus on our
who volunteered were on the front lines serving the       practices in 2009 were recognized by the Carbon         customers and employees, growth, remain competitive
less fortunate, working in community food banks,          Disclosure Project, who added us to their Global        and operate responsibly. Our commitment remains
at financially-strapped social service agencies, and       Leadership Index. We are the only global transporta-    consistent as we “Deliver the World.”
shelters. Consequently, our support for community         tion company on that Index.
charities remained strong: US$97.6 million in total
                                                          We continue to challenge ourselves and our industry
charitable contributions. We are so proud of employ-
                                                          peers to offer more comprehensive carbon reporting
ees who continued to find ways to give back.
                                                          so that shippers can more accurately report the         D. Scott Davis
ENVIRONMENTAL LEADERSHIP                                  environmental performance of their supply chains and    Chairman and CEO
This Report also recounts our strong commitment           to do so using globally accepted reporting standards.
to environmental stewardship. Our contributions                                                                   July 26, 2010
                                                          WHAT’S DIFFERENT ABOUT THIS REPORT
extend to effectively utilizing technology to optimize
                                                          When you open this Report, please note that there
the miles we fly and drive; introducing more green
                                                          are two major sections. We redesigned the Report in
products to help our customers streamline their logis-
                                                          response to feedback from employees, customers
tics operations; leveraging all modes of transportation
                                                          and other stakeholders who were looking for different
(particularly rail) to offer customers a fuel-efficient
                                                          kinds of information.
delivery network; and working with industry and
environmental groups like the World Resources             The first section is designed to highlight our 2009
Institute to tackle shared challenges like bio-fuels      achievements and initiatives for a quick overview.
in aviation and carbon mitigation. These efforts are      The second section is designed for readers who are
detailed in this Report.                                  interested in the granular details of our activities
                                                          that are more technical and quantitative.
We also continue to push ourselves to be more
accountable, and are using additional data to guide       For the first time, the Report has been assured by
us to make new goals and targets. This Report intro-      Deloitte & Touche LLP and GRI checked. This
duces a new automotive goal, improving our miles per      too is part of our commitment to provide a credible
gallon performance by at least 20% between 2000           transparent report.
and 2020. We already have achieved half of our goal.
 2009 Highlights



During 2009, UPS fought through the         You can read about all these commitments
global recession and its aftermath—right    and how we fulfill them in our formal
along with our millions of customers        reporting beginning on page 22.
around the world. Like many of them,        In the next pages you will find stories
we kept our commitment to sustainability    about exciting innovations, breakthroughs
despite difficult market conditions.         and trends that defined sustainability
We continued to invest in better service,   at UPS in 2009.
new green products, and a more
environmentally efficient network to
serve our growing number of customers
around the world. We also continued
to drive positive change in our industry,
develop our people, and donate
extraordinary amounts of time and
money to our communities.
                                                                                                                                        ENVIRONMENTALLY
                                                                                                                                        RESPONSIBLE




                              ENVIRONMENTALLY
                              AWARE




DELIVERING FOR THE ENVIRONMENT
UPS serves a rapidly growing number of customers who care about the           UPS connects customers to one of the most extensive and fuel-efficient logistics
environment—and not just in their own operations. They want their suppliers   networks. We keep optimizing how many miles we drive, how much fuel, water
and business partners to reduce resource consumption, increase efficiency,     and paper we use—even how much noise our airplanes make. And we’re steadily
and still deliver great results.                                              building our portfolio of green products and services to help our customers
                                                                              make their own operations more environmentally responsible.
2009 Highlights                                                                                                                                                                    2009 UPS CSR | 8




UPS Delivers                                                                                                               5¢

Carbon Neutral                                                                                                                                                             CARBON NEUTRAL




Shipping
                                                                                                                          Only 5 cents to offset the carbon of   Up to US$1 million toward matching
                                                                                                                          a single ground package in the U.S.    carbon offsets.




UPS customers now can purchase certified carbon offsets
to help mitigate the climate impact of their shipping




UPS is the first small package carrier to     projects such as wastewater treatment,   internationally and to more ship-
offer its customers the ability to offset    reforestation, methane destruction and   ping systems, so that millions more
the carbon dioxide emissions generated       landfill gas destruction.                 customers can take advantage of this
by the transport of their packages                                                    opportunity to make their own business
                                             Next we engaged two world-renowned
within the United States. Customers                                                   more environmentally responsible.
                                             independent third-party organizations
can purchase carbon offsets for orders
                                             to assure customers of our choices.         For complete information on UPS carbon neutral,
placed on the internet, and higher-
                                             Our carbon neutral shipping service         please visit ups.com/carbonneutral.
volume shippers can contract for their
                                             is verified by Société Générale de           To see the GRI-G3 reporting on Environment
deliveries to be offset according to their                                               visit page 31.
                                             Surveillance (SGS), an independent
own particular shipping patterns.
                                             inspection, testing and verification
Bringing this offering to market started     company. Additionally, the UPS
with our expertise, data and method-         carbon neutral process is certified by
ologies for precise carbon calculations      The CarbonNeutral Company.
related to shipping. We also leveraged
                                             Finally, to give customers an extra
our ability to accurately calculate the
                                             incentive to embrace carbon neutral
carbon associated with our customers’
                                             shipping, we announced that UPS will
shipping activities—no matter how
                                             match the first US$1 million of offsets
big or small. To offset customer carbon,
                                             purchased for our customers’ UPS
we conducted extensive research
                                             carbon neutral transactions. In 2010,
and decided to focus on high-quality,
                                             we expanded carbon neutral shipping
geographically appropriate CO2 offset
                                                                                                                                               HEALTHCARE
                                                                                                                                               LOGISTICS SPECIALIST




                               HEALTHCARE
                               SPECIALIST




DELIVERING FOCUSED SOLUTIONS

Healthcare experts around the world share information on best practices, their     UPS has fine tuned its logistics infrastructure to support the healthcare industry in
most effective treatments, and how to add new drugs to the tools and techniques    everything from developing and testing new remedies to delivering prescriptions
they use already. But they can’t connect treatment options with patient needs if   directly to doctors and patients. Specialized invoicing systems, facilities and
they can’t get the medicine they need, quickly, safely and efficiently.             vehicles help drug companies, medical device companies and healthcare
                                                                                   providers meet patient needs better than ever.
2009 Highlights                                                                                                                                                              2009 UPS CSR | 10




Healing the Healthcare                                                                                                        52%

Supply Chain                                                                                                         Percentage of large healthcare        0% of large pharmaceutical
UPS is delivering new solutions                                                                                      companies that have near-term         companies surveyed have every-
for healthcare supply chain challenges                                                                               plans for direct distribution         thing in place to meet serialization
                                                                                                                     to consumers (2009 Pain in the        requirements for direct distribution
                                                                                                                     (Supply) Chain Survey).               (2009 Pain in the (Supply) Chain
                                                                                                                                                           Survey).




NEW RESOURCES FOR HEALTHCARE               tory authorities want strict temperature     UPS’s healthcare facility footprint has              For more information on UPS healthcare solutions
                                                                                                                                             please visit ups.com/healthcare.
An aging population is putting pres-       control, chain of custody and other          doubled in the last four years, signaling
                                                                                                                                             For information on UPS’s “Pain in the Chain”
sure on healthcare systems around          controls to ensure quality and reliability   a surge in growth of customer needs.                 survey of healthcare companies visit

the world. Most observers agree that       of every delivery.                           We now have 25 fully compliant health-               pressroom.ups.com/healthcare.

the healthcare industry must become                                                     care facilities around the world, totaling
                                           INTELLIGENT DESIGN AND EXECUTION
more efficient at every level—including                                                  more than 3.5 million square feet.
                                          We chose the locations of the new
the development and delivery of new
                                          facilities to be near major clusters of
therapies. In 2009, we expanded our
                                          pharmaceutical, biotech and medical
support for the healthcare industry with
                                          device companies, so that these busi-
two new state-of-the-art facilities in
                                          nesses can more efficiently distribute
San Juan, Puerto Rico and Roermond,
                                          new products to their customers and
the Netherlands. These facilities add
                                          consumers around the world. We also
nearly 400,000 square feet of dedicated
                                          designed and built the new buildings
space to our existing infrastructure for
                                          up as multi-client facilities. This means
healthcare customers.
                                          that each customer has the necessary
Specialized facilities are vital to the   privacy as well as significant flexibility
healthcare industry, because speed alone in how they integrate our logistics and
is not enough when drugs and medical      delivery expertise into their own supply
devices are shipped to hospitals, doctors chains—yet they all benefit from the
and patients. Both end users and regula- cost efficiency of a shared facility.
                                                                                                                                                                                           2009 UPS CSR | 11
   World’s first                                               DC-8 aircraft meet Stage III                   Deploys vehicles                      Deploys vehicles                        Introduces
    air express                                               noise requirements                                  fueled with                      with hybrid electric                carbon neutral
        service                                                                                             liquid natural gas                     drivetrains (HEV)                  shipping within
                                                                                                                        (LNG)                                                                 the U.S.
                                                                                                                                                   Partners with
                                                                                                                                                   EDF for responsible
                                                                                                                                                   packaging


                    Deploys                                                                         Introduces 10:30 am                                                     Deploys vehicles
                    vehicles                                                                        delivery guarantee                                                      with hybrid hydraulic
                   powered                                                                                                                                                  drivetrains (HHV)
                          by
                  electricity




 1907        1929         1935   1966      1970s         1980s         1985        1987         1990          1992          1994     1995     1998         2003           2006         2008         2009




                                                                                                                   Delivers in 200     727-100 re-engine
                                                 Deploys vehicles                       Purchase first 757          countries           for noise and             Deploys hydrogen
     UPS Founded                                 fueled with propane                    aircraft                   and territories     fuel efficiency            fuel cell vehicles        Retired last 727
                                                                                                                                                                                           aircraft

                                    Begins use          Deploys vehicles                                                                                                                   Entire airfleet
                                    of rail                  fueled with                                                                                                                   meets Stage IV
                                                            compressed                                                                                                                     noise
                                                       natural gas (CNG)                                                                                                                   requirements
                                                                                                                                                                                           Powers
                                                                                                                                                                                           distribution
                                                                                                                                                                                           facility with
                                                                                                                                                                                           Bloom Energy
                                                                                                                                                                                           fuel cell




DELIVERING INNOVATION FOR DECADES

UPS has long been an innovative pioneer in the logistics and transport industry.                   This leadership results in efficiencies and capabilities that have provided and will
Throughout our history we have strategically planned, developed and implemented                    continue to provide a wide range of benefits to our customers, our communities
new services, state-of-the-art technologies and modal shift capabilities—in many                   and the environment.
cases well before others and at a scale far beyond what others have undertaken.
2009 Highlights                                                                                                                                                                    2009 UPS CSR | 12




Driving Change                                                                                                                                                     +28.9%
in Transport
and Logistics
                                                                                                                      1,883 vehicles in the UPS                 Increase in fuel economy for
                                                                                                                      alternative vehicle fleet                 UPS hybrid diesel electric
                                                                                                                                                                delivery vehicles compared
                                                                                                                                                                to conventional vehicles

UPS continued to play a leadership role
in its sector in 2009




ALTERNATIVE FUEL VEHICLES.                  for UPS, also delivered performance         AIRCRAFT NOISE REDUCTION.                                 For more information on UPS environmental
                                                                                                                                                  initiatives please visit ups.com/environment.
UPS has long been a leader in vehicles      and reliability equal to conventional       Engine noise is often overlooked as an                    For more information on UPS Airlines and the UPS
using alternative fuels and technologies,   engines.                                    environmental impact of air transport,                    alternative vehicle fleet, see p. 39 and 42 of this
                                                                                                                                                  Report. For more information on UPS public policy
beginning with the use of electric          AIRLINE BIO-FUELS.                          an issue UPS began addressing in the                      advocacy, see page 61 of this Report.
vehicles in the 1930s. In 2009, we placed                                               1980’s. UPS has been demonstrating
                                            In 2009, we introduced an ambitious
into service 245 new vehicles running                                                   a way to reduce noise during airport
                                            goal to reduce our airline emissions,
on compressed natural gas (CNG) and                                                     approaches, when jets are close to the
                                            including the use of bio-fuels that offer
released performance results for inno-                                                  ground and typically use their engines
                                            the potential of lower emissions per
vative hybrid vehicles we introduced                                                    to adjust altitude. The alternative, called
                                            available ton mile we fly. (For details
in 2008. The new CNG deployment                                                         continuous descent approach (CDA),
                                            on this goal, see page 42). To stimulate
expands our alternative fleet to 1,883                                                   empowers pilots to glide to the ground
                                            market demand for jet engine bio-fuels,
vehicles operating in North America,                                                    and reduce engine noise. In 2009, UPS
                                            which are not commercially available
South America, Europe and Asia.                                                         Airlines began discussions with Euro-
                                            today, we signed a memorandum of
                                                                                        pean airport authorities to expand the
A 12-month study of our hybrid diesel       understanding with two potential fuel
                                                                                        benefits of CDA in the region.
electric delivery vehicles by the U.S.      developers that states our willingness
Department of Energy’s National             to use their fuels in the future. The
Renewable Energy Laboratory (NREL)          memorandum was promoted by the
found that they improved on-road fuel       Air Transport Association of America,
economy by 28.9 percent. The hybrid         Inc. (ATA) and signed by ten other ATA
drive system, developed by Eaton Corp.      members as well.
                                                                                                            2009 UPS CSR | 13




   ENVIRONMENTAL                                           COMMUNITY                 FUND-RAISING   TASK FORCE
   CLEAN-UP LEADER                                         ORGANIZER                 CHAIRPERSON    ADVISOR




DELIVERING FOR THE COMMUNITY
The people of UPS have created a corporate culture that gives back in the forms
that society needs most: time, skills and money. The millions of volunteer hours
they donated to community non-profit organizations in the past decade helped
children, the disabled and the elderly while advancing numerous causes ranging
from global literacy and diversity to safer driving and environmental stewardship.
2009 Highlights                                                                                                                                                              2009 UPS CSR | 14




Continuing                                                                                                                      US   $97.6 million

to Give Back                                                                                                                Total charitable contributions   Surpassed 1.2 million volunteer
Pull back in a recession?                                                                                                   in 2009                          hours donated by UPS employees
Not UPS volunteers.                                                                                                                                          and their families in 2009




There’s no doubt that 2009 was a chal-     As part of its $43.6 million in global    organizations receiving our financial
lenging year for UPS and its employees.    philanthropy, The UPS Foundation pro-     support are putting it to good use in
Yet for community and charitable           vided an $8 million donation to United    their communities. Furthermore, our
organizations in over 50 countries,        Way to match employee contributions.      volunteers bring the kind of skills that
UPS and its people still came through.                                               non-profit organizations need most:
                                           While Foundation philanthropy
The proof includes $97.6 million in                                                  financial and business management,
                                           declined compared to 2008, it actually
total charitable contributions and                                                   expertise in logistics and efficiency,
                                           rose as a percentage of UPS income,
more than 1.2 million volunteer hours                                                and broad experience in how to recruit,
                                           which is the source for Foundation
donated by UPS employees and their                                                   train and motivate teams of people.
                                           funding. In other words, we found
families. Total charitable contributions
                                           ways to maintain strong support for
includes donations by The UPS Foun-                                                      For complete information on philanthropy and
                                           communities and the environment even          volunteerism at UPS, visit ups.com/responsibility.
dation, donations by employees and
                                           in the most difficult year we ever faced       For more information in this Report on community
in-kind giving.                                                                          engagement at UPS, see page 60.
                                           as a public company.
UPS volunteer hours were matched
                                           One of the ways we make our charitable
with generous financial support. Our
employees and retirees contributed         dollars and employee volunteer hours
                                           go farther is to combine them. Approxi-
financial support for the company’s
                                           mately 50% of Foundation grants go
United Way campaign totaling $53.2
                                           to local agencies where UPS employees
million, the second highest corporate
                                           volunteer. This ensures that we support
contribution in the nation after eight
                                           deserving organizations, and that the
straight years as the top contributor.
                                                                                                             GLOBAL PARTNER




   GLOBAL
   OPPORTUNITY




DELIVERING A GLOBAL MARKETPLACE
Throughout the world, small businesses are often a wellspring of economic      UPS supports small businesses worldwide in many ways. We make export
development: creating sustainable jobs and markets for an increasingly urban   processes simpler and access to government-guaranteed loan programs easier, so
world population. Yet small businesses in many countries struggle with         more of our customers can compete in world markets. We seek small and diverse
limited infrastructure and the complexities of international export as they    suppliers around the world, creating business opportunities wherever we go.
try to participate in the global economy.                                      Through the UPS Foundation, we fund highly regarded micro-lending organiza-
                                                                               tions bringing the dream of entrepreneurship within reach to thousands.
2009 Highlights                                                                                                                                                                 2009 UPS CSR | 16




Respecting
Human Rights                                                                                                                      200+
                                                                                                                              Countries and territories where   68,000 people employed
A Human Rights statement is now part of the UPS Code                                                                          UPS operates                      at UPS outside the U.S.
of Business Conduct, Policy Book and Training




In 2009, we amended our Code of            statement into our Code of Business
                                                                                                  AN EXCERPT FROM THE HUMAN RIGHTS LANGUAGE
Business Conduct to include a new          Conduct. We communicate it to
                                                                                                  ADDED TO THE UPS CODE OF BUSINESS CONDUCT IN 2009:
section specifically recognizing the        employees in that context, because
United Nations’ Global Compact             we already require all employees and                   As a global company, UPS recognizes that it plays a role in acknowledging basic

principles for respecting and protecting   representatives of UPS to adhere to                    human rights in accordance with our high standards for the treatment of our people.

human rights. Basic human rights           the Code. In addition, we added new                    Basic human rights address areas such as equality among people, employee well-being
include acknowledgement of equality        human rights language to the UPS                       and security, personal freedom from persecution, and economic, social and cultural
among people, employee well-being          Policy Book. In 2009, we began includ-                 freedom. Human rights principles have been generally defined by the United Nations,
and security, personal freedom from        ing human rights compliance language                   which has created a Global Compact to address these rights.
persecution, and economic, social          to our contracts with suppliers outside                While the values underlying the U.N. Global Compact’s Human Rights Principles
and cultural freedom.                      the U.S.; and we are conducting onsite                 are found throughout this Code, the company believes that the concept of basic
                                           audits. UPS ethics and compliance                      human rights should be specifically recognized, and as a result, supports the U.N.
Respect for basic human rights has         training is mandatory for all managers.                Global Compact’s Human Rights Principles.
always been the foundation of our
Code of Business Conduct. But because          For complete information on corporate governance
we hadn’t used the term broadly and            at UPS, visit investors.ups.com.

specifically, we set an objective in 2008       For more information in this Report on labor
                                               practices at UPS, see page 59.
to adopt and implement a human rights
statement in 2009. Because respect for
human rights should be both universal
and universally supported, we decided
to incorporate the human rights
                                                                                                                     ONE EFFICIENT
                                                                                                                     NETWORK




                               MANY WAYS TO
                               GET THERE




DELIVERING TRANSPORT EFFICIENCY
There are countless ways to get a shipment from one point to another: cars, trucks,   UPS has developed a range of advanced capabilities for optimizing delivery routes,
planes, trains and ships all have a role to play. Customers also want choices         such as the ability to nimbly shift packages between transport modes. By optimiz-
about price, speed and environmental impact. And everything needs to get to           ing routes, we keep our service commitments to customers while conserving fuel
its destination securely, using the minimum amount of natural resources.              and minimizing emissions on their behalf. We have fine-tuned our approach to
                                                                                      routing packages so completely that our drivers can now minimize starts, stops,
                                                                                      turns and idling every time they hit the streets.
2009 Highlights                                                                                                                                                                    2009 UPS CSR | 18




Sharing Expertise
in Fuel Efficiency
UPS has mastered the art and science of avoiding
                                                                                                                            1.9 million metric tonnes of carbon
                                                                                                                            emissions avoided
                                                                                                                                                                      1.1
                                                                                                                                                                  1.1 billion miles not driven since
                                                                                                                                                                  2006 by customers using products
unnecessary driving, and we’re helping our customers                                                                                                              from UPS Logistics Technologies

do the same.




One of our primary carbon reduction       or service. The products include            maintenance resources, increased
strategies at UPS is to minimize the      optimized route planning, real-time         competitiveness, and greater ability
miles we drive and minutes our vehicles   wireless dispatch utilizing GPS, stra-      to target opportunities for growth.
spend idling, so that we maximize the     tegic territory planning, web-based
number of pickups and deliveries          reporting and more. This set of tools
with every gallon of fuel we use. Over    enables businesses to identify their most       For complete information on UPS Logistics
                                                                                          Technologies, visit upslogisticstech.com.
the years we have developed software,     efficient route plans and territories,
                                                                                          For more information in this Report on ground
methodologies, training programs          track them in real-time, and identify           fleet efficiency at UPS, see page 39.
and other capabilities that help us       opportunities to improve.
get the maximum value from the fuel
                                         Companies have been using UPS Logis-
we use every day, on every route, all
                                         tics Technologies products since 2006,
around the world.
                                         and in 2009 the estimated total of miles
We also help other companies do the      not driven was 1.1 billion. This total
same, using transportation management translates into 1.9 million metric tonnes
solutions provided by UPS Logistics      of carbon avoidance and cost savings
Technologies. This business unit has     on 186 million gallons of fuel. On top
adapted UPS proprietary software into    of these environmental and financial
ten products for different applications, benefits, UPS Logistics Technologies
and licensed them to approximately       customers report improvements in
1,200 companies around the world         response times on service and delivery
that operate ground fleets for delivery   calls, more efficient use of drivers and
Achievements and Recognition                                                                                                                                                    2009 UPS CSR | 19




2009
                                                                                                                                               This page presents highlights of external recognition
                                                                                                                                               for sustainability at UPS in 2009. A complete list is
                                                                                                                                               available online at pressroom.ups.com.




Recognition



Sustainability                                                                                      Environment, Workplace, Community
                                                                                                    ORGANIZATION                          RECOGNITION FOR UPS


                                                                                                    Carbon Disclosure Project             Carbon Disclosure Leadership Index (CDLI)

                                                                                                    Newsweek magazine                     Global Green 100

UPS was the only company in        UPS was selected for the Dow     UPS was selected for the        Climate Counts Scorecard              Rated No. 1 for consumer shipping
its industry to be named to the    Jones Sustainability Index for   FTSE4Good Index.
Carbon Disclosure Leadership       North America.                                                   U.S. EPA                              SmartWay Excellence Award
Index (CDLI), placing among the
top 50 companies in the world.                                                                      Women’s Business Enterprise           America’s Top Corporations for Women’s
                                                                                                    National Council                      Business Enterprises

                                                                                                    Hispanic Business magazine            Top 60 Diversity Elite

                                                                                                    Black Enterprise magazine             Best Companies for Diversity

                                                                                                    Human Rights Campaign                 Perfect score on the 2009 Corporate
                                                                                                                                          Equality Index

                                                                                                    President’s Council on Service        Presidential Gold Level Volunteer Service Award
                                                                                                    and Civic Participation in the U.S.
In Fortune magazine’s ranking      UPS was included on the          UPS received the 2009
of Most Admired Companies,         Ethisphere Institute list        Community Service Award from    CARE                                  Champions of Philanthropy Award
UPS was No. 1 in the Delivery      of World’s Most Ethical          the U.S. Chamber of Commerce.
industry for Social Responsibil-   Companies.                                                       National Safety Council               President’s Award for Community
ity, and placed among the top
30 companies overall.
Achievements and Recognition                                                                                                                                                                    2009 UPS CSR | 20




2009
Achievements




                                                                                                                   CO2e
                                              CARBON NEUTRAL



Set a goal to reduce UPS Airline   Became the first small package       Adopted a Human Rights State-   Measured CO2e for Scopes 1           Implemented an enterprise-wide      Entered into a robust third-party
CO2 emissions intensity 20% by     carrier to offer a carbon neutral   ment and incorporated it into   and 2 in addition to CO2 reporting   data acquisition and analysis IT    assurance process for external
2020.                              service for deliveries within       the Code of Business Conduct,   for Scopes 1, 2 and 3.               system for emissions and sustain-   sustainability reporting.
                                   the United States.                  Policy Book and training.                                            ability reporting.
Looking Forward                                                                                                                                                                                2009 UPS CSR | 21




Continuing Commitment to                                                                                                                                                              77.3
                                                                                                                                                                                     million
                                                                                                                                                                                     miles
                                                                                                                                                                                                     3.2
                                                                                                                                                                                                   million
                                                                                                                                                                                                   gallons

Improved Fuel Economy.                                                                                                                                                               more           less


                                                                                                                                                                             miles driven and fuel consumed
After a decade of increasing fuel economy in its U.S. ground delivery fleet,                                                                                                  by UPS U.S. Domestic Package
UPS has set a goal for even higher MPG by 2020.                                                                                                                              segment delivery vehicles in 2009
                                                                                                                                                                             compared to 2000




Everyone wants to get more miles per       77.3 million miles more than they did
gallon when they drive. The difference     in 2000—yet our fuel consumption was
at UPS is that we work hard at it every    lower by 3.2 million gallons (gasoline
                                                                                                    Miles per gallon goal (20% improvement through 2020)
day—and our success gets multiplied        & diesel.) If we had simply been content
over tens of thousands of vehicles on a    to keep driving the same fleet with the
daily basis. We rigorously measure and     same MPG that we had in 2000, our
manage dozens of factors that affect       2009 carbon footprint would have been
fuel efficiency: from which vehicles we     larger by 30,400 metric tonnes of car-
                                                                                      Miles Per Gallon
use to how we maintain them, route         bon dioxide (CO2)—or the equivalent of
them, load them and drive them.            5,813 passenger vehicles.

Our comprehensive approach to fuel         And we’re still not satisfied. Now we’ve                        10% Improvement                                10% Improvement from 2007
economy and our use of advanced            set a new goal for our U.S. Domestic                           20% Improvement from 2000
technology and training methods has        Package segment: we intend to push
                                                                                              2000             2002       2004       2006      2008      2010     2012     2014        2016     2018      2020
gotten results. Over the ten-year period   fuel economy up an additional 9%+
that ended in 2009, we increased the       from 2009, which will equate to a 20%
miles per gallon (MPG) of the delivery     improvement by 2020 from the 2000
vehicles in our U.S. Domestic Package      baseline. We believe this will raise
segment by 10%. To understand how          the bar for the entire small package
this improvement gets multiplied across    sector—and help keep more greenhouse
approximately 60,000 vehicles, con-        gases out of our atmosphere.
                                                                                                         For more information on ground fleet efficiency
sider that in 2009, our drivers logged                                                                   at UPS, see p. 39 of this Report.
Formal Sustainability Reporting—2009                                                                                                                2009 UPS CSR | 22




   24                           29                                                 31
   PROFILE                      MARKETPLACE                                        ENVIRONMENT




   55                                                 60                                               64
   WORKPLACE                                          COMMUNITY                                        GRI INDEX




PROFILE                                            WORKPLACE & HUMAN RIGHTS                           FORMAL SUSTAINABILITY REPORTING AT UPS
Independent Accountants’ Review Report        23   GRI: Labor Practices and Decent Work               This Report covers the calendar year 2009, which cor-
Strategy and Analysis                         24   Management Approach                           55   responds to our fiscal year. UPS has issued a Corporate
                                                   Goals and Performance                         55   Sustainability Report every year since 2003. For all past
Organizational Profile                         25
                                                                                                      reports, and for extensive additional material not included in
Report Parameters                             25   Policy                                        56
                                                                                                      this Report, please visit ups.com/sustainability.
Governance                                    26   Organizational Responsibility                 56
                                                                                                      This section of the Report presents our formal sustainability
Management Approach                                Training and Awareness                        56
                                                                                                      reporting for 2009. The information provided here is prepared
and Performance Indicators                    27   Monitoring and Follow-Up                      57   in accordance with the G3 guidelines of the Global Reporting
KPI Chart                                     28   Additional Contextual Information             57   Initiative (GRI), an independent institution that provides a
                                                                                                      standard framework for sustainability reporting across com-
MARKETPLACE                                        COMMUNITY                                          panies and industries. UPS’s formal sustainability reporting
GRI: Economic Sustainability                       GRI: SOCIETY                                       for 2009 covers the full range of G3 topics in the order speci-
Management Approach                           29   Management Approach                                fied by GRI (see table of contents at left). Please note that
Performance                                   30   and Performance Indicators                    60   the full Report includes an overview of sustainability at UPS,
Additional Contextual Information             30   Goals and Performance                         61   which precedes this section. We provide a G3 index to this
                                                   Policy                                        61   Report’s contents on page 64. The entire Report was prepared
ENVIRONMENT                                                                                           at the B level and we obtained an independent review by
                                                   Organizational Responsibility                 61
GRI: Environment                                                                                      Deloitte and Touche LLP to achieve the level B+. As indicated
                                                   Training and Awareness                        61
Management Approach                           31                                                      by the icon to the right, GRI checked the Report and confirmed
                                                   Monitoring and Follow-Up                      61   its adherence to the guidelines for B+ level reporting.
Goals and Performance                         35
                                                   Philanthropy, Volunteerism                         We invite readers to send comments or questions
Policy                                        52   and Urgent Humanitarian Relief                61   regarding this Report to:
Organizational Responsibility                 53
                                                                                                      UPS
Training and Awareness                        53   APPENDIX: GRI INDEX                           64
                                                                                                      Attention: Rebecca Treacy-Lenda
Monitoring and Follow-Up                      53                                                      55 Glenlake Parkway, N.E.
Additional Contextual Information             53                                                      Atlanta, GA 30328
                                                                                                      pr@ups.com
                                                                                                                                            2009 UPS CSR | 23




Independent Accountants’ Review Report


Board of Directors, Shareowners,             to provide assurance on the entity’s           sustainability reports; that the 2009
and Stakeholders                             compliance with laws or regulations.           amounts included therein have not been
                                                                                            accurately derived, in all material respects,
United Parcel Service, Inc.                 The preparation of the sustainability           from the Company’s records; or that the
Atlanta, Georgia                            report requires management to interpret         underlying information, determinations,
                                            the criteria, make determinations as to the     estimates, and assumptions of the
We have reviewed the 2009 UPS Corporate relevancy of information to be included,            Company do not provide a reasonable
Sustainability Report of United Parcel      and make estimates and assumptions that         basis for the disclosures contained therein.
Service, Inc. (the “Company”) for the year affect reported information. Different
ended December 31, 2009. This report        entities may make different but acceptable      The comparative disclosures for periods
is the responsibility of the Company’s      interpretations and determinations. The         prior to 2009 were not reviewed by us and,
management.                                 sustainability report includes information      accordingly, we do not express any form of
                                            regarding the Company’s sustainability          assurance on them.
We conducted our review in accordance       initiatives and targets, the estimated future
with attestation standards established      impact of events that have occurred or
by the American Institute of Certified       are expected to occur, commitments, and
Public Accountants. A review consists       uncertainties. Actual results in the future     July 9, 2010
principally of applying analytical          may differ materially from management’s         Detroit, Michigan
procedures, considering management          present assessment of this information
assumptions, methods, and findings, and      because events and circumstances
making inquiries of persons responsible     frequently do not occur as expected.
for sustainability and operational matters.
It is substantially less in scope than an   Based on our review, nothing came to our
examination, the objective of which         attention that caused us to believe that
is the expression of an opinion on the      such sustainability report does not include,
presentation. Accordingly, we do not        in all material respects, the required
express such an opinion. A review of        elements of the Global Reporting Initiative
the sustainability report is not intended   G3 Guidelines, for Application Level B
Profile—Strategy and Analysis                                                                                                                                                                             2009 UPS CSR | 24




Profile


UPS is the world’s largest package           • benefits the economy by making global      demand rises or falls for the environ-      Our strategy in this regard is to integrate
delivery company and a leader in               supply chains more efficient and less      mental efficiencies we provide to others,    new operations into our logistics net-        Board of Directors
supply chain and freight services, with        expensive and provides small busi-        we respond by expanding or contracting      work as quickly and completely as we          (Current in 2010)
an annual volume of 3.8 billion pack-          nesses with access to global markets;     our transport activity as efficiently as     can, consistent with respect for local
ages across more than 200 countries                                                      possible.                                   people, communities, laws and customs.
                                             • benefits the environment by reducing                                                                                                 F. Duane Ackerman
and territories. We are also a global                                                                                                Overall, we believe that the impact of
                                               the carbon intensity of global shipping   We strive continually to reduce the                                                       Michael J. Burns
leader in logistics, and a U.S. leader in                                                                                            our international expansion is a net posi-    D. Scott Davis
                                               activity and enabling UPS to leverage     strength of this correlation, so that our
the less-than-truckload segment of the                                                                                               tive for the environment. Among other         Stuart E. Eizenstat
                                               its own carbon efficiency improve-         energy costs (and associated impacts on
freight industry. In 2009, we employed                                                                                               things, we often acquire existing busi-       Michael L. Eskew
                                               ments into the supply chains of all its   our profits and the global environment)
more than 408,000 people, including                                                                                                  nesses and reduce their carbon intensity      William R. Johnson
                                               customers; and                            do not rise in line with our shipping
approximately 68,000 outside the U.S.;                                                                                               rather than create new sources of fuel        Ann M. Livermore
                                                                                         volume. We take a similar approach
paid more than U.S.$2.6 billion              • benefits our employees and society                                                     use or emissions.                             Rudy Markham
                                                                                         with water and other natural resources
in taxes; and made U.S.$43.6 million           by ensuring stable employment and                                                                                                   John W. Thompson
                                                                                         our business consumes. The success of       SUSTAINABILITY TRENDS, RISKS                  Carol B. Tomé
in philanthropic grants. On top of that,       the ability to maintain our culture of
                                                                                         this approach was apparent during the       AND OPPORTUNITIES.
UPS employees and retirees donated             giving back through philanthropy and
                                                                                         challenging economic conditions of the      We see both risks and opportunities                 Committee charters are online at
U.S.$53.2 million to United Way in             volunteer work.
                                                                                         past two years: we reduced our carbon       from global sustainability trends. Risks            investors.ups.com.
2009, and our workers and their families     CORRELATION OF ENVIRONMENTAL                impact and water use by more than the       include the following:
donated a total of 1.2 million hours of      IMPACT WITH ECONOMIC GROWTH.                reduction in our business volume.
volunteer work to their communities.                                                                                                 • Regulatory risk, particularly related
                                             The nature of our business is moving
                                                                                         IMPACT OF INTERNATIONAL                       to the imposition of carbon taxes,
                                             goods and documents for other com-
                                                                                         EXPANSION ON ENVIRONMENTAL                    cap-and-trade systems for carbon
Strategy and Analysis                        panies more efficiently than they could
                                                                                         SUSTAINABILITY.                               emissions, and other forms of regula-
                                             do it themselves. This in turn enables
                                                                                         In the past 30 years, we have expanded        tion that we are not subject to now.
                                             millions of businesses around the
Our business strategy and corporate                                                      our business internationally to a consid-
                                             world to avoid operating costs, energy                                                  • Physical risk, particularly related
responsibility strategy are substantially                                                erable extent. While this brings a broad
                                             consumption and emissions generation.                                                     to extreme weather or climate events
the same: to increase the economic                                                       range of economic and societal benefits
                                             To help create this large-scale economic                                                  that may disrupt commerce and
vitality and environmental sustainability                                                to UPS and its customers, it has also
                                             and environmental benefit, we use more                                                     impact revenue.
of the global economy by aggregating                                                     increased our indirect carbon footprint
                                             than 95,000 ground vehicles, more than
the shipping activity of millions of busi-                                               to a greater degree than our direct foot-   • Energy risk, particularly related to the
                                             200 aircraft, and the services of many
nesses and individuals worldwide into a                                                  print, particularly with regard to Scope      cost and availability of fuel for our air
                                             other transportation companies. As a
single, highly efficient logistics network.                                               3 emissions. This is in part because in       and ground fleets.
                                             result, our direct and indirect consump-
This approach:                                                                           many regions of the developing world,
                                             tion of fossil fuels and emission of                                                    • Reputational risk, particularly related
• benefits UPS by ensuring strong                                                         we are more reliant on contractors and        to customer perceptions of UPS
                                             greenhouse gases are strongly corre-
  demand for our products and services;                                                  suppliers than we are in the U.S.             as a significant user of fossil fuel.
                                             lated to global economic activity: when
Profile—Strategy and Analysis – Report Parameters                                                                                                                                                            2009 UPS CSR | 25




However, we also see substantial            Organizational Profile                         emissions sources, to the extent of our
opportunities from increased demand                                                       report scope and boundary as disclosed        UPS Facts
for products and services that help com-                                                  in the “Environment” section of this
                                            Although our primary business is the
panies mitigate their carbon impact and                                                   Report.
                                            time-definite delivery of packages and                                                       Headquarters            Atlanta, GA
improve the efficiency and responsibility
                                            documents, we have extended our capa-        • We break out fuel, emissions and other
of their supply chains. We believe that                                                                                                 Founded                 1907
                                            bilities in recent years to encompass the      data for our U.S. Domestic Package
data-rich, efficiency-oriented companies                                                                                                 Employees               408,000 (U.S. 340,000; International 68,000)
                                            broader spectrum of services known as          segment because it is by far our largest
that are committed to transparency
                                            supply chain solutions, such as freight        business segment.                            Customers               7.9 million
will have a competitive advantage in
                                            forwarding, customs brokerage, fulfill-       • We break out data for our Supply Chain       Daily Online            22.4 million
meeting these demands. The specific
                                            ment, returns, financial transactions           and Freight segment, which is our            Tracking Requests
opportunities we anticipate include but
                                            and even repairs. We are also a leading        fastest-growing business segment.
are not limited to the following:                                                                                                       Worldwide Operating     2,880
                                            provider of less-than-truckload transpor-                                                   Facilities
• Competitive opportunities, particularly   tation services. Following is a table that   • We break out data for UPS Airlines
  related to increased customer demand      provides a statistical profile of UPS in        because it is the largest single source of   Retail Access           62,000
  for more efficient logistics services,     2009. Substantial additional information       greenhouse gas emissions in our global       Delivery Fleet          101,900 package cars, vans, tractors, motorcycles,
  carbon neutral offerings, responsible     on our organization by business func-          logistics network and it is our most                                 including 1,883 alternative fuel vehicles
  packaging, and other capabilities that    tion, region and financial performance          energy intensive mode of transport.
                                                                                                                                        UPS jet aircraft        210 in service
  UPS already possesses and continues       is available in our Annual Report and at     • We provide compliance data that relate
                                                                                                                                        2009 Packages           3.8 billion
  to develop.                               investors.ups.com.                             to U.S. law and regulation.                  Delivered
• Regulatory opportunities, particularly                                                 • We report employment and philan-             UPS SUPPLY CHAIN SERVICES
  related to cap-and-trade systems          Report Parameters                              thropic data on a global basis, except
  which may favor transport companies                                                                                                   2009 net revenue        $7.4 billion
                                                                                           for United Way contributions which are
  with leading-edge operating efficiency.    TIME.                                          made in the U.S. and Canada only.            Key services            Logistics and distribution; transportation and freight
Further discussion of our environmental     This Report presents data for 2009,          MATERIALITY.                                                           (air, sea, ground, rail); freight forwarding; international
impacts, risks and opportunities are        accompanied by prior-year results or         We employ a number of processes to                                     trade management and customs brokerage
included in “Environment” on page           multi-year results for context. In par-      determine materiality, priority of top-        Facilities              852 facilitities in more than 120 countries
53. Tables and charts highlighting our      ticular, our charts of Key Performance       ics and stakeholder audiences for this
performance in 2009 are provided            Indicators (KPIs) provide data for up to                                                    UPS FREIGHT
                                                                                         report. The primary processes include:
throughout this Report and summarized       five previous years. A summary table of                                                      Key services            Leading provider of less-than-truckload and truckload
                                            KPIs is provided on page 28.                 • extensive communication with
together in “Management Approach and                                                                                                                            services coast-to-coast
                                                                                           independent, non-governmental
Performance Indicators” on page 27.         SCOPE.                                         organizations that evaluate                  Delivery Fleet          6,541 tractors, 22,010 trailers
                                            We provide information on our environ-         sustainability reporting by UPS and
     Complete information on UPS’s busi-                                                                                                Facilities              202 service centers
                                            mental and social performance from             many other companies;
     ness, strategy and performance can     a number of different perspectives that
     be found on our investor website at                                                 • internal benchmarking of other compa-        as of 12/31/2009
     investors.ups.com.
                                            we believe are useful to our stakeholders:
                                                                                           nies that publish sustainability Reports,
                                            • We provide comprehensive enterprise          both inside and outside our industry;
                                              data on fuel use and emissions for our
                                              entire global operations, including both
                                              direct and indirect (Scope 1, 2 and 3)
Profile—Report Parameters – Governance                                                                                                                                                                    2009 UPS CSR | 26




• gap analysis using GRI-G3 guidelines      Audit Committee, which is composed           Governance guidelines include our           and UPS is a founding member of the         In 2009, UPS announced a multi-year,
  and external feedback regarding our       entirely of independent directors.           Code of Business Conduct. In 2009, we       WRI Climate Southeast working group.        multi-million-dollar initiative to improve
  prior sustainability reporting; and                                                    updated the Code to include a statement     In 2009, UPS contributed expertise as       the capabilities of relief organizations
                                            COMPENSATION AND PERFORMANCE.
                                                                                         supporting the U.N. Global Compact          part of the WEF publication entitled,       to respond to global emergencies. The
• analysis of the results of the above      The Compensation Committee of the
                                                                                         on Human Rights (see page 16 of this        “Supply Chain Decarbonization: The Role     effort, which will involve both UPS and
  processes by members of the UPS           Board of Directors sets performance
                                                                                         Report or visit pressroom.ups.com).         of Logistics and Transport in Reducing      The UPS Foundation, begins with a com-
  Sustainability Working Committee          criteria and compensation for the CEO,
                                                                                         Extensive information on our                Supply Chain Carbon Emissions.” UPS         mitment of up to US$9 million over the
  and Sustainability Steering Committee,    and also reviews and approves compen-
                                                                                         governance guidelines is available          personnel also have participated in the     next two years in the form of substantial
  which reports to the Management           sation for other executive officers.
                                                                                         online at investors.ups.com.                Clean Cargo Working Group of Business       financial grants, in-kind services and the
  Committee.
                                            MANAGEMENT COMMITTEE.                                                                    for Social Responsibility (BSR). To help    deployment of logistics expertise. The
                                                                                         GOVERNANCE PROCESSES.
Further discussion of our stakeholder       The UPS Management Committee                                                             encourage and guide development of          commitment will support some of the
                                                                                         Corporate governance at UPS is assured
engagement program is provided in           includes 12 senior managers of the com-                                                  a new generation of lower-emission          world’s most respected relief organiza-
                                                                                         by a set of robust and interrelated
“Stakeholder Engagement” on this page.      pany, representing all major operational                                                 fuels for air transport, we are working     tions, including the American Red Cross,
                                                                                         processes, including internal monitoring
                                            and administrative groups within UPS.                                                    with other members of the Air Transport     UNICEF, the UN World Food Programme,
                                                                                         of their effectiveness. For example, we
Governance                                  The Management Committee supports
                                                                                         conduct regular reviews of our regula-
                                                                                                                                     Association of America (ATA).               CARE and the Aidmatrix Foundation. UPS
                                            the Board of Directors in executing                                                                                                  and The UPS Foundation announced the
                                                                                         tory compliance activities and annually     We are active in a number of programs
                                            UPS strategy. The only member of the                                                                                                 initiative at the 2009 annual meeting
BOARD OF DIRECTORS.                                                                      certify and report on our compliance        of the U.S. Environmental Protection
                                            Management Committee to sit on the                                                                                                   of the Clinton Global Initiative, which
The top governance body at UPS is the                                                    activities. In 2009, approximately          Agency (EPA). UPS is the first and only
                                            Board of Directors is the CEO.                                                                                                       recognized UPS for its “Commitment
Board of Directors. Eight of the 10                                                      44,000 UPS full time management             global shipping company to join the
                                            GOVERNANCE PRINCIPLES                                                                                                                to Action.”
members are independent, as defined                                                       employees received training on our          Climate Leaders® program of the EPA.
below. Director D. Scott Davis is Chair-    AND GUIDELINES.                              updated Code of Business Conduct.           UPS was a charter partner in EPA’s          STAKEHOLDER ENGAGEMENT.
man of the Board and chief executive        Corporate governance at UPS is based         Our 24-hour employee “Help Line,”           SmartWay SM program, which is reducing      We consider stakeholder engagement
officer (CEO) of UPS. The remaining          on long-held principles and explicit         which allows employees to voice their       the fuel consumption and emissions          an essential aspect of corporate gov-
director, Michael L. Eskew, is a non-       guidelines. In very brief form, our gover-   ethical concerns anonymously, received      impact of the U.S. freight industry. We     ernance and therefore conduct regular
executive member in his capacity as         nance principles are as follows:             4,597 calls in 2009. We investigated all    are a participant in the SmartWay pro-      dialogue with employees, customers,
former chairman and CEO of UPS.             • We operate our business for a balance      cases and took corrective or disciplinary   gram at the leadership level, with 100      investors, community leaders, universi-
Mr. Davis and Mr. Eskew comprise the          of economic prosperity, social responsi-   actions, when appropriate, to address       percent of the UPS-owned U.S. vehicle       ties and public officials through formal
Executive Committee of the Board.             bility, and environmental stewardship.     each substantiated concern.                 fleet in the program. We participate in      and informal channels. Because of our
The other three committees are made                                                      Extensive information on UPS gover-         five other EPA voluntary programs aimed      long history, we have been engaged
                                            • We manage assets wisely, and               nance processes is available online
up of independent directors.                                                                                                         at influencing or executing U.S. climate     with all these stakeholders for decades.
                                              emphasize the long term in strategy        at investors.ups.com.                       change policy.                              Based on this experience, we believe
INDEPENDENT DIRECTORS.                        and decision-making.
                                                                                                                                                                                 that long-term commitment by UPS,
We define an “independent” director as                                                    COMMITMENTS TO EXTERNAL                     UPS is a leading corporate sponsor of
                                            • We believe that enabling our customers                                                                                             personal involvement by its employees,
one whom the Board has determined                                                        INITIATIVES.                                World Association of Girl Guides and Girl
                                              to succeed and grow is central to the                                                                                              and focused action on shared priorities
has no material relationship, other than                                                 We participate actively in organiza-        Scouts (WAGGGS), a global organization
                                              success of UPS.                                                                                                                    are the best ways to build trust and
as a director of the company, with the                                                   tions influential in environmental policy    that advances the social and economic
                                                                                                                                                                                 communication with external and
company or any of its consolidated sub-     • We encourage ownership of our              issues, such as the World Resource          development of young women around
                                                                                                                                                                                 internal groups.
sidiaries. The independent directors meet     company by our employees.                  Institute (WRI) and World Economic          the world. More information about
regularly without management direc-                                                      Forum (WEF). UPS employees serve on a       WAGGGS is presented in “Community”
                                            • We help our employees develop
tors present. In addition, our corporate                                                 number of technical committees for WRI      beginning on page 62.
                                              themselves and place great value
compliance officer reports directly to the                                                that develop standards and guidance,
                                              on diversity.
Profile—Governance – Management Approach and Performance Indicators                                                                                                                                    2009 UPS CSR | 27




We also welcome feedback and diverse         • hold benchmarking sessions with other     abundant opportunities for personal          environmental and social sustainability,
points of view. In fact, one of our guid-      companies to determine best practices     and career development, and encour-          and they are clearly identified as KPIs       We encourage
ing principles is to be “constructively        that can be implemented at UPS;           age them to become shareowners.              in this Report. Performance measures         shareowners to
dissatisfied” with our own performance                                                    Our management approach to social            for financial performance are presented
                                             • require managers to respond to critical                                                                                             communicate directly
as a company. This in turn compels us to                                                 responsibility in society is to encour-      in our Annual Report, which is available
                                               comments that emerge from employ-
listen carefully to others, who may have                                                 age our employees to provide skilled         online at investors.ups.com.                 with the Board of
                                               ees, both personally and collectively;
different or better ideas than our own.                                                  volunteer hours for nonprofit organiza-
                                                                                                                                      With few exceptions, we use generally        Directors or with our
For example, we:                             • communicate transparently, consis-        tions in areas that correspond to UPS
                                                                                                                                      accepted or industry-standard metrics        independent directors
                                               tently and frequently with shareowners;   expertise (community safety, nonprofit
• participate in more than 100 assess-                                                                                                and measurement protocols so that our        by contacting our
                                               and                                       effectiveness, economic and global
  ments and surveys by non-government                                                                                                 reported results will be directly compa-
                                             • audit media coverage of our company       literacy, environmental sustainability,                                                   Corporate Secretary:
  organization and research firms as a                                                                                                 rable across our industry and with other
                                               and our industry, including online com-   and diversity), to direct a substantial
  way to learn about how we compare to                                                                                                companies outside our industry. In some
                                               mentary, to identify emerging issues      portion of our corporate philanthropy to
  our competitors and other sustainability                                                                                            cases, industry standards have not yet
                                               or trends regarding UPS’s operational     those organizations, and to increase the                                                  UPS
  leaders;                                                                                                                            been established. The exceptions arise
                                                                                         amount of our corporate philanthropy                                                      c/o Corporate Secretary
                                               impact, customer service levels, and                                                   due to contextual circumstances, which
• actively seek and gather feedback                                                      outside the U.S.                                                                          55 Glenlake Parkway, N.E.
                                               other aspects of our business.                                                         are explained whenever the relevant
  from our employees through the use                                                                                                                                               Atlanta, Georgia 30328
                                             In summary, we appreciate feedback          PERFORMANCE INDICATORS.                      metrics are presented in this Report. In
  of internal surveys, focus groups and
                                             on our own operations and seek to share     UPS manages sustainability performance       some cases, we provide both absolute
  confidential hotlines;
                                             our expertise with others.                  using hundreds of quantitative measures      and normalized results because carbon
• engage respectfully in open                                                            throughout the company and throughout        intensity (fuel use and emissions at a
  dialogue with our labor unions to                                                      the world. Some are highly detailed and      given level of economic activity) may
  answer their concerns;                          Complete information on governance
                                                  and stakeholder commitments can
                                                                                         individualized, such as those used to        be as relevant or more relevant than
• solicit insights from nonprofits,                be found on our investor website at    assess the fuel-efficiency performance        absolute carbon footprint (actual fuel
  academics, and community leaders                investors.ups.com.                     of delivery drivers. Others are highly       use and emissions regardless of the
  on a variety of emerging issues or                                                     aggregated, such as those used to assess     associated level of economic activity).
  concerns;                                  Management                                  our carbon footprint or the emissions
                                                                                                                                      The table below summarizes the Key
                                                                                         for our entire airline. Our management
• review performance scorecards, report-     Approach and                                uses these quantitative measures to
                                                                                                                                      Performance Indicators (KPIs) pre-
  ing standards and other benchmarking                                                                                                sented in this Report. Data for all these
  tools, such as awards submissions, to      Performance Indicators                      evaluate progress of existing programs
                                                                                                                                      KPIs were presented in our previous
                                                                                         and priorities and to identify new oppor-
  identify areas where we can improve;                                                                                                Reports as well. These KPIs appear in
                                                                                         tunities for increasing our sustainability
                                             MANAGEMENT APPROACH.                                                                     the relevant sections of this Report, with
• respond directly to inquiries and com-                                                 performance.
                                             Our management priority for environ-                                                     explanatory captions as well as accom-
  ments from groups concerned about
                                             mental responsibility is to optimize all    Within these measures we have                panying narrative, and they should be
  our business practices;
                                             our consumption of natural resources        identified approximately 30 that we           used and analyzed in those contexts.
• conduct proactive monthly surveys          and fossil fuels and our emission of        believe are material for UPS’s
  with customers;                            greenhouse gases. Our management            sustainability reporting. Within that
                                             approach to social responsibility in        set, we have identified 15 that we
• catalogue, review and address cus-
                                             the workplace is to compensate our          consider Key Performance Indicators
  tomer comments about service issues
                                             employees well, train them thoroughly,      for the sustainability of our business.
  or concerns about UPS’s actions;
                                             keep them safe, provide them with           These measures include KPIs for
Profile—Management Approach and Performance Indicators                                                                                                                                                                                         2009 UPS CSR | 28




                                                                                                                                                                                                 RESULTS                                       GOALS

SOCIAL KPI DESCRIPTION                             SCOPE OF DATA IN 2009            ADDITIONAL DATA DESCRIPTION                                                      2006             2007            2008            2009           2011              2020
Full-Time Employee Turnover Rate                   Global Operations                Percent of all full-time employees that leave our company annually.              9.3%             9.6%            9.0%            7.4%           15.0%             ——

Employer of Choice Index                           Global Operations                A subset of 20 questions from the Employee Opinion Survey that assess            75.0%            75.0%           Did not         70.0%          70.0%             ——
                                                                                    employees’ opinions of how UPS attracts, retains, and motivates employees.                                        conduct

Total Charitable Contributions                     Global Operations                Includes The UPS Foundation grants, in-kind services and employee/retiree        US$96.9M         US$98.8M        US$100.9M       US$97.6M       US$103.5M         ——
                                                                                    donations to United Way.

Automotive Accident Frequency                      Global Operations                Total number of vehicular accidents (regardless of severity) per 100,000         15.3*            15.1*           13.3            10.9           8.9†              ——
                                                                                    driver hours.                                                                                                                                    (US Pkg only)

DART (Days Away, Restricted or Transferred Duty)   Global Operations                Days away from work, restricted activity, or transferred to another job due      6.9*             6.0*            5.0             4.2            4.1†              ——
Injury Rate per 200,000 Hours                                                       to an on-the-job injury. This number represents the number of occurrences                                                                        (US Pkg only)
                                                                                    per 200,000 hours worked.

ENVIRONMENTAL KPI DESCRIPTION                      SCOPE OF DATA IN 2009            ADDITIONAL DATA DESCRIPTION                                                      2006             2007            2008            2009           2011              2020
Penalties as a percent of                          U.S. Package Operations          Environment related fines paid (United States) as a percent of total              0.94%            1.14%           0.59%           1.00%          0.00%             ——
Total Environmental Inspections                    U.S. Supply Chain and Freight    environment related agency inspections.                                                                                           1.10%

Water Consumption—Normalized                       U.S. Package Operations          Water consumption (United States) includes all facility related water and
Cu meters per 1,000 Packages                                                        water used to wash vehicles—expressed in cubic meters.                           1.48             1.54            1.28            1.18           ——                ——
Cu meters per US$1,000 of Revenue                                                                                                                                    0.170            0.174           0.139           0.138          ——                ——

Energy Consumption—Normalized                      U.S. Package Operations          Energy consumption (United States) includes stationary sources of energy
Gigajoule per 1,000 Packages                                                        and mobile sources of energy (gasoline, diesel, jet A, and compressed            28.13            30.04*          30.40*          29.33          ——                ——
Gigajoules per US$1,000 of Revenue                                                  natural gas).                                                                    3.22             3.39*           3.32*           3.44

Gallons of Fuel per Ground Package                 U.S. Package Operations          Fuel consumption (United States) includes gasoline, diesel, compressed           0.120            0.127*          0.127*          0.121          ——                ——
                                                                                    natural gas, fuel for rail services divided by total United States ground and
                                                                                    air volume moved on ground.

Aircraft Emissions per Payload Capacity            UPS Airlines—Global Operations   Total Emissions in kgs divided by the sum of max structural payload capacity     0.81             0.80            0.76            0.75           0.74              ——
                                                                                    (in thousands of kgs) weighted by annual aircraft cycles.

Percent of UPS Air Fleet Meeting Stage IV          UPS Airlines—Global Operations   Percent of UPS total fleet that meets 2006 noise requirements.                    96.1%            96.4%           100%            100.0%         100%              ——
Noise Guidelines                                                                    Cumulative noise as measured by Effective Perceived Noise decibels.

CO2 Emissions—Normalized                           U.S. Package Operations          GHG emissions (United States) calculated using GHG Protocol—Scope 1
Metric tonnes per 1,000 Packages                                                    and Scope 2. Includes stationary sources of energy (electricity, natural gas,    2.09             2.23*           2.25*           2.18           ——                ——
Metric tonnes per US$100,000 of Revenue                                             propane, and heating oil) and mobile sources of energy (gasoline, diesel,        23.97            25.09*          24.61*          25.55
                                                                                    jet A, compressed natural gas).

Number of Reportable Spills                        U.S. Package Operations          Spills that meet criteria of being federal or state reportable.                  33               49              82              75             0                 ——
                                                   U.S. Supply Chain and Freight                                                                                                                                      38

Aviation Gallons Burned per                        UPS Airlines—Global Operations   Gallons of jet fuel consumed by aircraft type by lane segment divided by         7.13             7.22            6.73            6.63           6.57**            6.27
100 Available Ton Miles                                                             (air distance by lane segment X maximum payload in tons) divided by 100.

CO2 Pounds per Available Ton Mile                  UPS Airlines—Global Operations   Pounds of CO2 emitted for every ton of capacity transported one                  1.50             1.52            1.42            1.40           ——                1.24
                                                                                    nautical mile.



Green Type—already met 2011 goal                                                                                                        *These figures have been restated. See p. 37 for Environment figures and 58 for Social figures. **2012 goal. †New goal.
Brown Type—improved results from last year
Marketplace—Management Approach                                                                                                                                                                                2009 UPS CSR | 29




Marketplace
To read related highlights, visit page 9




UPS economic goals and financial per-         • using a portion of our profits to conduct   business – even in years, such as 2009,
formance are extensively documented            sustained corporate philanthropy, and      when revenue and operating profit             Financial Highlights
on our investor relations website at                                                      were under extraordinary pressure due        (in millions except for per-share amounts)
                                             • encouraging our employees to donate
www.investors.ups.com. A summary of                                                       to recessionary conditions.
                                               time and money to ensure and
2009 financial performance compared
                                               enhance the economic health of             INTEGRATED NETWORK WITH GLOBAL                                                        2009            2008
to 2008 is provided on this page. This
                                               their communities.                         REACH AND SCALE.                             Revenue                             US$45,297       US$51,486
section of this Report complements that
                                                                                          We believe that our integrated global
information with additional commentary       In 2009, we delivered an average of                                                       Operating expenses                      41,496          46,104
                                                                                          ground and air network is the most
on the economic sustainability of our        more than 15 million packages a day,
                                                                                          extensive in the industry. Our network       Net income                               2,152           3,003
business and how that contributes to         connecting the participants in a global
                                                                                          handles all levels of service (express,      Adjusted net income*                     2,316           3,578
the larger economic system in which we       marketplace that includes everything
                                                                                          ground, domestic, international,
operate. As the world’s largest package      from rural sole proprietors to multina-                                                   Diluted earnings                             2.14         2.94
                                                                                          commercial, residential) through one
delivery company, we have employ-            tional corporations. We believe that                                                      per share
                                                                                          integrated pickup and delivery service
ees traveling the streets, highways          the economic benefits we generate are
                                                                                          system. This business model eliminates       Adjusted diluted                             2.31           3.5
and cities of more than 200 countries        inter-dependent, and we operate our                                                       earnings per share*
                                                                                          redundancies and enables us to use all
and territories on a nearly daily basis.     business from that perspective. This
                                                                                          assets more efficiently while reducing        Dividends declared                           1.80         1.80
This perspective gives us an unusually       management approach to the market-
                                                                                          our carbon intensity. This in turn enables   per share*
comprehensive and detailed view of the       place in turn has strongly influenced
                                                                                          our customers to choose services with        Assets                                  31,883          31,879
global marketplace and our role within it.   the development of our company and
                                                                                          the right balance of cost, speed and
                                             its economic sustainability. Key aspects                                                  Long-term debt                           8,668           7,797
                                                                                          carbon impact for meeting their own
                                             of our management approach are
Management Approach                          described in the following paragraphs.
                                                                                          market challenges.                           Shareowners’ equity                      7,696           6,780

                                                                                          TECHNOLOGY LEADERSHIP.                       Capital expenditures                     1,602           2,636
UPS seeks to have a positive effect on                                                    We are an industry pioneer in develop-       Cash and marketable                      2,100           1,049
economic vitality in the communities         FINANCIAL STRENGTH.                          ing technology that simultaneously           securities
and countries where we operate, by           We keep our balance sheet strong and         improves our logistical performance
                                             we use conservative financial projec-         and increases our ability to help custom-
• serving our customers effectively,
                                             tions in our planning. Combined with                                                      * For an explanation of adjustments affecting results, see page 23-24
                                                                                          ers meet their shipping needs. One of
• compensating our workers fairly,                                                                                                       of the UPS 2009 Annual Report at investors.ups.com.
                                             disciplined cash management, these           our particular strengths is in information
• paying applicable taxes,                   attributes have enabled us to increase       technology. For example, we operate
                                             or maintain our dividend for 40 years.       one of the largest private databases
• distributing profits to our shareholders
                                             Financial support for The UPS Founda-        in the world as measured by data
  in the form of dividends,
                                             tion, our philanthropic arm, comes           volume, and we use it extensively to
                                             entirely from the profits we earn in our      improve customer service, increase our
Marketplace—Management Approach – Additional Contextual Information                                                                                                                 2009 UPS CSR | 30


        To read related highlights, visit page 9




efficiency and anticipate both risks and            paid full-time and part-time employees      for small and diverse businesses. While    and growth plans. To conserve our cash
opportunities for our business.                    US$25.6 billion in wages and benefits.       such businesses make up a majority of      we took a number of steps. We froze
                                                   While our global compensation and           the world’s importers and exporters,       hiring and compensation increases for
DISTINCTIVE CULTURE.
                                                   benefit programs vary based upon the         many of them operate in areas where        management during the year, reduced
We believe that the dedication of our
                                                   competitive market and local regulation,    entrepreneurs may not have easy access     our workforce through retirements and
employees—and the enduring positive
                                                   our broad performance goal is to com-       to a wide range of financial and trans-     attrition; slowed our stock repurchase
reputation they have earned with
                                                   pensate our workers well so that they       port options.                              program, and reduced our capital
customers—results in large part from our
                                                   will view UPS as an employer of choice.                                                expenditure budget. We also suspended
distinctive “employee-owner” concept.                                                          UPS spent more than US$1.6 billion
                                                   (Further information on this topic is                                                  the UPS contribution to the employee
Our employee stock ownership tradition                                                         with small and diverse businesses in
                                                   provided in “Workplace – Goals and Per-                                                401(k) matching program. The UPS
began in 1927, when our founders                                                               2009. The UPS Store® (with more than
                                                   formance” on page 55.) Our investment                                                  Foundation reduced its total grant-
first offered stock to employees. Today,                                                        4,700 locations around the world) is a
                                                   in UPS employees generally includes                                                    making to US$43.6 million from US$46.9
more than 43 percent of UPS employees                                                          franchise opportunity for small business
                                                   competitive wages and salaries, health                                                 million in 2008, a decline of 7%. For
own UPS stock. This promotes a partner-                                                        entrepreneurs. Our financing subsidiary,
                                                   care, savings plans and incentive                                                      comparison, operating profit for UPS
ship mentality within the company                                                              UPS Capital®, helps small and diverse
                                                   programs. Good jobs and competitive                                                    (the source of funding for the Founda-
that we believe motivates our employees                                                        businesses finance trade and get access
                                                   compensation packages help make our                                                    tion) declined 36% from the 2008 level.
to serve customers effectively and                                                             to government-backed loan programs.
                                                   employees a positive economic force
succeed competitively. To facilitate                                                           The UPS Foundation has pledged more        Because we have been in business
                                                   throughout the world.
employee stock ownership, we maintain                                                          than US$1 million to microlending          more than 100 years, we have signifi-
several stock-based compensation                   DIVIDENDS.                                  organizations operating around the         cant management experience in dealing
programs. Much more information on                 In 2009, UPS distributed US$1.75            world and makes grants to organiza-        with economic cycles, including the
workplace and culture at UPS is pro-               billion in dividends to UPS shareholders,   tions promoting economic literacy and      importance of planning ahead for the
vided in “Workplace” on page 55.                   including approximately 94,000 UPS          the social and economic development        opportunities we will encounter when
                                                   employees globally.                         of young women. In many countries          the business cycle turns positive.
Performance                                        TAXES.
                                                                                               around the world, female entrepre-         In fact, our international expansion
                                                                                               neurship represents an increasingly        strategy was a primary reason for our
                                                   The taxes that UPS pays to local and
                                                                                               important engine of economic develop-      strong financial performance in the last
Our performance in contributing to the             national governments around the world
                                                                                               ment. In addition, our 62,000 points of    quarter of our fiscal year. We gained
wider economic system includes a num-              help fund schools, community infra-
                                                                                               retail presence around the world provide   this momentum in part by opening
ber of components. Below we highlight              structure, and services. In 2009, UPS
                                                                                               small and diverse businesses with local,   major new operations centers in China
the compensation we pay our workers;               paid more than US$2.6 billion in taxes
                                                                                               one-stop access to our global network,     and Canada in 2009. We also expanded
the dividends we pay our shareholders;             worldwide.
                                                                                               including the products, services, and      our presence in other countries via
the taxes and fees we pay to govern-               SUPPORT FOR SMALL AND DIVERSE               tools they need.                           acquisitions and a joint venture agree-
ments around the world; and our                    BUSINESSES.                                                                            ment. We believe that our international
support for small and diverse business             UPS has an indirect economic impact on
development around the world.                      its markets by making it easier for small
                                                                                               Additional Contextual                      operations will continue to present
                                                                                                                                          substantial economic opportunities for
COMPENSATION.                                      and diverse businesses everywhere to        Information                                UPS, its employees and shareholders
UPS is one of the world’s largest private          participate in the global economy. We                                                  in the years ahead.
employers. Our global workforce of                 achieve this result by providing local      Much of the global economy was in
approximately 408,000 people includes              businesses with three vital resources:      a recession or dealing with its conse-
more than 68,000 people located                    procurement contracts, finance, and          quences in 2009. This had a negative
outside the United States. In 2009, we             logistics. This is particularly important   impact on our revenue, operating profit
Environment—Management Approach – Energy and Emissions: Our Decarbonization Synergy                                                                                                                    2009 UPS CSR | 31




Environment
To read related highlights,
visit pages 7, 11 and 17




Management Approach                         ability “firsts” for UPS in our industry    • U.S. Environmental Protection Agency       in a way that make each one stronger        haul trucking. This in turn enables us
                                            (see timeline on page 11).                   (EPA)                                      and more effective than it would be         to operate our modal shifting strategy
                                                                                                                                    on its own. These strategies (described     (described below) at a high level, with
DECISION GREEN                              Our management approach to the             • World Resources Institute (WRI)
                                                                                                                                    in detail later in this section) focus on   each mode of transport used in the opti-
Our overall management approach to          environment includes an Environmental
                                                                                       • Business for Social Responsibility (BSR)   modal shifting, network efficiencies, air    mum way. We also invested in advanced
the environment is to make sustain-         Policy Statement and a set of Envi-
                                                                                       • World Economic Forum (WEF)                 and ground fleet efficiencies, integra-       IT and measurement capabilities, which
able business decisions regarding all       ronmental Guidance Statements that
                                                                                                                                    tion of technological and human factors,    is now creating synergies in many differ-
the resources we use (fuel, energy,         specify how the policy is to be imple-     • Air Transport Association of America
                                                                                                                                    management of Scope 3 emissions, and        ent areas. For example, we can precisely
water, and materials), including careful    mented. These Statements are included        (ATA)
                                                                                                                                    more. A simple yet powerful example         measure when and why our vehicles
management and mitigation of their          below in “Training and Awareness” on
                                                                                       More information on these                    of decarbonization synergy at UPS is        need conditional maintenance, so we
by-products (emissions, effluents, and       page 53.
                                                                                       engagements is provided earlier              our ability to handle all categories of     can keep their fuel efficiency high at a
waste) while maintaining or exceed-         COMPREHENSIVE MEASUREMENT AND              in “Profile” on page 26.                      service (express, ground, domestic,         lower cost. These are just a few of the
ing compliance with all applicable          REPORTING CAPABILITIES.                                                                 international, commercial and residen-      many examples of sustainable carbon
environmental laws and regulations and                                                 The UPS Foundation awarded more than
                                            Our ability to make pioneering,                                                         tial) through one integrated pickup and     avoidance we have achieved by gaining
protecting biodiversity in delivering our                                              $2.9 million in grants for environmental
                                            capital-intensive, far-reaching busi-                                                   delivery service system. For comparison,    control of a broad range of environmen-
products and services.                                                                 initiatives around the world in 2009.
                                            ness decisions on environmental                                                         many of our competitors employ paral-       tal performance factors and managing
                                                                                       Major recipients of the grants included
We are particularly focused on the          sustainability stems directly from our                                                  lel service networks in their operating     them in a synergistic way. Looking
                                                                                       WRI, The Nature Conservancy, Earth
environmental performance of our            increasing ability to measure and report                                                regions to handle different categories of   ahead, we believe that decarbonization
                                                                                       Day Network, the National Council
energy-intensive business assets,           the relevant variables accurately and                                                   services. By eliminating this redundancy    synergy will enable us to incorporate
                                                                                       for Science and the Environment, the
particularly our ground and air fleets.      extensively. For example, we are one of                                                 throughout our global logistics network,    emerging, environmentally friendly fuels
                                                                                       National Park Foundation, Keep America
Our carbon reduction strategy regarding     the first companies in our sector to com-                                                we are able to use all assets more effi-     and technologies into our network in
                                                                                       Beautiful, and the National Arbor Day
all fuel use and emissions is presented     prehensively report Scope 3 emissions                                                   ciently and achieve far greater carbon      a way that benefits both our economic
                                                                                       Foundation.
in “Energy and Emissions” beginning on      (see page 32). We continue to advance                                                   avoidance.                                  and environmental bottom lines.
this page.                                  our ability to capture and analyze

We have long worked to gain major
                                            emissions and fuel-use data, such as by    Energy and Emissions:                        Because we proactively manage so
                                                                                                                                    many of the technical, logistical and
                                                                                                                                                                                It would be impossible in this Report
                                                                                                                                                                                to detail every aspect of decarboniza-
                                            working with new business units and
reductions in emissions and fuel
                                            outside vendors to increase their under-
                                                                                       Our Decarbonization                          behavioral factors that are essential to    tion synergy at UPS, because it extends
consumption, such as through early                                                                                                  environmental performance, we can           so thoroughly into every corner of
development and adoption of new
                                            standing of our data requirements.         Synergy                                      make decisions on multiple factors that     our operations. Below, we highlight a
technologies, while continually making      ENGAGEMENT WITH CLIMATE ISSUES                                                          increase energy and emissions effi-          number of key carbon reduction factors
incremental performance improvements        AND ORGANIZATIONS.                         At UPS, we recognize our management          ciency more than any one factor could       that we measure, manage and mitigate
in our entire logistics network in the      UPS is engaged with numerous orga-         approach for avoiding energy use and         alone. For example, we made decisions       as part of our overall carbon reduction
near term. This management approach         nizations that address climate change      emissions as “decarbonization synergy.”      in the past to own our own airline and      strategy. We have selected these factors
has resulted in a long legacy of sustain-   and other environmental issues. These      This means we simultaneously pursue          a large fleet of delivery vehicles, and      for illustration in part because they
                                            include, but are not limited to:           multiple strategies for carbon avoidance,    to build up our capabilities in long-       differentiate UPS and in part because
Environment—Energy and Emissions: Our Decarbonization Synergy Strategy                                                                                                                                                2009 UPS CSR | 32


        To read related highlights, visit pages 7, 11 and 17




they take place “behind the scenes.” We           services—domestic and international,          we devote so many KPIs to air fleet              important that UPS and other compa-           potential of our capital investments
believe our customers and communities             parcels and documents, express and            efficiencies. Measuring, managing and            nies invest in ways to use alternative        to also benefit the environment.
should be more aware of how careful               ground—in one vehicle with one driver:        mitigating the environmental impact of          fuels and technologies, even if it does
                                                                                                                                                                                              MANAGEMENT OF SCOPE 3
management of these particular factors            we fully utilize every mile traveled          air transport is critical to overall carbon     not make economic sense today for
                                                                                                                                                                                              EMISSIONS.
results in avoidance of fuel use and              by every mode of transport we use.            impact—just as transparent reporting on         extensive deployment. This is why we
                                                                                                                                                                                              All major companies in our industry
emissions in the transport and logistics          Furthermore, we measure and manage            these activities is critical to a full under-   have already formulated principles (see
                                                                                                                                                                                              have and exercise the option to hire
industry.                                         the performance of our drivers and their      standing of environmental responsibility        page 33) for adopting bio-fuels more
                                                                                                                                                                                              outside contractors to conduct portions
                                                  vehicles using telematics (see page           in our industry.                                widely in our operations: we intend to
FLEXIBLE, INTEGRATED USE                                                                                                                                                                      of their business. This includes the
                                                  41), which helps us minimize the miles                                                        adopt lower-emission fuels as rapidly as
OF ALL TRANSPORT MODES.                                                                         GROUND FLEET EFFICIENCIES.                                                                    use of commercial air cargo services,
                                                  we drive, the fuel we consume and the                                                         possible consistent with our commit-
The various transport modes used in our                                                         Carbon reduction in ground transport                                                          railroads and ocean-going shipping lines
                                                  emissions we create on every trip, every                                                      ments to all our stakeholders, including
sector have different energy intensities                                                        depends on two factors: mastering fuel                                                        as well as contractors for small-package
                                                  day, all over the world. Our entire global                                                    customers and investors. As noted above
(energy required per unit of volume                                                             efficiency for every type of vehicle                                                           and freight forwarding operations. The
                                                  network is designed and managed with                                                          in “Carbon Avoidance Through Modal
transported). Aircraft have by far the                                                          used, and multiplying that mastery over                                                       emissions from these contractors are
                                                  the same philosophy. Our sorting facili-                                                      Shifting,” we have developed advanced
highest energy intensity, well above                                                            as many vehicles as possible. This is why                                                     known as “Scope 3” emissions. Some
                                                  ties and transport hubs are strategically                                                     capabilities for integrating rail transport
ground transport using trucks. In con-                                                          UPS has invested in ownership of more                                                         of our competitors, for example, report
                                                  placed and modally connected to major                                                         into our overall ground network, which
trast, the energy intensities of railroads                                                      than 101,000 vehicles around the world.                                                       that up to 75 percent of their emissions
                                                  population centers. Road, rail, air, and                                                      includes railroads along with tractor-
and ships, respectively, are well below                                                         We have spent decades developing the                                                          come from Scope 3 sources. At UPS,
                                                  shipping hubs are connected together                                                          trailors and package delivery vehicles.
that of ground transport. These varia-                                                          ability to maximize fuel efficiency for                                                        our long-term carbon reduction strategy
                                                  with one of the world’s largest private                                                       Our significant use of rail has a material
tions in energy intensity correspond to                                                         our vehicles as well as our drivers, and                                                      includes tight control of Scope 3 emis-
                                                  IT systems. On a daily basis, our load-                                                       impact on our ability to provide an
travel speed (higher speed results in                                                           owning our own vehicles enables us to                                                         sions, both by limiting our use of outside
                                                  optimized network moves goods for                                                             efficient ground network while achiev-
higher energy intensity). This is why UPS                                                       multiply these efficiency gains by tens                                                        contractors and transport services, and
                                                  our customers at a level of efficiency                                                         ing significant carbon avoidance.
has focused for decades on using the                                                            of thousands of vehicles, every business                                                      by encouraging such contractors and
                                                  they cannot otherwise achieve by
most fuel-efficient transport mode or                                                            day. We believe this explains our excep-        FULL INTEGRATION OF TECHNOLOGY                services to reduce their carbon impact.
                                                  themselves—which in turn dramatically
combination of modes to meet service                                                            tional performance in the EPA SmartWay          AND HUMAN FACTORS.                            (A complete description of UPS Scope 3
                                                  reduces the total carbon emitted for all
requirements—and on being able to                                                               program for the U.S. ground transporta-         Whether it involves pilots and aircraft,      emissions is provided in “Report Scope
                                                  our customers.
fluidly shift modes in real time to reduce                                                       tion industry (described on page 39), as        drivers and delivery vehicles or loaders      and Boundary” on page 36.)
energy intensity whenever possible.               AIR FLEET EFFICIENCIES.                       well as the 10% aggregate improvement           and route planning software, UPS strives
                                                                                                                                                                                              The prevalence of indirect emissions in
In 2009, our modal shifting expertise             Our management approach to air fleet           in miles per gallon (MPG) of the delivery       to fully integrate human behavior with
                                                                                                                                                                                              our industry has two consequences for
enabled us to avoid 1.6 million metric            efficiency includes a long-term strategy       vehicles in our U.S. Domestic Package           logistics and technologies. For example,
                                                                                                                                                                                              environmental impact. First, as noted
tonnes of emissions by shifting delivery          of investing in a comparatively young,        segment from 2000 through 2009.                 our airline emissions may result from
                                                                                                                                                                                              above, companies that own a higher
volume from air to ground, and we                 quiet and fuel-efficient air fleet that                                                         the engines on our jet planes, but win-
                                                                                                Alternative fuel/technology vehicles                                                          percentage of their network fleets have
avoided another 840,500 metric tonnes             is inherently more environmentally                                                            ning regulatory approval for our pilots
                                                                                                offer increases in energy efficiency,                                                          greater control of their overall fuel and
of emissions by shifting volume from              friendly than competitors’ fleets that still                                                   to fly the planes more efficiently is
                                                                                                though the economic investment                                                                emissions efficiency and options for
ground to rail—all while keeping our              contain older aircraft such as Boeing                                                         vitally important to reducing emissions
                                                                                                required to realize those efficiencies                                                         improving them. Second, companies
service commitments to customers.                 727s. Because air transport is more                                                           from their engines. We believe that
                                                                                                remains high. At UPS, we therefore                                                            that use contractors extensively bear the
                                                  energy intensive than other modes, it                                                         integration of technological factors and
NETWORK EFFICIENCIES.                                                                           look at alternative-technology vehicles                                                       responsibility for measuring, manag-
                                                  usually contributes the largest portion                                                       human factors is a critically important
Another fundamental way to reduce                                                               holistically, considering more than                                                           ing and mitigating the environmental
                                                  of a company’s carbon footprint. At UPS,                                                      capability for reducing energy use
energy and emissions is to optimize the                                                         their cost and miles per gallon. There                                                        performance of the contractors they
                                                  for example, our airline accounted for                                                        and emissions, because it simultane-
load of every truck, plane, ship or railcar                                                     is a finite amount of petroleum-based                                                          use—and for reporting their emissions
                                                  53% of our enterprise carbon inventory                                                        ous empowers people and unlocks the
used. This is why UPS fulfills so many                                                           fuel available from our planet, so it is                                                      accurately and transparently.
                                                  in both 2008 and 2009. This is why
Environment—Goals and Performance: Our Decarbonization Synergy Strategy – Biodiversity                                                                                                          2009 UPS CSR | 33


      To read related highlights, visit pages 7, 11 and 17




                                                                                 TRANSPARENCY AND                             Effluents and Waste                         Materials
 Where We Stand On Bio-Fuels                                                     THIRD-PARTY VERIFICATION.
                                                                                 At UPS, we believe that full transpar-       Our management approach to effluents
                                                                                                                              and waste is to reduce, re-use and         Our management approach to materials
                                                                                 ency and third-party assurance of
 There is considerable controversy in society regarding the environmental                                                                                                has two primary components:
                                                                                 emissions reporting should not be            recycle. At a minimum, our approach is
 trade-offs of bio-fuels compared to conventional fossil fuels, and even in
                                                                                 treated solely as compliance or public       to comply with all applicable laws and     • increasing our use of green procure-
 how to appropriately measure their environmental benefits. For example,
                                                                                 policy. They are drivers of carbon reduc-    regulations. In many cases, we exceed        ment policies and practices that
 some environmental organizations favor the “life-cycle analysis” method of
                                                                                 tion strategies, because companies that      this standard of performance. Informa-       encourage our suppliers to use recy-
 evaluating bio-diesel fuel, which takes into account carbon dioxide seques-
                                                                                 are the most open to accurate outside        tion on our goals and performance is         clable materials and packaging, and
 tered in the process of growing the plants for the fuel. This method results
                                                                                 assessment of their performance are          provided below, on page 47.
 in a significantly better environmental performance for bio-diesel compared                                                                                              • increasing development of
                                                                                 the most likely to strive for sustainable,
 to conventional diesel fuel. In contrast, other climate protection organi-                                                                                                environmentally responsible packaging
 zations focus on tail-pipe emissions, which do not reflect the life-cycle
                                                                                 credible, holistic carbon reduction and      Water                                        solutions for our customers.
                                                                                 avoidance. Conversely, companies that
 benefits of bio-fuels. We are engaged in this societal dialog at multiple
                                                                                 resist full transparency and third-party
 levels, and are involved with other air transport companies in supporting
                                                                                 assurance are less accountable to soci-
                                                                                                                              Our management approach to water
                                                                                                                                                                         Biodiversity
 the development of jet engine bio-fuels, because we believe bio-fuels are                                                    is one of conservation in our facilities
                                                                                 ety for their emissions performance and      and operations. Information on our
 important to the long-term environmental health of our company and our
                                                                                 therefore have less incentive to pursue                                                 In general, biodiversity is not an issue
 planet. We also have formulated a set of principles for more widespread                                                      goals and performance is provided
                                                                                 carbon reduction strategies.                                                            of high materiality for UPS. Our manage-
 use of bio-fuels at UPS in the future. According to these principles, we look                                                below, on page 49.
                                                                                                                                                                         ment approach to biodiversity primarily
 forward to a time when bio-fuels:
  – are produced in an environmentally and socially responsible manner.
                                                                                 Products and Services                        Compliance
                                                                                                                                                                         concerns the location and management
                                                                                                                                                                         of our facilities and preventing trans-
  – meet or exceed existing fuel performance standards.                                                                                                                  portation of invasive species. We set
                                                                                 Our management approach to reducing          Our management approach to compli-         the criteria for our site selection, land
  – are compatible with available engine technology.                             the environmental impact of our              ance is to observe and comply with         purchases, and related facilities deci-
                                                                                 products and services is primarily to        all applicable laws and regulations in
  – work in real-world operating conditions.                                                                                                                             sions to prevent negative impacts on
                                                                                 increase our own operating efficiency.        all jurisdictions where we operate. In     biodiversity, and we cooperate with
  – are economically viable.                                                     Our most basic service is to reduce the      practice, we also exceed existing legal    governmental authorities in efforts to
  – are available in robust fuel supply chains.                                  climate impact of our customers’             and regulatory standards in many           prevent inadvertent transportation of
                                                                                 shipments by aggregating them into a         cases. Relevant policies and programs
  – surpass the environmental performance of conventional fuels.                                                                                                         invasive species.
                                                                                 highly efficient logistics network. We        are explained in “Policy” beginning
                                                                                 leverage that network to create and          on page 51.
                                                                                 offer a growing range of green products
                                                                                 and services, such as our carbon
                                                                                 neutral shipping options. Information on
                                                                                 our goals and performance is provided
                                                                                 below, on page 45.
Environment—Climate Change Statement                                                                                                                                                                 2009 UPS CSR | 34




 Climate Change Statement

 As a global transportation company, UPS acknowledges
 that greenhouse gas emissions impact the climate and
 pose a serious challenge to the environment—and ultimately
 the global economy. It is the responsibility of all segments
 of society to improve energy efficiency and to reduce carbon
 emissions in the atmosphere.

 UPS prides itself on its current, numerous sus-      Our plan includes:                                  Specific ongoing programs yielding both opera-         In closing, we will be part of the solution to
 tainability initiatives, and being a responsible                                                         tional and environmental results are:                 discover more opportunities for improvement
                                                      • Transportation network optimization to minimize
 corporate citizen. Our long-term strategy is to                                                                                                                with our industry partners and other thought
                                                        the miles driven/flown.                            • Alternative fuel/technology fleet deployment.
 optimize the processes that consume non-                                                                                                                       leaders. It will take determination and
 renewable resources. We also recognize that UPS      • Investments in fuel-saving technologies to        • Fuel and energy conservation programs.              collaboration with government, commercial,
 is a critical component of our customers’ supply       reduce our dependency on fossil-based fuels.                                                            and non-government organizations to create a
                                                                                                          • Airline initiatives on the ground and in the air.
 chains, and that we have an obligation to help       • Energy conservation via facility design,                                                                sustainable transportation infrastructure that
                                                                                                          • Shipment consolidation.                             will minimize environmental impact. Climate
 them operate in a more environmentally sustain-        operational practices, renewable energy, and
 able way.                                              retrofitting.                                      • Employee engagement programs.                       change is a critical issue that affects the future
                                                                                                                                                                viability and prosperity of our world.
 We continue to review all aspects of our business,   All these measures include both ongoing and         • We will continue to improve our operating
 including: systems, procedures, equipment, and       new initiatives for the entire enterprise. We         efficiency, which is one of the most significant
 operating processes. These efforts are being         utilize technology-enabled, behavior-based, and       ways we reduce our energy and fuel use.
 developed in tandem with our plans for growth        engineering-based approaches to address our           These actions are just a partial list of our
 and profitability.                                                                                          efforts to reduce our greenhouse gas emissions      D. Scott Davis
                                                      environmental footprint.
                                                                                                            and our dependency on fossil fuel. We report        Chairman and CEO
                                                                                                            our progress annually in our sustainability
                                                                                                            report. Additional information is on our
                                                                                                            responsibility website (ups.com/responsibility).
Environment—Goals and Performance: Reporting Scope and Boundaries                                                                                                                                                2009 UPS CSR | 35


        To read related highlights, visit pages 7, 11 and 17




Goals and                                         Reporting Scope and                            ticated analytic techniques and factors
                                                                                                 to develop reportable information from       2009 Global Enterprise CO2e by Business Segment (million metric tonnes)
                                                  Boundaries
Performance
                                                                                                 secondary data where necessary. We
                                                                                                 are aided in this last effort by our par-
                                                                                                 ticipation in numerous organizations,
                                                                                                                                              UPS publishes scope 1 and 2
                                                  UPS is a global company operating in
                                                  over 200 countries and territories. Our        programs and protocols, notably U.S.         global CO2e for the first time.
                                                  three reportable business segments are         EPA (Climate Leaders), World Resource
Overview                                          U.S. Domestic Package, International           Institute (Greenhouse Gas Protocol)
                                                                                                                                                                                                  Global
                                                  Package, and Supply Chain and Freight.         and Business for Social Responsibility                         U.S. Package   Int’l Package                        Total
                                                                                                                                                                                               Supply Chain
UPS evaluates and manages environ-                Supply Chain and Freight solutions             (Clean Cargo Working Group).                                    Operations     Operations
                                                                                                                                                                                                and Freight
                                                                                                                                                                                                                  Enterprise

mental performance using a broad range            include freight forwarding, customs           • For many organizations, Scope 3 emis-
                                                                                                                                                  Scope 1 & 2
of metrics. Most of these correspond to           brokerage, fulfillment, returns, financial        sions have the greatest uncertainty due                          7.27           3.78             1.31            12.36
                                                                                                                                                     CO2e
GRI performance indicators. We have               transactions, repairs and less-than-            to the complexities associated with third
designated a number of our environ-               truckload transportation services.              party relationships. Part of our progress         Scope 3
                                                                                                                                                      CO2
                                                                                                                                                                   .50            1.27             5.52             7.29
mental metrics as Key Performance                 REPORTING ON GREENHOUSE GAS                     with Scope 3 emission reporting in 2009
Indicators (KPIs) in recognition of               EMISSIONS.                                      was identifying three types of emissions
their long-term value to UPS and our              Our reporting on greenhouse gas                 source areas where we believe it will                           TOTAL CO2e and CO2                               19.65
stakeholders. These KPIs are presented            emissions includes scope 1, 2 and 3             be possible to make further advances in
in the pages that follow. In many cases,          emissions for all three segments based          data collection and analysis:
we provide global, comprehensive data             on operational control. Notable emis-          – areas of our operations where we
as well as detailed breakouts for our             sions reporting issues for this Report                                                      2009 Total Scope 1 and 2 CO2e Emissions by Source—Global Enterprise
                                                                                                   already intend to gather more com-
largest reportable business segment               include the following:                                                                      (metric tonnes)
                                                                                                   plete data; examples include the use
(U.S. Domestic Package) and our largest
                                                  • We provide information on global CO2e          of outside service partners to pick
emissions source (UPS Airlines).
                                                    emissions for Scope 1 and 2 emissions          up and deliver small packages in                                                                                      Metric
In 2003, we began publishing a carbon               for the first time. These C02e emissions        South America and Asia, and the                                                      Mobile                           Tonnes
inventory for the U.S., beginning with              include CO2, CH4, N2O and HFCs. In             use of third-party contractors in our                                                Jet-A           52.8%         6,524,948
data for 2002. In 2009, we began                    previous years, we reported only on            non-U.S. supply chain operations.                                                    Diesel             33%        4,071,137
reporting a carbon inventory that                                                                                                                                                       Gasoline          4.3%          534,311
                                                    CO2 emissions.                               – areas of our operations where we
included both our international and                                                                                                                                                     Propane           0.3%           32,559
                                                  • We made significant progress in 2009            know there is a carbon impact                                                        CNG               0.1%           12,027
domestic inventory, beginning with data
                                                    with Scope 3 emissions reporting (CO2          but we are not certain whether                                                       LNG            0.002%               269
for 2007 and 2008. This Report includes
                                                    only), which is the most challenging           current data gathering activities                                                    LPG            0.001%                71
a more comprehensive overview and
                                                    area of carbon inventory reporting. In         are capturing it. Examples include                                                   Subtotal          90%         11,175,322
improved data quality for our 2009
                                                    particular, we put considerable effort         the ground movement of packages/
global inventory, and we continue to
                                                    into completing a process map of all           freight from ocean ports and rail-
improve our processes for measuring                                                                                                                                                     Stationary
                                                    transport activities that generate car-        heads to UPS/customer facilities.                                                    Electricity       7.5%          924,259
and reporting on Scope 1, 2 and 3 emis-
                                                    bon for our entire global enterprise. Our    – aspects of our operations where                                                      Natural Gas         2%          242,531
sions in the future. This in turn improves
                                                    progress stems from extensive work to          we are not yet aware of a carbon                                                     Propane           0.1%            8,045
our ability to set meaningful goals that
                                                    understand our emissions sources com-                                                                                               Heating Oil       0.3%            4,248
challenge us as well as other companies.                                                           impact and therefore may not
                                                    prehensively, capture primary data to          be measuring it.                                                                     Subtotal          10%          1,179,083
                                                    the extent possible, and apply sophis-
Environment—Worldwide Carbon Scope and Boundary                                                                                                                                                                  2009 UPS CSR | 36



 Worldwide Carbon Scope and Boundary—90% Mobile and 10% Stationary Sources

 Emissions sources from U.S.                             • packages picked up, moved and delivered on the         Scope 3 emission sources for the International            largest operations facilities, and we expect to
                                                           ground by third parties (including tractor-trailers,   Package segment include emissions associated              continue improving our data collection.
 Domestic Package segment.                                 railroads, last-mile delivery by the U.S. Postal       with:                                                    • Fugitive HFC emissions from facility and vehicle
                                                           Service, and contract delivery service in Alaska).     • Employee business travel.                                air conditioning units.
 Our largest business segment is U.S. Domestic                                                                                                                             Scope 2 emission sources for the Supply Chain
                                                                                                                  • Packages moved by third parties via chartered
 Package, which includes all small package deliv-        Emissions sources from                                     aircraft, leased jet aircraft, commercial airlines,    and Freight segment include electricity usage
 ery services in the U.S. This segment accounted
 for 62% of our revenues in 2009. For this               International Package segment.                             or the air services of other small package deliv-      for facilities we own or lease. We estimate that
                                                                                                                    ery companies.                                         these sources in total represent only 1.3 percent
 segment, Scope 1 emissions sources include:                                                                                                                               of global Scope 1 and 2 emissions for UPS. Of this
                                                         Our next largest business segment is International       • Packages picked up, moved and delivered on
 • All jet fuel used for UPS owned aircraft                                                                                                                                1.3%, we are capturing data for these sources
                                                         Package, which includes all package operations             the ground by third parties via tractor-trailers
   (U.S. flights).                                                                                                                                                          from over 90% of our owned facilities, and
                                                         outside of the U.S. This segment accounted for             or the ground services of other small package
 • All ground fuels (diesel, gasoline, propane,                                                                                                                            approximately 60% of our leased facilities in the
                                                         21% of our revenues in 2009. For this segment,             delivery companies (estimated for Europe and
   CNG, and LNG) used in UPS owned vehicles to                                                                                                                             U.S., including all our largest operations facilities.
                                                         Scope 1 emissions sources include:                         Asia-Pacific regions only).
   transport, pickup and deliver small packages.                                                                                                                           We are capturing data from these sources for
                                                         • All jet fuel used for UPS owned aircraft               • Packages transported on the ground or over
 • Natural gas, propane and heating oil for facili-                                                                                                                        approximately 35% of our owned and leased
                                                           (International flights).                                  water by third parties via railroads or ferries over
   ties we own or lease. We estimate that these                                                                                                                            facilities in all other countries outside of the
                                                         • Ground fuels (diesel, gasoline, CNG, propane             the UK Channel.
   sources in total represent only 1.6 percent of                                                                                                                          U.S., including all our largest operations facilities,
   global Scope 1 and 2 emissions for UPS. Of this         and LPG) used in vehicles we own to transport,                                                                  and we expect to continue improving our data
   1.6%, we are capturing data for over 90% of             pickup and delivery small package.                     Emissions sources from Supply                            collection.
   our owned facilities, and approximately 60%           • Ground fuels (gasoline) for company-owned cars         Chain and Freight segment.                               Scope 3 emission sources for Supply Chain and
   of our leased facilities, including all our largest     used by employees (Europe only).                                                                                Freight include emissions associated with:
   operations facilities, and we expect to continue      • Natural gas, propane and heating oil for facilities    Our Supply Chain and Freight segment accounted           • Employee business travel.
   improving our data collection.                          we own or lease. We estimate that these sources        for 17% of our revenues in 2009. Scope 1 emis-           • Mobile fuels for third-party pick-up, transport
 • Fugitive HFC emissions from facility and vehicle        in total represent only 0.3 percent of global          sions sources for this segment include:                    and delivery of freight for our UPS Freight Opera-
   air conditioning units.                                 Scope 1 and 2 emissions for UPS. Of this 0.3%,
                                                                                                                  • Ground fuels (diesel, gasoline) used in vehicles         tions in the U.S. via various modes of transport
 Scope 2 emission sources for U.S. Domestic                we are capturing data from these sources for
                                                                                                                    we own or lease to transport, pick up and deliver        which include tractor-trailers; railroads; agents
 Package include electricity usage for facilities we       approximately 40% of our owned and leased
                                                                                                                    freight or packages.                                     in the U.S for pickup and delivery of freight;
 own or lease. We estimate that these sources in           facilities, including all our largest operations
                                                                                                                  • Ground fuels (gasoline) for company-owned cars           ocean transport of freight, typically to Hawaii,
 total represent only 5.7% of global Scope 1 and 2         facilities, and we expect to continue improving
                                                                                                                    used by employees (U.S. and Canada only).                Puerto Rico and Alaska.
 emissions for UPS. Of this 5.7%, we are captur-           our data collection.
                                                                                                                  • Fuel (diesel) used in refrigerated trailers (U.S.      • Mobile fuels to transport, pick up and deliver
 ing data for over 90% of our owned facilities,          • Fugitive HFC emissions from facility and vehicle
                                                                                                                    freight operations only).                                freight/packages by other third parties for global
 and approximately 60% of our leased facilities,           air conditioning units.
                                                                                                                  • Natural gas, propane and heating oil for facilities      supply chain operations.
 including all our largest operations facilities,        Scope 2 emission sources for International Pack-
                                                                                                                    we own or lease. We estimate that these sources         – air transport (chartered aircraft, other small
 and we expect to continue improving our data            age include electricity usage for facilities we own
                                                                                                                    in total represent only 0.2% of global Scope 1            package delivery companies and commercial
 collection.                                             or lease. We estimate that these sources in total
                                                                                                                    and 2 emissions for UPS. We are capturing data            airlines).
 Scope 3 emission sources for U.S. Domestic              represent only 0.5 percent of global Scope 1 and
                                                                                                                    from these sources for over 90% of our owned            – Ground transport (estimated for the U.S. only)
 Package include emissions associated with:              2 emissions for UPS. Of this 0.5%, we are captur-
                                                                                                                    facilities, and approximately capturing 60% of            for pick up and delivery of freight/packages
 • employee business travel;                             ing data for these sources for approximately 40%
                                                                                                                    our leased facilities in the U.S., including all our      (tractor-trailers, other small package delivery
                                                         of our owned and leased facilities, including all
 • packages moved by third parties via small feeder                                                                 largest operations facilities. We are capturing           companies and courier services).
                                                         our largest operations facilities, and we expect to
   aircraft or leased jet aircraft; and                                                                             data from these sources for approximately 35%
                                                         continue improving our data collection.                                                                            – other transportation modes, such as ocean-
                                                                                                                    of our owned and leased facilities in all other
                                                                                                                    countries outside of the U.S., including all our          going ships.
Environment—Goals and Performance: Reporting Scope and Boundaries – Energy and Emissions                                                                                         2009 UPS CSR | 37


       To read related highlights, visit pages 7, 11 and 17




We restated our 2007 and 2008 Scope 1            disposal and recycling come from 1,551
inventory, which unintentionally under-          facilities (65%) in the United States        2009 Global Enterprise CO2 Emissions
reported fuel usage in the U.S. There            U.S. Domestic Package and Supply
are few instances of restatement, and            Chain and Freight segments that are
they are shown clearly in our graphs             managed through UPS’s corporate              Direct emissions down, indirect
and described in the accompanying
text. These voluntary restatements
                                                 vendor program.
                                                                                              emissions up—due to more
                                                 Hazardous waste disposal data for the
stem directly from the ongoing work
                                                 U.S. Domestic Package segment cover
                                                                                              comprehensive data collection
described above to increase the
                                                 100% of facilities that are required to
comprehensiveness and accuracy of                                                                                                                                       Total
                                                 dispose of hazardous waste according to
our reporting.
                                                 federal or state regulations. Hazardous
REPORTING ON WATER, EFFLUENTS                    waste disposal data for U.S. operations      2009                        12.3                             7.3          19.6
AND WASTE.                                       of UPS Freight cover more than 85%
Our reporting for water consumption,             of these facilities. UPS Supply Chain        2008                          13.5*               2.2                     15.7*
solid waste disposal, hazardous waste            and Freight operations generate very
disposal and recycling continues to              little hazardous waste and as a result,      2007                          13.5*               1.9                     15.4*
apply to our entire U.S. Domestic Pack-          the data represents less than 10% of
                                                                                              2006 N/A                                                                  N/A
age segment and to the U.S. operations           these facilities. We continue to work
of our Supply Chain and Freight segment          to move hazardous waste disposal for
only. UPS’s primary usage of water is            U.S. operations of the Supply Chain and
for vehicle washing, landscaping and             Freight segment to the corporate vendor             Scope 1 and 2
                                                                                                     Scope 3
domestic water usage. Water consump-             program, in order to enable centralized
tion data represents approximately               data capture.
60% of our total U.S. owned and leased                                                        Total CO2 emissions for the global enterprise includes both direct and indirect
                                                 REPORTING ON COMPLIANCE.                     emissions from all UPS business units globally which include: U.S. Small Package
facilities from all business units. The
                                                 Our reporting for spills and environmen-     Operations, International Small Package Operations and Global Supply Chain
remaining 40% of the facilities gener-
                                                 tal penalties is confined to the U.S. We      and Freight operations, see scope and boundary sections for detailed explanation
ate little water usage with the primary                                                       of emission sources.
                                                 will continue to improve data collection
usage being domestic water service.                                                           *These figures have been restated. See left.
                                                 and reporting for international opera-
We do not yet report this information for
                                                 tions in the future. Our overall policy of
our International Package segment or
                                                 environmental compliance applies to
international operations of the Supply
                                                 all our facilities and operations wherever
Chain and Freight segment, because we
                                                 we do business.
do not have systems in place to capture
the necessary data. This will continue to
be a challenge for UPS in coming years           Energy and Emissions
due to the extensive nature of our global
operations, the enormous number of               This section begins with a high-level
providers for waste services and water           snapshot of all our direct (Scope 1) and
utilities, and the financial investment           indirect (Scope 2 and 3) emissions by
required to acquire this data. The data          business segment, source, type and pro-
we report concerning solid waste                 portion (see chart on page 40). We then
Environment—Goals and Performance: Energy and Emissions                                                                                                                                                                  2009 UPS CSR | 38


       To read related highlights, visit pages 7, 11 and 17




present and discuss metrics for energy           Our ability to manage emissions is evi-
consumption and emissions, including             dent in the chart (on page 40) showing       KEY PERFORMANCE INDICATOR
numerous KPIs. Along with many of the            CO2e emissions. CO2e emissions (short        Scope 1 and 2 CO2 Emissions—Normalized, U.S. Package Operations
metrics, we also describe the relevant           for “CO2 equivalents”) is a metric that
management and mitigation efforts                includes all six global warming gases        Carbon reduction surpasses U.S. small package volume reduction.
that were briefly summarized above in             named in The Greenhouse Gas Protocol.
“Management Approach.”                           Because CO2 is by far the most promi-
                                                 nent of the six, the other five sources are
CONTROLLING CO2e EMISSIONS.
                                                 expressed in CO2 equivalents of global
Our direct (Scope 1) emissions declined
                                                 warming potential in order to create a
in 2009 compared to 2008, in part
because the recession reduced our
                                                 unified metric. While CO2e reporting is                                        2.23                          2.25
                                                 more data-and calculation-intensive                 2.09                                                                                2.18
delivery volume and package weight
                                                 than reporting on CO2 alone, it results in
and also changed our business mix.
                                                 a more detailed and actionable carbon
Our carbon avoidance strategies,
                                                 inventory.
particularly modal shifting (described
on page 32), also played an important            In our International Package segment,                                                                                                                              Metric tonnes
role in controlling emissions. Note that         business volume increased compared                   2006                      2007*                        2008*                       2009                       per 1,000 Packages
emissions for 2007 and 2008 are now              to 2008 but we reduced Scope 1
stated at a higher level than in our 2008        and 2 CO2 emissions by 11%. In our
                                                                                              Total normalized CO2 emissions for U.S. Package Operations includes scope 1 (direct) sources of CO2 emissions (gasoline, diesel, jet-A,
Report, due to our continued efforts to          largest and most mature segment, U.S.        compressed natural gas, propane, natural gas and heating oil) and scope 2 (indirect) sources of CO2 emissions from electricity.
gather more comprehensive energy and             Domestic Package, business volume            *These figures have been restated. See p.37.
emissions data even for past periods.            declined 3.5% but we recorded an even
These restatements mainly affect direct          larger decline year-over-year in Scope 1
emissions.                                       and 2 CO2e absolute emissions, of 6.2%.      KEY PERFORMANCE INDICATOR
                                                                                              Energy Consumption—Normalized, U.S. Package Operations
Indirect (Scope 2 and 3) emissions rose          REDUCING ENERGY CONSUMPTION.
compared to 2008, due primarily to               We achieved a similarly positive
capturing more raw Scope 3 data from             result in energy consumption for U.S.
more sources and continuing to                   Domestic Package Segment: absolute
improve our analytical processes for             consumption declined by an even
quantifying reportable emissions from            larger percentage than package volume
the data we captured. Gathering                  compared to 2008. We believe this is
the necessary data and performing the            due to our flexible, multi-faceted carbon
necessary calculations to formulate              reduction strategy described above,                         28.13                            30.04*                           30.40*                             29.33
meaningful emissions results in these            which enabled us to find decarboniza-
                                                                                                               2006                             2007                              2008                              2009
situations is extremely complex,                 tion synergies despite adverse economic
requiring analysis of more than 3 million        conditions. On an absolute basis, energy
lines of data. We continue to work               consumption for the segment in 2009
                                                                                                    Gigajoule per 1,000 Packages             Total normalized energy consumption for U.S. Package Operations includes direct sources
with all our sources of Scope 3                  was lower than in each of the previous                                                      of energy (gasoline, diesel, jet-A,compressed natural gas, propane, natural gas and heating
emissions to improve our data collection         four years. The energy consumption                                                          oil) and indirect sources of energy from electricity.
and reporting.                                   profile by type for U.S. Domestic Pack-                                                      *These numbers have been restated. See p.37.
Environment—Goals and Performance: Energy and Emissions                                                                                                                                                                  2009 UPS CSR | 39


        To read related highlights, visit pages 7, 11 and 17




age Segment remained stable compared              aggregate improvement in miles per          2001. The technology helps us achieve
to 2008.                                          gallon (MPG) for the delivery vehicles      this by optimizing the processes of:          KEY PERFORMANCE INDICATOR
                                                  in our U.S. Domestic Package segment                                                      Gallons of Fuel per Ground Package—U.S. Package Operations
INCREASED EFFICIENCY WITH ENERGY                                                              • Allocating our pick-ups and deliveries
                                                  over the decade that began in the year
AND EMISSIONS.                                                                                  to the most efficient number of vehicles
UPS tracks normalized energy consump-
                                                  2000. The strategies and methods
                                                                                                each day at each facility, thus keeping     Ground network fuel efficiency
                                                  behind this success include our package
tion and emissions in order to compare
the results of our management and
                                                  routing technology and growing use of
                                                                                                vehicles off the road wherever possible.
                                                                                                                                            improves by 4.7% from 2008.
                                                  telematics, both of which leverage our      • Loading vehicles most efficiently for
mitigation efforts with operating results:
                                                  extensive investments and expertise in        the order of delivery, so that routes and
package volume and business revenue.
                                                  information technology as well as our         miles driven can be kept to a minimum.
In other words, normalized measure-
                                                  commitment to driver training. Telemat-     • Routing vehicles so that they reach
ments show our energy and emissions
                                                  ics is described in detail on page 41.        all required destinations in the least
efficiency in running our business. In
contrast, an absolute measurement                 We believe our long-term, continuous          amount of time and miles driven.
                                                                                                                                               0.120               0.127                0.127              0.121
shows total energy consumption or                 focus on increasing ground network effi-     • Selecting route options that minimize
emissions without regard for how much             ciency is a significant competitive and        idling time spent waiting for lights
business we were able to conduct at               environmental advantage, based in part        and turns, thus reducing fuel use and            2006               2007*                2008*               2009
that level of energy consumption or               on external recognition for our results.      emissions even if miles driven remain
emissions generation.                             One example is our Shipper Index Factor       the same
                                                  (SIF) as calculated by the EPA SmartWay
In 2009, energy efficiency and emis-                                                           • Identifying stopping locations that         Fuel consumption (US) includes gasoline, diesel, compressed natural
                                                  program mentioned above. A SmartWay
sions efficiency for our largest business                                                        enable multiple deliveries.                 gas, liquid natural gas, fuel for rail services and fuel for small package
                                                  SIF of 1.25 is considered outstanding.
segment, U.S. Domestic Package, both                                                                                                        contract carriers including the USPS Divided by total U.S. ground
                                                  Our SIF in 2008 was more than double        • Keeping drivers on route and on             volume and air volume moved on ground.
improved compared to the previous
                                                  that level, at 2.66, and our emissions        schedule via a handheld computer.           *These figures have been restated. See p.37.
year, due to more efficient management
                                                  performance (in grams per mile) as cal-
of our ground and air fleets as well as                                                        ALTERNATIVE FUEL/TECHNOLOGY VEHICLES.
                                                  culated under SmartWay is 33% higher
our facilities and other assets. Energy                                                       Our alternative fuel/technology vehicle
                                                  than the average US domestic fleet. We
consumption was 3.5 percent lower per                                                         fleet logged more than 21 million miles
                                                  believe this is a good example of decar-
1000 packages, and rose 3.6 percent                                                           in 2009, for a total of 185 million miles
                                                  bonization synergy at work: owning
per dollar of revenue. CO2e emissions                                                         since 2000. The fleet reached a total of
                                                  a high percentage of our ground fleet
declined 3.1 percent per 1000 packages,                                                       1,883 vehicles in 2009, up from 1,819 in
                                                  combined with continual incremental
and increased 3.8 percent per dollar of                                                       2008, and we commissioned 245 new
                                                  increases in vehicle and driver efficiency
revenue.                                                                                      compressed natural gas (CNG) vehicles.
                                                  results in greater carbon reduction than
                                                                                              Approximately a third of our alternative
GROUND NETWORK EFFICIENCY.                        either one would achieve independently.
                                                                                              fuel/technology vehicles operate outside
UPS has owned and operated one of the
                                                  ROUTING TECHNOLOGY.                         the United States: in Brazil, Canada,
world’s most extensive private ground
                                                  Our proprietary routing technology          Netherlands, Chile, South Korea, France,
delivery networks in the world for
                                                  enabled us to avoid driving more than       Germany, Mexico, and the UK.
decades, so we have abundant experi-
                                                  20.4 million miles in 2009, with an
ence in identifying and executing on
                                                  associated emissions avoidance of
ways to increase our ground network
                                                  20,000 metric tonnes with a cumulative
efficiency, particularly regarding fuel
                                                  avoidance of 119 million miles since
usage. For example, we achieved a 10%
Environment—Goals and Performance: Energy and Emissions                                                                                                                                               2009 UPS CSR | 40


        To read related highlights, visit pages 7, 11 and 17




 CO2e Emissions—Absolute, Direct vs. Indirect, U.S. Package                       Energy Consumption—Absolute, Direct vs. Indirect, U.S. Package Operations,             2009 Total Energy Consumption by Source—
 Operations (million metric tonnes)                                               U.S. Supply Chain and Freight (million gigajoules)                                     U.S. Package Operations


 Effectively managed energy through                                                                                                                             Total

 the economic downturn.
                                                                                                           15.78        0.77                                   16.55
                                                                                  2009
                                                                      Total                                            92.50                4.30               96.80
 2009                                   6.57           0.70           7.27
                                                                                                                  19.79        0.74                            20.53
 2008                                      7.01*           0.74       7.75*       2008
                                                                                                                          99.60*                4.41           104.01*
 2007                                      7.06   *
                                                           0.76       7.82    *



 2006                                    6.59           0.76          7.35                                     18.05        0.73                               18.78
                                                                                  2007
                                                                                                                        100.40     *
                                                                                                                                                 4.53          104.93*

          Direct CO2e Emissions (Scope 1) (million metric tonnes)
                                                                                         N/A                                                                   N/A
          Indirect CO2e Emissions (Scope 2) (million metric tonnes)
                                                                                  2006
                                                                                                                        93.69                 4.52             98.21          Mobile
 Total CO2e for U.S. Package Operations includes Scope 1 (direct) sources of                                                                                                  Jet A                              45%
 GHG emissions (gasoline, diesel, jet A, compressed natural gas, natural gas,                                                                                                 Diesel                            39%
 propane & heating oil) and Scope 2 (indirect) sources of GHG emissions from                                                                                                  Gasoline                            8%
 electricity. Direct CO2e emissions contain restated values for 2007 through             U.S. Package Operations                                                              CNG                               0.2%
 2008 as result of improved data accuracy.                                               Direct Energy Consumption (million gigajoules)                                       LNG                            0.002%
 *These figures have been restated. See p.37.                                             Indirect Energy Consumption (million gigajoules)
                                                                                                                                                                              Stationary
                                                                                         U.S. Supply Chain and Freight                                                        Natural Gas                        4%
                                                                                         Direct Energy Consumption (million gigajoules)                                       Eletricity                         4%
                                                                                         Indirect Energy Consumption (million gigajoules)                                     Propane                         0.05%
                                                                                                                                                                              Heating Oil                     0.02%
                                                                                  Total energy consumption for U.S. Package Operations, U.S. Supply Chain and Freight
                                                                                  includes direct sources of energy (gasoline, diesel, jet A, compressed natural gas,
                                                                                  natural gas, propane & heating oil) and indirect sources of energy from electricity.
                                                                                  *These figures have been restated. See p.37.
Environment—A Telling Difference With Telematics                                                                                                                                                              2009 UPS CSR | 41


        To read related highlights, visit pages 7, 11 and 17




A Telling Difference With Telematics


At UPS, we believe the driver plays a             In another example of decarboniza-            • Telematics allows us to match
vital role in making a vehicle more effi-          tion synergy, we combine telematics             vehicles with routes that maximize fuel
cient with energy and emissions. That’s           data (about vehicle performance) with           efficiency. For example, if a vehicle
                                                                                                                                              Telematics Technology Utilizes:
why we use proprietary IT systems to              business data (about packages and               achieves its highest efficiency at a par-
give our drivers detailed information             locations) according to time of day and         ticular speed, we can assign it to routes   ENGINE DATA     GPS DATA         SENSOR DATA    DIAD DATA        MAP DATA
on efficient routes before they even               analyze it with proprietary software to         where it performs best and where fuel
hit the road. We also equip vehicles              discover opportunities to improve our           consumption is minimized.
with energy informatics sensors that              processes. Along with greater fuel and
                                                                                                • Condition-based maintenance enabled
track speeds, turns, idle time, driving in        emissions efficiency, we can also find
                                                                                                  telematics sites to reduce expenses for
reverse, and other data and transmit it to        ways to improve our safety and our
                                                                                                  replacement parts by 6.27% compared
“data warehouse” computers for analy-             customer service performance.                                                               Automotive      Safety           Route          On-Road          Work
                                                                                                  to non-telematics sites; in addition to
sis using sophisticated software tools.                                                                                                                                        Planning       Performance      Measurement
                                                  Here are some examples of our success           saving money and time, replacing fewer      Tracks:         Monitors:
We call this approach “telematics,”               with telematics in 2009:                        parts means less waste in landfills.                                          Aids in:       Analyses:        Processes:
and it enables us to spot opportunities                                                                                                       • Vehicle       • Seatbelt use
                                                  • In 2009, package operations drivers         • 2009 capped a ten-year period during
                                                                                                                                                diagnostics
for individual drivers to get even more
                                                    in telematics-equipped vehicles elimi-        which we increased the average miles                        • Driving habits • Dispatch     • Daily route    • Measures and
efficient with every mile they drive and                                                                                                       • Conditional                      planning       paths            plans future
                                                    nated more than 13.5 million minutes          per gallon (MPG) of vehicles in our U.S.                    • Use of reverse
every stop they make. Drivers receive                                                                                                           maintenance                                                      work process
                                                    of idling time. This translates into fuel     Domestic Package segment by 10%.                                             • Address
detailed reports generated from telemat-                                                                                                                                         validation
                                                    savings of more than 90,000 gallons
ics data, enabling them to compare their                                                        • By the end of 2009, vehicles with fully
                                                    as well as substantial emissions avoid-
performance with benchmarks and set                                                               functioning telematics increased to
                                                    ance.
personal goals for increasing efficiency.                                                          11,500 in 69 locations in North Amer-
At the same time, telematics gives us             • Package operations drivers in telemat-        ica. The technology has been installed
detailed reports on vehicle performance             ics-equipped vehicles improved stops          in an additional 24,000 vehicles
as well, so we can determine the best               per mile by 25% more than non-tele-           (approximately 37% of our U.S. fleet),
times and the best ways to keep them                matics centers. This saved 5.6 million        which will become operational as more
operating at peak efficiency with cus-               miles, equating to over 590,000 gallons       facilities are equipped to receive the
tomized, condition-based maintenance                of fuel.                                      data. We expect to continue expanding
rather than scheduled, one-size-fits-all                                                           telematics steadily in the years ahead.
maintenance.
Environment—Leadership in Airfleet Efficiency                                                                                                                                                                 2009 UPS CSR | 42


       To read related highlights, visit pages 7, 11 and 17




Leadership in Air Fleet Efficiency                                                             KEY PERFORMANCE INDICATOR
                                                                                              CO2 Pounds per Available Ton Mile—
                                                                                                                                                            KEY PERFORMANCE INDICATOR
                                                                                                                                                            Aviation Gallons Burned per 100 Available Ton Miles—
                                                                                              UPS Airlines–Global Operations                                UPS Airlines–Global Operations
The chart on this page depicts our               Because airline emissions are gener-
progress toward an aggressive environ-           ated by the burning of jet fuel, we also
mental goal: reducing CO2 emissions              closely track aviation fuel burned per       At 47% of meeting 2020 goal.                                  Airline fuel efficiency beats
from our airline by 42 percent by the            100 available ton miles (gals/100ATM).
year 2020, from a 1990 baseline. (The            Our progress in this regard is shown on
                                                                                                                                                            2011 goal, new goal set.
year 1990 is widely used as the baseline         the accompanying chart. In 2007 we
for calculating changes in greenhouse            set a goal of reducing fuel consump-          Nautical Miles      Statute Miles
                                                                                                                                                                                                       Actual Data
gas reduction.) The corresponding                tion to 6.9 gals/100ATM in 2011. This                                                                                                                 Goals
                                                                                                  1.24                1.08                                  2012
                                                                                                                                                                            6.57    **
reduction from a 2005 baseline would             represents a 32% improvement from a
be 20 percent.                                   1990 baseline. We have already reached       2020
                                                 that goal, cutting aviation fuel use to
The metric for this KPI is CO2 pounds
                                                 6.63 gals/100ATM in 2009, and set a
emitted per available ton mile (CO2lbs/                                                           1.40                1.22                                  2009
                                                 new goal of 6.57 for 2012.                                                                                                  6.63†
ATM), using nautical miles. According
                                                                                              2009
to published figures for our competitors          At present, this KPI is closely correlated
using the same metric, our emissions             with our KPI for reducing airline emis-
efficiency of 1.40 CO2lbs/ATM in 2009             sions, because emissions are generated           1.42                1.24                                  2008
                                                                                                                                                                             6.73
is among the best in the package airline         from fuel consumption. In the long term,     2008
sector. In fact, our current performance         we believe that lower-emission bio-fuels
against this metric exceeds both the cur-        will reduce the correlation between the
rent result and long-term target reported        two KPIs.                                        1.52                1.33
                                                                                                                                                            2007
by our nearest competitor.                                                                    2007
                                                                                                                                                                              7.22


                                                                                                  1.54                1.34
                                                                                                                                                            2005
                                                                                              2005 (Baseline)                                               (Baseline)       7.32

                                                                                                  2.13                1.85
                                                                                              1990
                                                                                                                                                            1990
                                                                                                                                                                               10.12


                                                                                                     Actual Data
                                                                                                     Goals
                                                                                                                                                            Gallons of jet fuel consumed by aircraft type by lane segment
                                                                                                                                                            divided by (air distance (nautical miles) by lane segment x
                                                                                              Pounds of CO2 emitted for every ton of capacity transported   maximum payloads in tons) divided by 100.
                                                                                              one nautical mile.                                            †
                                                                                                                                                              2011 goal of 6.9 was achieved in 2008. **This is a revised goal.
Environment—Goals and Performance: Energy and Emissions                                                                                                                                                             2009 UPS CSR | 43


       To read related highlights, visit pages 7, 11 and 17




AIR FLEET EFFICIENCY.                            in 2008, and exceeded it by an even           • cleaner engines.
Airline emissions represent 53 percent           wider margin in 2009.                                                                        KEY PERFORMANCE INDICATOR
                                                                                               FULL COMPLIANCE WITH                           Aircraft Emissions per Payload Capacity—
of our global CO2 inventory. For this
                                                 A third air fleet KPI (at right) addresses     ICAO GUIDELINES.                               UPS Airlines–Global Operations
reason, we have long made air fleet
                                                 air quality near airports by dividing         UPS operates one of the youngest and
efficiency improvement a part of our
                                                 hydrocarbons, carbon monoxide and             most fuel-efficient air fleets in the pack-
strategic planning. Following our overall
                                                 nitrogen oxides emitted during aircraft       age delivery sector, which is why we           7.4% reduction in aircraft emissions
decarbonization synergy strategy, we
take both long-term and near-term steps
                                                 takeoffs and landings (in kilograms) by       are the only company in the sector to          on take-offs and landings since 2006.
                                                 the payload capacity of UPS aircraft          exceed compliance with International
that complement each other. Long-term
                                                 (in units of 1,000 kilograms, weighted        Civil Aviation Organization (ICAO) Stage
steps include investing in younger,
                                                 by average annual aircraft cycles). This      IV noise guidelines. We achieved this
more fuel-efficient aircraft before most
                                                 metric compares our near-airport emis-        leadership due in part to investments
companies in the package airline sector                                                                                                       2011                   0.74
                                                 sions to how much air transport capacity      we have made in past years to reduce
(see chart on page 44), and publicly
                                                 we use during the year, and therefore         aircraft noise, and also to aircraft retire-
declaring our commitment to use jet
                                                 gives us an indication of the emissions       ments in 2009. The noise characteristics
engine bio-fuels when they are ready.
                                                 efficiency of our fleet during periods of       of our fleet are charted on page 44,
Near-term steps include numerous
                                                 relatively high fuel consumption (includ-     along with the average age of each
operating initiatives that increase fuel
                                                 ing taxiing, take-offs, and landings. We      aircraft type. The average age of our          2009                   0.75
and emissions efficiency in big and
                                                 reduced these emissions in 2009, due in       entire fleet of 210 aircraft in 2009 was
small ways, day in and day out, around
                                                 part to retirements of older, less efficient   just 12.3 years.
the world.
                                                 aircraft. At the end of 2009, the metric
                                                                                               One of our most significant advances in
EMISSIONS AND FUEL EFFICIENCY.                   yielded an overall result of 0.75, which
                                                                                               noise reduction in recent years was our
We have developed numerous metrics               brings us close to achieving our 2011
                                                                                               early adoption of “continuous descent          2008                   0.76
specifically for managing and mitigat-            goal of 0.74.
                                                                                               approach” (CDA) landings at airports
ing environmental impacts in our air
                                                 The emission and energy reductions            in the United States and Europe. In a
operations. Two of the most important
                                                 shown in the KPIs above come from             conventional approach to an airport
of these are presented and discussed on
                                                 a combination of long-term planning           landing, pilots drop down from cruising
page 42. The first, concerning emis-
                                                 and day-to-day operating efficiency.           altitude in a series of steps, each requir-
sions efficiency, is a Key Performance
                                                 The latter category includes numerous         ing a burst of acceleration to stabilize
                                                                                                                                              2007                  0.80
Indicator we introduced in 2009 along
                                                 strategies and techniques for reducing        at the next step. In a CDA landing, our
with a long-term goal of reducing emis-
                                                 aircraft fuel consumption and associated      pilots idle their engines and glide in as if
sions from UPS Airlines 42 percent from
                                                 emissions, including:                         rolling quietly down a ramp rather than
our 1990 baseline and 20 percent from
                                                                                               bumping down a flight of stairs. This
our 2005 baseline. We are on track to            • lower flight speeds,
achieve that goal, and we believe we
                                                                                               technique can reduce an aircraft’s noise       2006                   0.81
                                                 • computer-optimized flight plans,             profile by 30 percent and lower ground                                                                        Actual Data
are well ahead of our competitors in air
                                                 • computer-managed aircraft taxi times,       noise by five decibels—a significant                                                                           Goals
fleet emissions reductions. The second
                                                                                               difference for people living and working
KPI tracks air fleet fuel efficiency, for          • fuel-efficient towing tugs,                  near busy airports.
which our 2011 goal represents a 32%
                                                 • bio-diesel in ground support equipment,     Despite its advantages, CDA still requires     Total emissions of HC, CO AND NOx in kgs from aircraft takeoffs and landings
improvement from our 1990 baseline.
                                                                                               approval of airport authorities in every       below 3,000 feet of altitude divided by the sum of max structural payload capacity
We reached that goal ahead of schedule           • environmentally friendly paint that
                                                                                                                                              (in thousands of kgs) weighted by annual aircraft cycles.
                                                   reduces drag, and                           location where we introduce it. In 2009,
Environment—Airfleet Characteristics                                                                                                                                                     2009 UPS CSR | 44


     To read related highlights, visit pages 7, 11 and 17




                                                                                                             KEY PERFORMANCE INDICATOR
 UPS operates a modern, quiet, fuel-efficient airfleet.                                                        Percent of UPS Air Fleet Meeting Stage IV Noise Guidelines—
                                                                                                             UPS Airlines-Global Operations
 Jet aircraft owned/leased as of 12/31/2009

                                                                                                             UPS Airlines leads the industry
                                                     db below        db below      # of Aircraft   Average
       Aircraft                Engine
                                                   Stage 3 Limit   Stage 4 Limit   in operation      Age     in noise reduction.*

     A300F4-600              PW-4158                    -11.3          -1.33            53           6.5


      B757-200             RB211-535E4                  -19.8          -9.83            40          13.3          96.1%             96.4%            100.0%            100.0%            100.0%

      B757-200               PW-2040                    -13.0          -3.03            35          19.1
                                                                                                                    2006              2007              2008              2009              2011

      B767-300             CF6-80C2B6F                  -14.5         -4.51             34          11.3

                                                                                                                   Actual Data
        MD-11                 PW4460                    -12.5          -2.53            27          15.6
                                                                                                                   Goals

     B-747-400F            CF6-80C2B1F                  -12.3          -2.33            10           4.3     *The entire UPS fleet meets 2006 noise requirements (which only applies to new aircraft
                                                                                                             acquisitions). Cumulative noise (take-off sideline and approach) as measured by
        MD-11              CF6-80C2D1F                  -13.4          -3.43            11          16.1     effective percieved noise decibles (EPNdb).


       DC8-73               CFM56-2C1                   -16.7         -6.72             0          RETIRED
                                                                                                             The table at left shows how much quieter (in decibels) our aircraft are
                                                                                                             than the regulatory limits. UPS measure its total fleet against noise reduction
       DC8-71               CFM56-2C1                   -16.7         -6.71             0          RETIRED   regulations that only apply to new aircraft.
                                                                                                             • STAGE 3 applies to new aircraft purchased after January 1, 1999. UPS’s entire
     B727-100QF             TAY 651-54                  -12.4          -2.44            0          RETIRED
                                                                                                               fleet met Stage 3 limits in December 1996.
                                                                                                             • Stage 4 applies to new aircraft purchased after January 1, 2006. UPS’s entire
      B-747-200               JT9D-7Q                   -2.6           7.43             0          RETIRED
                                                                                                               fleet met Stage 4 limits in 2008

      B727-200             JT8D-15 (HK)                 -1.0           8.97             0          RETIRED   The UPS fleet has an average age of 12.25 years. New aircraft types are more
                                                                                                             quiet and more fuel efficient. Many of the aircraft we have retired are still in use
                                                                                                             by our competitors.
      B-747-100               JT9D-7A                   -0.9           9.13             0          RETIRED


                                           TOTAL                                       210          12.25
Environment—Goals and Performance: Energy and Emissions – Products and Services                                                            2009 UPS CSR | 45


        To read related highlights, visit pages 7, 11 and 17




we engaged with local airport authori-            RENEWABLE ENERGY.                           In 2009, UPS joined the EPA Low
ties and their surrounding communities            In 2009, we completed our test of a         Carbon IT program, which aims to
in Europe and the U.S. to explain the             first-generation solid oxide fuel cell       reduce energy consumed by informa-
benefits of CDA and demonstrate its                developed by Bloom Energy. Operating        tion technology in United States offices
effectiveness, particularly with night            in our Anchorage, Alaska distribution       and data centers. Approximately 92,000
flights at airports near densely popu-             facility, the fuel cell produced more       computer monitors in UPS facilities are
lated areas. We then worked with air              than 300,000 kilowatt hours of electric-    set to an energy-saving mode as part of
traffic controllers to ensure that CDA             ity in 2009, and reduced CO2 emissions      that program. Many additional examples
presents no safety issues for any other           associated with the facility by 170         of energy efficiency initiatives at UPS
air carriers using the airport. These suc-        metric tonnes. Our solar-powered            are available on our website at ups.
cessful engagements resulted in new or            facility in Palm Springs, Calif. produced   com/environment.
increased use of CDA in central England;          70 percent of its own electricity from
Cologne, Germany; Tampa, Florida                  solar technology, eliminating 500 metric    Products and Services
(U.S.); and Louisville, Kentucky (U.S.).          tonnes of CO2 emissions—the equivalent
                                                  of taking 95 automobiles off the road
ENERGY CONSERVATION.                                                                          In 2009, UPS was the first small package
                                                  for the year.
Stationary assets (excluding the                                                              carrier to offer its customers the
vehicles, planes, trains and ships used in        BACK-OFFICE ENERGY CONSERVATION.            ability to offset the carbon dioxide emis-
our transport network) are 10% of our             Energy efficiency is a priority in our       sions generated by the transport of their
global carbon inventory in 2009, and we           office and IT environments as well. In       packages within the United States. This
continued to develop, sustain or expand           2009 we continued to expand our use         service is described in detail on page 8
initiatives to reduce energy use in all           of building automation systems, such        and 46. This section of the Report also
our facilities. For example, we were able         as motion sensors for office lighting,       describes other green products and
to save 3.4 million therms of natural gas         to reduce energy consumption. These         services from UPS, including our Logis-
in 2009, primarily through simple steps           systems have been installed at our          tics Technology offering, and explains
such as setting thermostats lower in              corporate offices, major data centers,       how all these products and services are
some facilities.                                  and new distribution facilities, such as    strongly aligned with Federal Executive
                                                  in Newington, Va. and Cordova, Calif.       Order 13514 signed by U.S. President
LIGHTING.
                                                  As older heating, ventilation and air       Barack Obama.
Lighting is one of our major stationary
                                                  conditioning (HVAC) systems reach the
sources of energy use and emissions,
                                                  end of their life cycles, we replace them
in part because our distribution centers
                                                  with high-efficiency units. More than
are large facilities that remain in
                                                  81 percent of vending machines in UPS
operation overnight. In 2009, our multi-
                                                  locations in the United States are now
year lighting upgrade program
                                                  ENERGY STAR compliant. Our Windward
replaced or upgraded 22,683 fixtures.
                                                  Data Center, where we monitor all
The total since 2007 is more than
                                                  packages moving through our logistics
69,000 fixtures upgraded, with an
                                                  network, saved an estimated 3 million
estimated annual energy saving of
                                                  kilowatt hours of electricity in 2009 due
25 million kilowatt hours.
                                                  to high-efficiency heat-exchange and
                                                  other temperature-control techniques.
Environment—Carbon Neutral: More Than Just a Product                                                                                                                                                         2009 UPS CSR | 46


       To read related highlights, visit pages 7, 11 and 17




UPS Carbon Neutral: More Than Just a Product


UPS’s carbon neutral option, the first of         • identifying high-quality carbon offset      Each year, we conduct an audit of our
its kind in the U.S., enables customers            options that meet our stringent acquisi-    actual carbon emitted in the previous        Offset Example
to mitigate the climate impact of their            tion standards,                             year and purchase carbon credits to
shipping. To show our commitment                                                               offset emissions related to carbon neu-
                                                 • validating our offset choices with an                                                    Our first purchase of carbon offsets was in the Garcia River Forest Climate
to the environment and encourage                                                               tral shipments. The offsets we purchase
                                                   independent assessor,                                                                    Action Project. In February 2008, the California Climate Action Registry
customers to use the new service, we                                                           meet the key standard of additionality,
                                                                                                                                            (CCAR)—a premier carbon offset registry in the U.S. carbon market—
pledged to match US$1 million in offsets         • customizing offset offerings for shippers   which means that the carbon reduction
                                                                                                                                            certified the 23,780-acre Garcia River Forest as a source of carbon credits.
purchased for our customers’ UPS                   according to their volumes and shipping     project in question (such as reforesta-
                                                                                                                                            Over its 100 year lifetime, The Nature Conservancy estimates that the
carbon neutral transactions in 2009 and            patterns,                                   tion) produced an offsetting reduction in
                                                                                                                                            Garcia River Forest project will absorb and store 4.2 million metric tons
2010. This matching program effectively          • making the service available to a           CO2 generation or offsetting sequestra-
                                                                                                                                            of carbon dioxide by ensuring high forest growth rates and the
doubles the benefit of the carbon                   critical mass of customers, including       tion of CO2 in addition to what would
                                                                                                                                            development of larger and denser stands of redwood and Douglas fir.
neutral service for these two years.               individuals and small businesses, and       have been achieved by activities already
                                                                                               planned or underway. We retire all
The credibility of our carbon neutral            • achieving certification and verification
                                                                                               offsets in direct proportion to the actual
service is based on our ability to                 of our service and carbon neutral pro-
                                                                                               climate shipments made.                        Additional information on UPS
perform a number of complex processes              cess, respectively, by two independent
                                                                                                                                              carbon neutral is available online
at a high level of precision and                   third-party organizations.                  Our carbon neutral process is verified by
                                                                                                                                              at ups.com/carbonneutral.
repeatability. These include:                                                                  Société Générale de Surveillance (SGS),
                                                 A carbon offset is a certified financial
                                                                                               an independent inspection, testing
• capturing our comprehensive global             instrument aimed at a reduction in
                                                                                               and verification company. Addition-
  carbon inventory, including Scope 1,           greenhouse gas emissions. The term
                                                                                               ally, The CarbonNeutral Company has
  2 and 3 emissions, to the extent of            “carbon” actually refers to carbon
                                                                                               certified UPS’s carbon neutral process
  our Report scope and boundary as               dioxide, or CO2, one of the six green-
                                                                                               in accordance with The CarbonNeutral
  disclosed on page 36,                          house gases named in the Greenhouse           Protocol. In purchasing carbon credit
• accurately determining emissions data          Gas Protocol as primary contributors          offsets, we target Gold Standard,
  for a given shipment based on the form         to global warming. CO2 is the most            Voluntary Carbon Standard (VCS), and
  of transport,                                  prevalent of the gases in the protocol,       Climate Action Reserve (CAR) certified
                                                 and it results from combustion of fos-        offsets, European Union Allowances and
• “truing up” offset calculations to
                                                 sil fuels. Billions of people directly or     Certified Emission Reduction offsets.
  the year in which the customer used
                                                 indirectly participate in activities that     These organizations support a variety of
  the service, thus ensuring that the
                                                 burn fossil fuels, making carbon reduc-       high-quality, geographically-appropriate
  offset is calculated using accurate
                                                 tion an essential issue for environmental     CO2 offset projects such as waste water
  emissions data,
                                                 protection.                                   treatment, reforestation, methane
                                                                                               destruction and landfill gas destruction.
Environment—Goals and Performance: Products and Services – Effluents and Waste                                                                                                                                    2009 UPS CSR | 47


       To read related highlights, visit pages 7, 11 and 17




LOGISTICS TECHNOLOGIES.                          companies achieve efficiencies in how          commitment to sustainability of UPSers
UPS does more than plan delivery routes          they receive and distribute their docu-       everywhere.                               2009 Solid Waste Recycling—U.S. Package
to reduce fuel consumption, lower                ments, goods and materials. Other green                                                 Operations, U.S. Supply Chain and Freight (U.S. tons)
                                                                                               We continued to expand our e-waste
greenhouse gas emissions, and cut fuel           packaging and services are described
                                                                                               recycling program in 2009, particularly
costs. We also help other companies do           online at ups.com/bussol.
                                                                                               in Europe and Asia. Since 2000, the
the same, using products provided by
                                                                                               program has recycled 27 million pounds
UPS Logistics Technologies. This busi-           Effluents and Waste                            of e-waste. E-waste includes desk-
ness unit has adapted UPS proprietary
                                                                                               top computers, laptops, servers, hard
software into ten products for differ-
                                                 Because UPS is not involved in manufac-       drives, cables, keyboards, telephones,
ent applications, including the popular
                                                 turing (we purchase the packaging that        cell phones, routers, switches, print-
Roadnet daily routing product, and
                                                 we provide to customers), our manage-         ers, and media such as CDs. Through
licensed them to approximately 1,200
                                                 ment and mitigation of effluents and           our participation in the Rechargeable
companies around the world. Companies
                                                 waste is limited primarily to solid waste     Battery Recycling Corporation (RBRC),
using these products average a 15%
                                                 from supplier packaging and pallets,          we recycled 28,550 pounds of batteries
reduction in miles driven, which added
                                                 office paper, e-waste, and batteries.          in 2009.
up to 1.1 billion miles not driven in
2009. This total translates into 1.9 mil-        SOLID WASTE RECYCLING.                                                                                                                              Tons
lion metric tonnes of carbon avoidance           At UPS, solid waste mainly takes the                                                             Corrugated Containers                            22,815
and cost savings on 186 million gallons          form of corrugated containers and                                                                Pallets and Wood Waste                            5,086
of fuel. On top of these environmental           wood pallets. The complete breakdown                                                             Metals                                            4,846
and financial benefits, UPS Logistics              of solid waste by type across 1,551                                                              Mixed Recycling                                   1,748
                                                                                                                                                  Office Paper                                         244
Technologies customers report improve-           facilities in the U.S. is shown in the
                                                                                                                                                  Plastics                                            148
ments in response times on service               chart at right. In 2009, these facilities
and delivery calls, more efficient use            generated more than 104,000 tons of
of drivers and maintenance resources,            solid waste and recycled nearly 35,000                                                  Data represents 1,551 facilites, across all U.S. business units, that
increased competitiveness, and greater           tons of solid waste. This total was 31                                                  are managing waste & recycling through the corporate vendor.
ability to target opportunities for              percent lower than in 2008, driven                                                      (See scope and boundary section)
growth. More information is available            largely by a recessionary economy that
online at ups.com/bussol.                        led to lower revenues in our business
GREEN PACKAGING AND SERVICES.
                                                 as well as contraction in the market for                                                WasteWise
                                                 certain recycled materials. In combina-
Along with operating a responsible
                                                 tion, these factors reduced our financial
supply chain, we share related expertise                                                                                                 WasteWise is a free, voluntary EPA program that supports corporate
                                                 ability to recover the costs of recycling
with customers. One example is our UPS                                                                                                   and municipal efforts to eliminate wastes through prevention, recy-
                                                 programs. Beginning in 2010, we plan
Package Design and Test Lab, which has                                                                                                   cling and other measures. To help WasteWise participants quantify the
                                                 to address this challenge by giving many
extensive experience with packaging for                                                                                                  climate benefits from their waste reduction efforts, EPA developed
                                                 of our facilities more flexibility to invest
all types of shipping. The Lab now offers                                                                                                a Waste Reduction Model (WARM) that translates waste prevention
                                                 in recycling programs and activities. We
UPS customers advice on minimizing                                                                                                       and recycling data into equivalent greenhouse gas reductions. Using
                                                 believe this new approach will more
the environmental impact of their own                                                                                                    WARM, the EPA calculated that in 2009, UPS recycling efforts yielded
                                                 fully engage positive market forces,
packaging. Similarly, we increased our                                                                                                   a reduction of 120,315 metric tonnes of CO2e. This amount is equiva-
                                                 the entrepreneurial capabilities of our
consulting engagements for supply chain                                                                                                  lent to removing 22,035 passenger vehicles from the road for a year.
                                                 facilities managers, and the overall
management in 2009, helping other
Environment—Goals and Performance: Effluents and Waste                                                                      2009 UPS CSR | 48


       To read related highlights, visit pages 7, 11 and 17




HAZARDOUS AND NON-HAZARDOUS
WASTE MANAGEMENT.                                       2009 Hazardous Waste Management Methods—
Wastes are generated from aircraft,                     U.S. Package Operations, U.S. Supply Chain and
                                                        Freight (U.S. tons)
vehicle and facility operations. These
wastes typically include spent anti-
freeze, used oil, spent solvents, spill
residues, paint wastes, used filters and
leaking packages. Approximately 90
percent of these wastes are managed as
non-hazardous wastes, and recycled or
disposed of locally through numerous
vendors in the U.S. The remaining 10
percent of these wastes are classified as
hazardous wastes according to federal
or state regulations, and are managed
through three UPS-approved vendors.
In 2009, UPS operating facilities in the
United States generated 1,145 tons of
hazardous waste, 9% less than in 2008.
Ninety two percent of these hazardous
wastes are incinerated. The incineration
process converts approximately 80%
of the waste to energy recovery. Ash                          Incinerated                       92%            (1,052)
from the incineration process is included                     Recycled                          6%                (69)
in the 2% of hazardous waste that is                          Treated and Landfilled             2%                (24)

treated and disposed of in a secure land-
fill operated by a UPS-approved vendor.                  Data represents U.S. facilites, in all business units, disposing
The remaining 6% of the hazardous                       of hazardous waste through corporate vendors. (See scope
                                                        and boundary section)
waste we generate is recycled.
Environment—Goals and Performance: Water                                                                                                         2009 UPS CSR | 49


       To read related highlights, visit pages 7, 11 and 17




Water                                                   KEY PERFORMANCE INDICATOR
                                                        Water Consumption—Normalized, U.S. Package Operations
In 2009, UPS continued to improve our
collection and analysis of water data,
particularly outside the United States.                 Water consumption performance improves.
Our KPIs for water use are still focused
on domestic operations, however,
because we are able to report more
accurately for them. We began putting                                                1.54
                                                                1.48
processes in place in 2009 to gather
international water data so that we can
report on global water usage.                                                                             1.28                  1.18
The U.S. Domestic Package segment
reduced absolute water consumption
                                                                 2006                 2007                 2008                  2009
to 3.9 million cubic meters (1.03 billion
gallons) in 2009, 11 percent lower than
in 2008 and well below the levels of
                                                               Water Consumption Cubic Meters(m3) per 1,000 Packages
the previous three years. Normalized
water use for our U.S. Domestic Package
segment showed a similar pattern, with                  Water consumption (US) includes all facility related water and water used to wash
                                                        vehicles—expressed in cubic meters. (See scope and boundary section)
a 7.8 percent reduction per 1,000 pack-
ages compared to 2008 and significantly
lower consumption compared to the
                                                        Water Consumption—Absolute, U.S. Package Operations, U.S. Supply Chain
three years prior to 2008. Note that
                                                        and Freight
the normalized percentage change per
US$1,000 in revenue declined less than
1 percent, indicating that water con-                                0.62
sumption correlates more strongly with                  2009
                                                                                   3.90
package volume than with revenue. As
in prior years, reduction in water use
                                                                      0.68
came from multiple sources. We wash                     2008                                                    Water Consumption
our more than 75,000 vehicles in the                                                  4.36
                                                                                                                (million cubic meters)
United States only as needed to main-                                                                           U.S. Supply Chain and Freight
tain appearance; we reclaim water from                                  0.73                                    U.S. Package Operations
                                                        2007
some vehicle washing tunnels; and we
                                                                                              5.39
use an environmentally friendly enzyme                                                                    Water consumption (US) includes
wash agent that reduces the need for
                                                                         0.69                             all facility related water and water
rinse water.                                            2006                                              used to wash vehicles—expressed
                                                                                             5.18         in million cubic meters. (See scope
                                                                                                          and boundary section)
Environment—Spill Incidents                                                                                                                                                                                                           2009 UPS CSR | 50


       To read related highlights, visit pages 7, 11 and 17




 2009 spill incident cause analysis.

                                                                     Fuel
                                            UST/AST and/or                                                                                                                                                                      Freight
                             Aircraft                              Delivery              GSE                        Package                                                     UPS Vehicle
                                                Piping                                                                                                                                                                         Shipment
                                                                   Vehicle

                                                       Storage     Storage
                            Equipment    Equipment                                         Equipment    Damaged      Human     Improper                 Damaged     Equipment     Human       Improper    Road       Vehicle    Human
                                                        Tank        Tank      Accident                                                      Accident
                              Failure      Failure                                           Failure    Package       Error    Packaging                Package       Failure      Error      Packaging   Debris     Overfill     Error
                                                       Overfill     Overfill

       U.S. Package
        Operations              1            0           1           2          1               4         13           2           3          22           1          14            6             0        5           0          0          75

    U.S. Supply Chain
       And Freight              0            3           0           0          0               0          0           0           0          14           0           7            3             1        8           1          1          38

           Total                1            3           1           2          1               4         13           2           3          36           1          21            9             1       13           1          1         113


 Spills that meet criteria of being federal or state reportable.



 KEY PERFORMANCE INDICATOR                                                               KEY PERFORMANCE INDICATOR                                                                                             AGENCY ENVIRONMENTAL
 Number of Reportable Spill Incidents U.S. Federal or State                              Penalties as a percent of Total Environmental Inspections—                                                            INSPECTIONS.
 Environmental Agency                                                                    U.S. Package Operations, U.S. Supply Chain and Freight                                                                In 2009, U.S. federal and state
                                                                                                                                                                                                               environmental agencies conducted
 Better reporting in freight—spills                                                      Penalties remain low.                                                                                                 980 environmental inspections at
                                                                                                                                                                                                               UPS facilities in the United States.
 down in U.S. Package Operations.                                                                                                                                                                              Inspections in our U.S. Domestic
                                                                                                               1.00%                                                                                           Package Segment increased
                                                                                         2009                                                                     U.S. Small Package
                                                                                                                                                                                                               19 percent compared to 2008,
                                                                                                               1.10%                                              U.S. Supply Chain and Freight
                                                                                                                                                                                                               to 804 inspections. Of the 804
                               2006         2007         2008        2009
                                                                                                                                                                                                               inspections, 53 resulted in a notice
                                                                                                        0.59%
                                                                                         2008                                                                                                                  of violation and 8 penalties totaling
        U.S. Package
                               33           49           82          75                                                                4.00%                                                                   US$21,106. Our Supply Chain and
         Operations
                                                                                                                                                                                                               Freight segments saw a 40 percent
     U.S. Supply Chain
                                                                                         2007                  1.14%                                                                                           increase in inspections compared
        And Freight           N/A           26           17          38                                                                                                                                        to 2008. Of the 176 inspections
                                                                                         2006                0.94%                                                                                             conducted, 28 resulted in a notice
                                                                                                                                                                                                               of violation and two penalties
                                                                                                                                                                                                               totaled US$7,155.
 Spills that meet criteria of being federal or state reportable. (See scope              Environment related fines paid (US) as a percent of total environment related agency inspections. (See scope
 and boundary section)                                                                   and boundary section)
Environment—Goals and Performance: Compliance – Policy                                                                                                                                 2009 UPS CSR | 51


        To read related highlights, visit pages 7, 11 and 17




Compliance                                        • complying with laws regarding
                                                    clean air.
                                                                                               Biodiversity                                 Policy
As stated above in “Management                    • protecting against and appropriately       In 2009, UPS cooperated fully with
Approach,” our policy is to comply with             responding to spills and releases.         the Animal and Plant Health Inspection
                                                                                                                                            UPS environmental policy is set forth
all applicable laws and regulations of            • seeking ways to minimize waste and         Service (APHIS) of the United States
                                                                                                                                            in several statements, including a high-
all countries in which we operate, and              prevent pollution.                         Department of Agriculture to prevent
                                                                                                                                            level Environmental Policy and a set
in accordance with our company’s high                                                          the inadvertent spread of the Japanese
                                                  In addition, we must provide timely,                                                      of Environmental Guidance Statements.
standards of business conduct. This is                                                         beetle to the western United States
                                                  truthful, and accurate information                                                        These statements are presented on page
the policy stated in our Code of Business                                                      via air transport. The beetle is a highly
                                                  required in connection with applications                                                  52. Implementation of our policy is
Conduct, which governs all employees                                                           destructive plant pest that attacks more
                                                  for environmental permits and                                                             described below in “Training and Aware-
and representatives of UPS. Important                                                          than 300 different ornamental and
                                                  other reports called for under permits                                                    ness” beginning on page 53 and in
additional information is provided in                                                          agricultural plants including foliage,
                                                  or regulatory requirements.                                                               “Monitoring and Follow-Up” on page 53.
“Policy” on page 52.                                                                           flowers and fruits. It is already estab-
                                                  INCIDENTAL SPILLS.                           lished in the eastern United States and
With regard to the environment, our
                                                  Reportable spills in the U.S. increased to   now represents a significant threat to
commitment goes beyond compliance—
                                                  113 incidents in 2009 from 99 in 2008.       nine large western states. We ensure
we actively advance our own programs
                                                  While spill incidents declined in our U.S.   access for authorized inspectors to
to reduce our impact on the environ-
                                                  Domestic Package segment compared            our air hubs, aircraft and related facili-
ment. Everyone who is part of the UPS
                                                  to 2008, incidents in the Supply Chain       ties, and are following the guidelines
organization is expected to support our
                                                  and Freight segment increased. The           provided by APHIS to U.S. domestic
effort to maintain a leadership role in
                                                  total spill volume from reportable spills    air transport operators.
protecting the environment.
                                                  in 2009 was 3,973 gallons. Spills due
Through our Corporate Environmental               to accidents involving UPS vehicles in
Affairs Department, we have established           all segments increased to 36 from 27
site—and activity—specific environmen-             a year ago, and spills related to human
tal compliance and pollution prevention           error increased from 2 to 12. These
programs to address our environmen-               increases were partly offset by a reduc-
tal responsibilities. We continually              tion in spills from equipment failures on
evaluate improved technology and seek             vehicles, which fell from 29 in 2008 to
opportunities to improve environmental            21 in 2009. This improvement resulted
performance. Our environmental respon-            in part from steps we took in 2009 to
sibilities include:                               prevent leaks or breaks in fluid lines,
• properly storing, handling, and dispos-         fluid reservoirs, and radiators.
  ing of hazardous and other waste.               Outside the U.S., we conduct spill
• managing wastewater and storm water             management programs as part of
  in compliance with applicable regula-           implementing our Global Environmental
  tions.                                          Standards Manual, which is patterned on
                                                  the ISO 14001 environmental standard.
• monitoring and maintaining the integ-
  rity of underground storage tanks.
Environment—UPS Policy and Guidance Statement                                                                                                                                            2009 UPS CSR | 52


        To read related highlights, visit pages 7, 11 and 17




UPS Environmental Policy and Guidance Statements


WE STRIVE TO PROTECT THE ENVIRONMENT              ENVIRONMENTAL COMPLIANCE.                    WASTE MANAGEMENT.                            TRAINING.
FOR OUR PEOPLE AND THE COMMUNITIES                We will conduct our environmental            We will reduce waste through source          We will identify training needs for
IN WHICH WE OPERATE.                              compliance program in accordance with        reduction, reuse, and cost-effective         achieving our Environmental Policy
We conduct our business and operations            UPS’s Business Conduct and Compli-           recycling. We will reduce waste from         and Guidance Statements, and provide
with consideration for their environmental        ance Program, including auditing and         damaged packages by recommending             appropriate training for our people.
impact. Our responsibility for the                monitoring to ensure compliance              packaging improvements to custom-
                                                                                                                                            SUSTAINABILITY.
environment ranges from the construction,         with applicable laws, regulations and        ers when appropriate, and continually
                                                                                                                                            We continue to review all aspects
maintenance, and operation of our                 company requirements and prompt cor-         improving package handling. We will
                                                                                                                                            of our business, including: systems,
facilities, to the maintenance and                rection of deficiencies.                      seek opportunities to purchase recycled
                                                                                                                                            procedures, equipment and operat-
operation of our vehicles and aircraft,                                                        and recyclable products of acceptable
                                                  AIR EMISSIONS.                                                                            ing processes. These efforts are being
to the conservation of resources.                                                              quality. We will responsibly dispose of
                                                  We will evaluate the emissions from                                                       developed in tandem with our plans
                                                                                               waste remaining from our business and
In an effort to maintain a leadership             our facilities, vehicles and aircraft, and                                                for growth and profitability. Our plan
                                                                                               operations.
role in protecting the environment,               strive to reduce them. We will promote                                                    includes:
we continually evaluate improved                  the use of clean fuels in our vehicles,      PETROLEUM STORAGE SYSTEMS.
                                                                                                                                            • Transportation network optimization to
technology and seek opportunities to              taking into consideration emerging           We will maintain systems with high
                                                                                                                                              minimize the miles driven/flown
improve environmental performance.                regulatory requirements, cost-effective      standards for corrosion protection, spill,
All our people are responsible for                technologies and the engagement of           and overfill prevention and release           • Investments in fuel-saving technologies
pollution prevention and for compliance           sound business opportunities.                detection. We will maintain spill contin-      to reduce our dependency on fossil-
with applicable environmental laws                                                             gency plans and regularly monitor our          based fuels
                                                  RESOURCE CONSERVATION.
and regulations.                                                                               systems for product releases. We will        • Energy conservation via facility design,
                                                  We will monitor the use of electricity,
                                                                                               respond to releases of product without         operational practices, renewable
ENVIRONMENTAL GUIDANCE                            fuel, and water at our facilities and seek
                                                                                               delay, assess the environmental impact,        energy and retrofitting
STATEMENTS                                        opportunities to conserve their use.
                                                                                               and take appropriate remedial action.
These Environmental Guidance State-               We will strive to improve the fuel                                                        All these measures include both ongoing
ments provide explicit guidance for               efficiency of our vehicles and aircraft       POLLUTION PREVENTION.                        and new initiatives for the entire enter-
managing our environmental affairs.               through preventive maintenance,              We will maintain Pollution Prevention        prise. We utilize technology-enabled,
They serve as objectives from which               technology applications, and fuel            Practices in our business and operations.    behavior-based and engineering-based
more detailed environmental                       conservation practices.                      We will responsibly control discharges of    approaches to address our environmen-
performance goals can be set that                                                              water from our facilities.                   tal footprint
benefit our customers, our company
and our environment.
Environment—Organizational Responsibility – Additional Contextual Information: Risks…                                                                                                                           2009 UPS CSR | 53


        To read related highlights, visit pages 7, 11 and 17




Organizational                                    priorities and structures for environmen-
                                                  tal training and awareness.
                                                                                              change is as widespread as possible,
                                                                                              we maintain a section of the employee
                                                                                                                                            responsibilities for regulatory and waste
                                                                                                                                            minimization programs. We have 440
                                                                                                                                                                                        EXPANDING TELEMATICS.
                                                                                                                                                                                        Our plans for 2010 include activating

Responsibility
                                                                                              intranet devoted to the countless ways        full-time equivalent employees whose        more than 2,600 telematics units
                                                  ENVIRONMENTAL COORDINATORS.
                                                                                              that employees can become more                responsibilities include carrying out our   already installed in vehicles, and
                                                  UPS has environmental coordinators
                                                                                              environmentally minded both at work           environmental programs, processes and       installing more than 8,000 new
                                                  throughout its operations. Their role is
                                                                                              and in their personal lives. In particular,   activities in accordance with regulatory    telematics units. This will complete
                                                  to monitor and maintain compliance
Organizational responsibility for execut-                                                     the site encourages employees to share        and UPS-specific requirements (See           Phase 2 of our telematics deployment,
                                                  with environmental regulations, to train
ing our environmental policies and                                                            ideas with each other.                        “Environmental Coordinators” above).        bringing us to over 24,000 delivery
                                                  other operational personnel and to raise
management approach as outlined                                                                                                             Our training and auditing programs          vehicles equipped with the technology
                                                  awareness in regards to all environmen-     FUEL EFFICIENCY TRAINING AND
above rests with Bob Stoffel, Senior Vice                                                                                                   identify areas for improvement and          (37% of our U.S. fleet). More information
                                                  tal aspects of our operations. Training     AWARENESS.
President for Supply Chain, Strategy,                                                                                                       outline strategies for achieving it. We     on telematics is on page 41.
                                                  programs to assist the environmental        From the time delivery drivers are
Engineering, and Sustainability.                                                                                                            devote a number of KPIs to compliance
                                                  coordinator cover a wide range of top-      hired at UPS until they move into other                                                   INCREASING PUBLIC POLICY
Mr. Stoffel is a member of the Manage-                                                                                                      topics, and these are discussed above in
                                                  ics, including, among others:               positions or retire, they receive training                                                ENGAGEMENT.
ment Committee, which is responsible                                                                                                        “Compliance” beginning on page 51.
                                                                                              in how to operate their vehicles for                                                      In 2010, we expect to join major inter-
for setting and executing all UPS policy.         • air quality
                                                                                              maximum fuel efficiency and minimum            Our international environmental             national organizations known for their
Responsibility for managing all                   • automotive environmental procedures       emissions. In addition to formal training     programs are guided by our Global           positive influence on environmental
sustainability initiatives and strategies,                                                    sessions drivers may be given periodic        Environmental Standards Manual, which       public policy and sustainability, includ-
                                                  • hazardous waste management
including performance metrics, rests                                                          updates on their fuel efficiency perfor-       is patterned on the ISO 14001 struc-        ing the World Business Council
with Steve Leffin, Director, Global                • spill response plans
                                                                                              mance as measured by our telematics           ture. As of the end of 2009, we have        on Sustainable Development (WBCSD)
Sustainability. In addition, further              • underground storage tanks                 program (described on page 41).               implemented the programs specified in        and the Global Reporting Initiative (GRI).
accountability for specific performance                                                                                                      the Manual in 25 countries where UPS
metrics rests with managers of the                DECISION GREEN.
                                                  UPS encourages all employees to con-
                                                                                                                                            directly provides services. We expect to
                                                                                                                                                                                        Risks and Opportunities
                                                                                              Monitoring and
relevant business units and departments                                                                                                     continue implementing the standards in
throughout UPS.                                   sider the environment in all decisions,
                                                                                                                                            other countries in 2010 and beyond.
                                                  whether it involves the simplest office                                                                                                REGULATORY RISK.
                                                  task or a multi-year capital investment.
                                                                                              Follow-Up                                                                                 Regulatory Risk. As one of the world’s

Training and
                                                  Our enterprise-wide communication                                                                                                     largest transportation companies, UPS
                                                  platform for this effort is known as
                                                  Decision GreenSM. We refer to Decision
                                                                                                                                            Additional                                  acknowledges that both fossil-fuel
                                                                                                                                                                                        dependence and carbon emissions
Awareness                                         Green when communicating to custom-
                                                  ers and employees worldwide, both to
                                                                                              UPS has in place an extensive Envi-
                                                                                              ronmental Management System (EMS)             Contextual                                  pose a major long-term threat to the
                                                                                                                                                                                        environment and to the global econ-
                                                                                              in the United States for monitoring

UPS has a strong culture of training and
                                                  increase the consistency and impact of
                                                  our messages relating to environmen-
                                                                                              environmental performance and follow-
                                                                                              ing up on issues and opportunities that
                                                                                                                                            Information                                 omy, and that society may respond to
                                                                                                                                                                                        these threats with new or additional
awareness regarding all aspects of its            tal issues and to emphasize that any                                                                                                  regulatory structures. For example, the
                                                                                              may arise from monitoring activities.
operations. In addition to formal pro-            one activity is part of a larger ongoing                                                                                              European Union’s inclusion of airlines
                                                                                              Our EMS is not certified to the ISO
                                                  effort to consider the environment in                                                                                                 in its emissions trading scheme (ETS)
grams and responsibilities we encourage
                                                  everything we do. Decision Green has
                                                                                              14001 standard, yet we believe that it        Work in Progress                            in 2012 is an example of how carbon
all employees to raise awareness about                                                        is comprehensive and respects all of the
issues and opportunities for improving            led us to change many behaviors at UPS,                                                                                               regulation has implications for transpor-
                                                                                              principals of ISO 14001.
                                                  from how often we print documents                                                         At the end of 2009, we were involved in     tation companies. Groups within UPS
our environmental performance. Below
                                                  to how we develop new products and          Our EMS provides guidance to our              a number of activities that we expect to    that monitor regulatory developments
are some examples of formal programs,
                                                  services. To make sure such behavior        plant engineering staff regarding their       report on in our 2010 Report.               related to climate include:
Environment—Additional Contextual Information: Risks and Opportunities                                                                     2009 UPS CSR | 54


        To read related highlights, visit pages 7, 11 and 17




• our corporate risk management team,             conduct a substantial portion of our        • Reputational risks may arise due to cus-
                                                  business. We have operational contin-         tomer or public perception related to
• our public affairs offices in Washington
                                                  gency plans in place to deal with such        UPS’s significant use of fossil fuels. We
  D.C., in Brussels, Belgium and various
                                                  episodic disruptions; the scale of our        believe this risk is minimal because our
  other locations around the world,
                                                  network (more than 3,000 facilities)          past actions, present course and strate-
• the sustainability department within            allows for quick operational changes          gic direction all demonstrate continuing
  engineering, and                                and gives us the flexibility to recover        leadership in our industry.
• UPS Airlines                                    promptly from regional climate disasters.
                                                                                              REGULATORY OPPORTUNITIES.
The primary environmental regulatory              OTHER RISK.                                 We believe that regulation related to the
risk for UPS is the imposition of cap-            Other risks to UPS related to the envi-     environment, and particularly to climate
and-trade or carbon taxation regulations          ronment include revenue and profit risk,     change, presents opportunities for UPS.
at the international, national or state           competitive risk, and reputational risk:
                                                                                              • Imposition of cap-and-trade or carbon
level. This risk may be increased by              • Significant fuel and energy cost             taxation regulation, as mentioned
differences and inconsistencies in the              increases can impact customer demand        above, is likely to lead to increased
implementation of regulatory mecha-                 for services, including their transport     customer demand for efficient shipping
nisms around the world. Compliance                  modal choice. This can impact profit-        services, carbon neutral offerings,
with these new regulations will drive               ability of premium services.                supply chain services, and other capa-
additional costs into our global network,                                                       bilities in which UPS has long invested
                                                  • Fuel and energy related disruptions can
which in turn could affect the cost of                                                          and continues to lead its industry. Our
                                                    have significant impacts on our ability
our services for our customers. Statutory                                                       ability to meet these needs now and
                                                    to provide transportation services.
emissions limits driven by cap-and-trade                                                        demonstrated ability to develop new
systems may substantially increase the            OTHER OPPORTUNITIES.                          solutions in this area may increase our
costs associated with using fossil fuels,         • Shifts in attitudes and demands could       competitive advantage.
and therefore the profit and growth of               represent competitive opportunity as
                                                                                              • Increased public concern regarding
companies without sound strategies                  demand for carbon-efficient transporta-
                                                                                                climate change increases the pos-
for a low-carbon future. UPS has                    tion and supply chain carbon footprint
                                                                                                sibility of public/private partnerships
extensive experience with transporta-               analysis. We are aware of these shifts
                                                                                                for, and increased private investment
tion efficiency and implementation                   in consumers attitudes and demands,
                                                                                                in, development of alternative fuels
of low-carbon fuels. Specific actions                fulfilling such requests with current
                                                                                                and technologies. Such financial
taken to address risks and create                   capabilities, and enhancing our abili-
                                                                                                commitments from other parties and
opportunities are too numerous to                   ties to provide even more solutions,
                                                                                                organizations could enable UPS to
include in this document. Please visit              products and services for our customers
                                                                                                benefit disproportionately due to our
ups.com/environment.                                who are seeking greener supply chains.
                                                                                                more advanced ability to incorporate
PHYSICAL RISK.                                                                                  such fuels and technologies into
Our primary physical risk related to                                                            our existing operations.
climate change is the potential impact
on commerce and revenue genera-
tion caused by climate disturbances
and weather disasters, particularly in
densely populated areas where we
Workplace—Management Approach – Goals and Performance                                                                                                                                             2009 UPS CSR | 55




Workplace
To read related highlights, visit page 15




Management Approach                         employee based on factors such as race,   management jobs with the company.          workers. This aspect of our commitment    operate. We act on these beliefs as a
                                            gender or sexual preference.              We believe this is one of the reasons      to employee health is described in more   matter of policy.
                                                                                      we have successful, stable relation-       detail on page 57.
UPS is a labor-intensive service            EMPLOYMENT.
business. A large proportion of our         UPS is one of the world’s largest
                                                                                      ships with our employees, more than
                                                                                                                                 TRAINING AND EDUCATION.                   Goals and Performance
                                                                                      76 percent of whom hold jobs that are
non-management workers—                     employers, public or private. While                                                  UPS conducts one of the private sec-
                                                                                      represented by a collective bargaining
including our delivery drivers—are          we have long used technology and                                                     tor’s most extensive employee training    At UPS, we devote two of our Key
                                                                                      organization. For example, UPS is the
responsible for operating vehicles,         automated equipment to facilitate                                                    programs and also provides substantial    Performance Indicators (KPIs) to broad
                                                                                      world’s largest employer of members
equipment and information technology        commerce, there is no substitute for                                                 support for employee education. In        measurements of employee satisfaction.
                                                                                      of the International Brotherhood of
tools at a high level with minimal          people when it comes to meeting our                                                  2009, UPS allocated US$368 million        We value these metrics highly because
                                                                                      Teamsters. We respect the unions
supervision. To succeed, they must be       customers’ needs. Because so much of                                                 on training and education. We also        our business is so dependent on people
                                                                                      to which our people belong, maintain
physically fit, mentally alert, fully        our work comes in bursts of activity at                                              encourage all management employees        and the training we invest in them. The
                                                                                      open channels of communication
committed to safety, and able to main-      the beginning and end of the business                                                to continue their career development      first KPI measures full-time employee
                                                                                      with them, and bargain in good faith
tain a positive attitude toward             day around the world and during holiday                                              and job-related education, in part        turnover. Our goal was 14 percent
                                                                                      on all matters that involve them.
customers and co-workers at all times.      seasons, we have a large part-time                                                   during career development discussions.    in 2009, and actual turnover was
                                            workforce, a total of 186,000 people      OCCUPATIONAL HEALTH AND SAFETY.            Approximately 96% percent of UPS          7.4 percent (see chart.) In addition to
Furthermore, because we work all over
                                            at the end of 2009.                       The health and safety of our employees     management employees receive such         economic conditions, we believe that
the world, in communities at every
                                                                                      is a primary management concern. This      reviews. More information on training     this low level of turnover results from
level of the socioeconomic scale, our       Our century of reliance on the people
                                                                                      stems from the investment we make in       and education is provided on page 56.     working conditions, compensation and
workforce is diverse by nature. Around      who make up our workforce has pro-
                                                                                      each employee in terms of compensa-                                                  benefits that give employees incentives
the world, we operate our own local         duced a strong commitment to value                                                   DIVERSITY AND EQUAL OPPORTUNITY.
                                                                                      tion, education and training as well as                                              to remain with UPS as long as possible.
subsidiaries or form partnerships with      individuals and develop them as both                                                 UPS complies with all applicable laws
                                                                                      our reliance on them for keeping our                                                 Unlike many other companies, we did
local companies that are willing and        workers and people. This commitment                                                  and regulations regarding diversity and
                                                                                      service agreements with customers and                                                not resort to job cuts as a primary
able to meet our standards for employ-      includes multiple dimensions: fair                                                   equal opportunity, in every country
                                                                                      business partners. We therefore jointly                                              cost-reduction measure when business
ment, service quality, and compliance.      compensation, high-quality training,                                                 and community in which we operate.
                                                                                      develop and operate programs with our                                                cycles turn negative; instead we look
                                            opportunities for education, open doors                                              Beyond that base-line requirement
Our approach to employment is there-                                                  employees and our unions for extensive                                               for ways to minimize job loss.
                                            for promotion, and encouragement to                                                  for a responsible business, we strive
fore a critical strategy in which we                                                  safety training and reward excellence
                                            become share owners of UPS. All these                                                to increase our diversity, particularly   The data for our second employee sat-
seek talented people to work for us and                                               in safe job performance. In 2009, for
                                            are matters of policy and tradition at                                               among management employees, to            isfaction KPI comes from our Employee
then invest substantially in training and                                             example, we allocated approximately
                                            UPS, and are discussed as such in the                                                match the composition of our customer     Relations Index (ERI), which in turn
educational opportunities to increase                                                 35 percent of our training budget to
                                            relevant paragraphs below.                                                           base and the talent pool from which we    comes from an annual employee survey.
their capabilities even further. It would                                             safety. Further information on safety is
                                                                                                                                 recruit. We believe that diversity and    The survey includes a set of questions
be against our own interest—as well         LABOR/MANAGEMENT RELATIONS.               provided on page 57. In addition, we
                                                                                                                                 equal opportunity are good for UPS, and   focused on UPS as an employer of
as contrary to our policies, history and    Because of our policy of promoting        continue to develop and offer a variety
                                                                                                                                 that our employees should reflect the      choice. The data from 2009 indicated
culture—to discriminate against any         from within, approximately 77% of UPS     of healthcare, health awareness and
                                                                                                                                 diversity of the communities where we     that 70 percent of UPS employees
                                            managers began their careers in non-      health management options for our
Workplace—Management Approach – Training and Awareness About Workplace Issues                                                                                                                                  2009 UPS CSR | 56


       To read related highlights, visit page 15




consider the company an employer                   assistance for approximately 110,000          Organizational                           KEY PERFORMANCE INDICATOR
of choice (see chart).                             college students.
                                                   PROMOTE FROM WITHIN.
                                                                                                 Responsibility                           Employee Turnover—Global Workforce

Policy                                             UPS has promoted from within for
                                                   generations. This includes                    Organizational responsibility for        Turnover goal achieved.
                                                                                                 executing our human resource policies
COMPENSATE FAIRLY.                                 • part-time workers moving into full-time     and management approach as outlined
It is UPS policy that a competitive

                                                                                                                                                              9 2 .6
                                                     positions;
workplace compensation and benefits
package is essential to attract and
                                                   • non-management employees moving
                                                                                                 above rests with Allen E. Hill, Senior
                                                                                                 Vice President, Human Resources.           Retention                                          %
                                                     into management positions; and              Mr. Hill is a member of the Management
retain good workers. More information
                                                                                                 Committee, which is responsible for


                                                                                                                                                              0 7 .4
on our workplace programs are provided             • supervisors and managers moving
on page 57.                                          into positions of greater responsibility.
                                                                                                 setting and executing all UPS policy.
                                                                                                                                            Turnover
                                                                                                                                                                                               %
                                                                                                                                                                  .3
TRAIN EFFECTIVELY.                                 Well over 58 percent of our current
We allocated more than US$350                      full-time drivers were once part-time
                                                                                                 Training and Awareness
million to employee training in 2009,              employees, and more than 77 percent           About Workplace Issues
above the previous five-year average                of our full-time managers (including                                                   Percent of all full-time employees who leave our company annually.
of US$362 million. As in the past, a               most vice presidents) were once non-          Because of our decades-old policy
substantial amount of this investment              management employees. In 2009,                of promoting from within, approxi-
was in training for safety on the job.             1,866 part-time employees advanced            mately 77% of UPS managers began         KEY PERFORMANCE INDICATOR
Additional contextual information on               to full-time work with UPS, and 1,849         their careers in non-management jobs     Employer of Choice Index—Global Operations
training is provided below.                        employees moved into management               with the company and have worked
                                                   for the first time. Additionally, at UPS       in multiple organizations within the
PROVIDE OPPORTUNITIES FOR
                                                   the trend is to develop local employees       company. This includes members of
EDUCATION.
                                                   to manage and grow our international          our Management Committee, the most
Tuition assistance is available to                                                                                                                                                Did Not
                                                   operations rather than send people from       senior management body at UPS. Our
full-time and a substantial number of                                                                                                                                             Conduct
part-time employees. In particular,
                                                   other countries. In 2009, less than one       managers are thus aware from personal        75.0%            75.0%                              70.0%          70.0%
                                                   percent of our global managers were           experience of the full range of issues
college students are an important source
                                                   working outside their home countries.         related to fair employment and human
of part-time workers for UPS. They con-                                                                                                          2006             2007             2008              2009          2011
stituted 62 percent of our newly hired             ENCOURAGE OWNERSHIP.                          rights on the job. We supplement this
part-time employees in 2009, compared              UPS was privately owned primarily by          experience with systematic training of
to 59 percent in 2008. To help them                its employees during its first 90 years.       our management employees, and we
                                                                                                                                                Actual Data
balance work and school, our Earn and              Employees began sharing the benefits           provide all employees worldwide with           Goal
Learn program provides tuition assis-              of stock ownership in the 1920s. We           a 24-hour “Help Line” that enables
tance while they work part-time at UPS.            became a public company in 1999.              them to anonymously report their
                                                                                                                                          A subset of 20 questions from the Employee Opinion Survey that assess employees’
In 2009, we provided US$27 million in              Today we offer multiple stock owner-          concerns about all on-the-job issues.
                                                                                                                                          opinions of how UPS attracts, retains, and motivates employees.
tuition support to approximately 21,000            ship programs for employees, including,
students working in 90 locations. Since            in some countries, a discounted stock
the program began in 1999, we have                 purchase plan. In 2009, approximately
invested US$163 million in tuition                 43 percent of full-time employees were
                                                   shareholders.
Workplace—Organizational Responsibility – Additional Contextual Information…                                                                                                                                   2009 UPS CSR | 57


       To read related highlights, visit page 15




Monitoring and                                      Engineer & Information Technology and      In 2009, we allocated US$83 million        more than 350 employees at UPS work          • Our “Wellness Champions” program
                                                    Women of Color magazines.                  in teaching 65 formal safety training      full time to protect the health and safety     designates approximately 3,600 UPS
Follow-Up                                          • Business groups including National
                                                                                               courses in more than 1,800 facilities.     of UPS employees.                              employees at all levels of the company
                                                                                               Our workers allocated approximately                                                       as a Wellness Champion in their facility
                                                     Minority Supplier Development Council                                                AVOIDING INJURY.
We conduct regular internal monitor-                                                           2 million hours in safety training in                                                     or location, and supports them with
                                                     (NMSDC); GHCC (Georgia Hispanic                                                      We have reduced injuries in the United
ing of how our employment policies                                                             2009.                                                                                     tools and resources for informing
                                                     Chamber of Commerce); Greater                                                        States by 52 percent in the last five
and practices are followed around the                                                                                                                                                    their co-workers about health risks
                                                     Women’s Business Council (GWBC);          Because we operate more than 95,000        years. This success in avoiding injury
world. One of our primary monitoring                                                                                                                                                     and encouraging them to adopt new
                                                     Tri-State Minority Supplier Develop-      delivery vehicles on a daily basis all     is shown in the chart on page 58.
programs is our annual employee rela-                                                                                                                                                    behaviors to prevent or offset them.
                                                     ment Council (TSMSDC); and Women’s        over the world, safe driving is a major    More importantly, we wanted our KPI
tions index (ERI), which results from a              Business Enterprise National Council      focus for UPS. We measure both our         to reflect the actual impact of injuries      Especially during difficult times, our
systematic survey of a representative set            (WBENC).                                  successes and challenges in this regard.   on our business—time lost rather             Employee Assistance Program (EAP)
of employees at all levels and locations                                                       On the positive side, for example, 925     than simply the number of injuries.          and Work/Life benefits play a significant
of the company. We did not conduct this            • Regulatory agencies including the
                                                                                               more drivers entered the UPS “Circle of                                                 role in our overall wellness program.
survey in 2008, so that we could update              Georgia Department of Labor.                                                         WELLNESS.
                                                                                               Honor” in 2009 in recognition of driving                                                More than 350,000 UPS employees and/
the questions to ensure they are relevant                                                                                                 In 2009, UPS provided health benefits
                                                   • Interest groups including Human Rights    25 years without an avoidable accident.                                                 or household members have benefited
to changes in our business, accurately                                                                                                    for more than 823,000 employees,
                                                     Campaign (HRC); Workforce Strategy        The Circle of Honor now includes                                                        from the program since its inception in
reflect the opinions of our employees,                                                                                                     retirees, and their dependents. Our
                                                     Center (WSC) of the Bill and Melinda      4,836 drivers who have achieved this                                                    2006. The program provides practical
and measure the engagement of our                                                                                                         benefits programs provide medical,
                                                     Gates Foundation; The Leadership          remarkable record. Unfortunately,                                                       information, referrals to trained profes-
employees. The survey resumed in                                                                                                          dental, and vision care as well as
                                                     Institute for Women of Color Attorneys;   we also deeply regret the fatal auto                                                    sionals and support for a wide-range of
2009. The ERI is reported back to all                                                                                                     education programs and tools regard-
                                                     YWCA; National Urban League and the       accidents that claimed the lives of 9                                                   work/life issues from financial concerns
employees and also to management, up                                                                                                      ing healthcare and proactive wellness
                                                     American Diabetes Association.            UPS employees in 2009. Whenever an                                                      and childcare to substance abuse and
to and including the UPS Management                                                                                                       programs. The goal of these programs
                                                                                               accident occurs, we invest significant                                                   bereavement. In the transportation
Committee. As described on page 56,                                                                                                       and tools is getting our people to take
we use a subset of the ERI for our annual
                                                   Additional Contextual                       management attention in investigating
                                                                                                                                          wellness personally, by making
                                                                                                                                                                                       industry, companies that offer these
                                                                                               the causes, retraining the driver(s),                                                   benefits—including UPS—find that
KPI on employee satisfaction.                      Information and                             and, as appropriate, changing our
                                                                                                                                          informed choices in how they live and
                                                                                                                                                                                       participants report a 36 percent increase
                                                                                                                                          respond to wellness challenges.
UPS is externally monitored by numer-              Performance Indicators                      procedures and safety training.
                                                                                                                                          We also seek to reduce overall
                                                                                                                                                                                       in attendance and a 51 percent increase
ous outside stakeholder groups. In 2009,                                                                                                                                               in productivity.
                                                                                               In addition to training our people, we
for example, UPS was positively evalu-                                                                                                    healthcare costs for UPS. One of the
                                                   In the paragraphs below, we pres-           continually increase the safety of the                                                  WOMEN’S LEADERSHIP
ated for its performance regarding equal                                                                                                  characteristic qualities of UPS wellness
                                                   ent statistical information and discuss     facilities they work in and the equip-                                                  DEVELOPMENT.
opportunity, diversity, human rights, and                                                                                                 programs is an emphasis on matching
                                                   performance indicators related to the       ment they use. Many of the ideas                                                        Entry-level positions in our business,
other employment issues by:                                                                                                               employees with individuals who can
                                                   workplace strategies and policies dis-      for these improvements and upgrades                                                     such as for drivers and package loaders,
                                                                                                                                          help them.
• Publications and publishers including            cussed earlier in this section.             come from our Comprehensive Health                                                      have traditionally attracted more men
  Black Enterprise magazine; Diversity-                                                        and Safety Process (CHSP) members.         • Our “health coaches” program gives         than women. Coupled with our focus on
                                                   OUR FOCUS ON SAFETY.                                                                     UPS employees access to registered
  Business.com; Diversity Plus magazine;                                                       There are more than 3,900 CHSP                                                          promoting from within, this has created
                                                   Approximately 82 percent of UPS work-                                                    nurses who provide confidential
  Expansion magazine; Hispanic Business                                                        committees in UPS facilities worldwide,                                                 a particular need for UPS to develop
                                                   ers are involved in freight and package                                                  assistance in understanding healthcare
  magazine; PINK! magazine; Profiles in                                                         run primarily by hourly employees                                                       and retain women for supervisory and
                                                   handling, driving motor vehicles, or                                                     issues and navigating the healthcare
  Diversity Journal; Woman Engineer mag-                                                       with management support. The CHSP                                                       management positions. Our Women’s
                                                   both. To perform these jobs safely,                                                      system; health coaches helped more
  azine; and The Career Communications                                                         committee framework is designed to                                                      Leadership Development program,
                                                   people need specific skills and abilities                                                 than 11,500 UPS employees and family
  Group, publisher of US Black Engineer                                                        include approximately 10% of the work-                                                  which we expanded internationally in
                                                   that maximize their performance while                                                    members in 2009.
  & Information Technology, Hispanic                                                           force. In addition to the CHSP process,                                                 2009, meets this need in three ways:
                                                   minimizing their exposure to injury.
Workplace—Additional Contextual Information and Performance Indicators                                                                                                               2009 UPS CSR | 58


        To read related highlights, visit page 15




• Creating meaningful dialogues between
  women and men regarding workplace                 KEY PERFORMANCE INDICATOR                                      KEY PERFORMANCE INDICATOR
  issues.                                           Automotive Accident Frequency                                  DART Injury Rate per 200,000 Hours—Global Operations

• Opening avenues for women to build
  their leadership skills through com-              Established new 2011 goals.                                    Injury rate continues to drop—
  munity service.
                                                                                                                   new goal set.
• Providing opportunities for women to
  expand and strengthen their career
  networks.
                                                                                                                   2011†                             4.1
EFFECT OF THE RECESSION.                                                                                           2009                              4.2
Much of the global economy was in
a recession or dealing with its con-                                                                               2008                                     5.0
sequences in 2009. This had a strong
effect on our revenue, operating profit                                                                             2007*                                            6.0
and growth plans. To minimize the
effects on our employees and avoid lay-                                                                            2006*                                                   6.9
offs, we froze hiring and compensation
increases during the year. During the
year, our workforce reduced naturally,
                                                                                                                           Actual Data
through retirements and job changes
                                                                                                                           Goals
by employees. We also suspended the
401(k) matching program under which
                                                                                                                   Days away from work, restricted activity, or transferred to
UPS would have given employees
                                                                                                                   another job due to an on-the-job injury. This number represents
additional incentive to retain earnings                                                                            the number of occurrences per 200,000 hours worked.
in their retirement account. We also                                                                               *Restated to include global operations.
suspended matches for employee chari-                                                                              †
                                                                                                                     New goal. US package only.
table giving other than United Way
and cut back on management training,
all in an effort to minimize job loss as a
result of the recession.
                                                        15.3         15.1        13.3        10.9         8.9
                                                         2006*       2007*       2008         2009        2011†


                                                          Actual Data
                                                          Goals


                                                    Total number of vehicular accidents (regardless of severity)
                                                    per 100,000 driver hours.
                                                    *Restated to include global operations.
                                                    †
                                                      New goal. US package only
Workplace—Additional Contextual Information – Human Rights: Performance Indicators                                                                                                       2009 UPS CSR | 59


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Human Rights                                        valuable to be able to refer to an explicit
                                                    Human Rights Statement in our dealings
                                                                                                  Human Rights                               CHILD LABOR; FORCED AND
                                                                                                                                             COMPULSORY LABOR.
                                                    with them.                                    Performance Indicators                     We are not aware of any incidents,
                                                                                                                                             violations, complaints, or concerns in

Management Approach                                 Policy                                        INVESTMENT AND                             its operations involving the use of child
                                                                                                  PROCUREMENT PRACTICES.                     labor or forced or compulsory labor.
                                                                                                  We do not currently report the percent-    We manage our business in compliance
                                                    Our Human Rights Statement is incorpo-
For most of its first century in business,                                                         age and total number of significant         with all applicable laws and regulations
                                                    rated into our Code of Business Conduct,
UPS’s high regard for human rights                                                                investment agreements that include         of the countries in which we operate,
                                                    which is available online with our
was simply lived out in practice. When                                                            human rights clauses or that have          and in accordance with our own Code
                                                    other governance documents at www.
we created a formal Code of Business                                                              undergone human rights screening.          of Business Conduct.
                                                    investors.ups.com. The relevant excerpt
Conduct, our value for human rights                                                               All existing employees of UPS receive      SECURITY PRACTICES.
                                                    is provided in this Report on page 16.
was implicit in it. In 2009, we formally                                                          training on the Code of Business           100% of UPS’s security personnel
                                                    The language of the statement is closely
adopted a Human Rights Statement for                                                              Conduct. Human Rights language was         receive training on the proper use
                                                    modeled on that used by the United
the first time, in response to two trends.                                                         added to the Code of Business Conduct      of force.
                                                    Nations Global Compact. In addition, we
                                                                                                  in October, 2009. All new employees
The first trend is the growing value of              added new human rights language to                                                       INDIGENOUS RIGHTS.
                                                                                                  receive this training when they are
explicit recognition of human rights by             the UPS Policy Book, and began includ-                                                   We are not aware of any incidents
                                                                                                  hired. In addition, the Code of Business
well-known, widely respected global                 ing language relating to human rights                                                    of violations involving the rights of
                                                                                                  Conduct is available on our employee
organizations. Even though respecting               compliance to key contracts with suppli-                                                 indigenous people.
                                                                                                  website in 13 languages.
human rights has not been an issue for              ers outside the United States. However,
UPS itself (because of the nature of                all major suppliers must comply with the      NON-DISCRIMINATION.
our business, the kind of people we hire,           UPS Code of Business Conduct, which           We do not currently report the total
and our strong culture of developing                now includes human rights language.           number of incidents of discrimination
individuals as people and workers),                                                               and actions taken.
we understand that society as a whole
                                                    Organizational                                FREEDOM OF ASSOCIATION AND
benefits when organizations such
                                                                                                  COLLECTIVE BARGAINING.
as UPS publicly support global efforts              Responsibility                                In 2009, we identified no operations in
to protect human rights.
                                                                                                  which the right to exercise freedom
Second, UPS has been expanding inter-               Organizational responsibility for             of association and collective bargaining
nationally from its base in the United              monitoring and enforcing performance          were at significant risk. In contrast,
States. Because we seek to support                  related to our human rights policies rests    we support the rights of our employees
local suppliers, particularly small and             with Allen E. Hill, Senior Vice President,    to become members of a union, and
diverse businesses, with procurement                Human Resources. Mr. Hill is a member         76 percent of our employees have
opportunities, our international                    of the Management Committee, which is         exercised that right. In addition, we
expansion means we are engaging with                responsible for setting and executing all     encourage positive relationships
new suppliers in many countries around              UPS policy.                                   with our employees and unions by
the world. We want to ensure that our                                                             adhering to the principles outlined
supply chain partners share our regard                                                            in our Policy Book and our collective
for human rights, and it is therefore                                                             bargaining agreements.
Community—Management Approach and Performance Indicators                                                                                                                                                      2009 UPS CSR | 60




Community
To read related highlights, visit page 13




Management Approach                         Aggregating logistics into dedicated          • National Association of Women              that help individual entrepreneurs start      Over time, The Foundation has evolved
                                            networks such as UPS’s makes global             Business Owners                            businesses, create jobs, build assets and     our philanthropic giving to meet the
and Performance                             commerce more efficient in terms of
                                                                                          • Minority Business Development Agency
                                                                                                                                       improve the standard of living for their      changing needs of communities. In late
                                            time, money and environmental costs.                                                       families:                                     2008 we updated the strategic priorities
Indicators                                  The benefit of this efficiency increase         • National Gay and Lesbian                                                                 for our philanthropy, to achieve greater
                                                                                                                                       • Opportunity International is helping
                                            has historically been difficult to mea-          Chamber of Commerce                                                                      alignment between the societal issues
COMMUNITY.                                                                                                                               nearly 1.2 million active loan clients
                                            sure. In 2009 we invested significant          • National Minority Supplier                                                               we are currently addressing and the
UPS has always operated from the belief                                                                                                  and entrepreneurs in 27 developing
                                            effort in systems and methods for               Development Council                                                                      expertise of our people and UPS as an
that strong communities are essential to                                                                                                 countries.
                                            measuring our carbon efficiency and its                                                                                                   organization. We describe the work of
the long-term success of the company.                                                     • National Urban League                      • ACCION International works with part-
                                            indirect benefit to customers, and we                                                                                                     the Foundation later in “Philanthropy,
Our employees live in the cities,           provide information on our progress and                                                      ners in 25 countries to reach more than     Volunteerism and Disaster Relief” on
                                                                                          • National Veteran-Owned
counties, provinces, states, territories    leadership in “Environment” beginning                                                        3.1 million active clients with loans and   page 61.
                                                                                            Business Association
and countries that we serve; our drivers    on page 31.                                                                                  financial services.
daily visit countless neighborhoods                                                       • Native American Business Alliance
                                            We have a number of additional positive                                                    Our 62,000 retail access points around            Further information is available
where people live and work. With                                                          • U.S. Hispanic Chamber of Commerce                                                            online at ups.com/foundation.
                                            impacts on society through the opera-                                                      the world provide small and diverse
the rise of online commerce, we are
                                            tion of our business. Three of the most       • U.S. Pan Asian American                    businesses with local, one-stop access
engaging with individuals and small
                                            important are procurement contracts,            Chamber of Commerce                        to our global network, including the
businesses at a greater rate than ever
                                            finance, and logistics. This is particularly                                                products, services, and tools they need.      CORRUPTION.
before. So for us, “community” and                                                        • Women’s Business Enterprise
                                            important for small and diverse busi-                                                      In addition, The UPS Store® (with nearly      Our policy is to comply with all appli-
“society” are not abstract concepts. We                                                     National Council
                                            nesses, which make up a majority of                                                        4,800 The UPS Store and Mailboxes             cable laws, rules and regulations, in
see society from the ground up, every
                                            the world’s importers and exporters.          Internationally, we are actively explor-     Etc. locations around the world) is a         all countries where we operate. Our
day, around the world. We manage our
                                                                                          ing ways to increase our focus on            franchise opportunity for small business      Code of Business Conduct state poli-
business to make a positive difference      UPS spent more than US$1.6 billion            diversity and inclusion in ways that are     entrepreneurs.                                cies and procedures that prohibit UPS
in society both in the way we operate       with small and diverse businesses in          germane to our employees and the                                                           employees, and the people acting on
commercially and the way we give back       2009, compared to US$1.3 billion spent                                                     To complement our positive impacts on
                                                                                          communities in which we operate.                                                           our behalf, from engaging in unlawful
to our communities with money and           in 2008. This represents 10 percent                                                        society from the operation of our busi-
volunteer time.                                                                           Our financing subsidiary, UPS Capital®,       ness, we conduct a substantial amount         activities, including violations of the
                                            of our total U.S. procurement spend
                                                                                          helps small and diverse businesses           of corporate philanthropy. This includes      U.S. Foreign Corrupt Practices Act and
Our primary business impact on society      (excluding categories that do not have
                                                                                          finance trade and get access to govern-       both direct grants to outside organiza-       other applicable anti-bribery laws, rules
is aggregating the shipping activity of     small or diverse vendors). We actively
                                                                                          ment-backed loan programs. UPS Capital       tions and extensive programs to support       and regulations in various countries.
millions of organizations and individuals   support organizations whose mission is
                                                                                          also provides trade financing to small        volunteer work by our employees. We           UPS is not aware of any allegations of
into a single, highly efficient logistics    to support small and diverse businesses,
                                                                                          and medium enterprises, helping to           established The UPS Foundation in 1951        corruption in 2009 from any government
network. In 2009, for example, we           including:
                                                                                          mitigate the risks of trading internation-   simply to “accomplish good purposes,”         agency around the world responsible for
estimate that approximately 2 percent of                                                                                                                                             oversight of this issue.
                                                                                          ally. Through The UPS Foundation, we         in the words of UPS founder Jim Casey.
global GDP passed through our network.
                                                                                          support two micro-lending organizations
Community—Management Approach and Performance Indicators– Philanthropy Volunteerism, Urgent Humanitarian…                                                                                                          2009 UPS CSR | 61


        To read related highlights, visit page 13




PUBLIC POLICY.                                      greater awareness of climate change            determine the amount of any liability        Policy                                      Monitoring and
Along with facing tough competition and             and influence changes in public policy.         that may result from these matters or
the challenges of entering new markets,
                                                    ANTI-COMPETITIVE BEHAVIOR.
                                                                                                   whether such liability, if any, would                                                    Follow-Up
                                                                                                                                                Our Code of Business Conduct is avail-
UPS must continually adapt to new laws                                                             have a material adverse effect on UPS’s
                                                    Our policy is to comply with all appli-                                                     able online at www.investors.ups.com
and regulations. Legislative and regula-                                                           financial condition, results of operations,                                               During 2009, we conducted onsite
                                                    cable laws, rules and regulations, in all                                                   under the “Governance” and “Gover-
tory changes can limit our opportunities                                                           or liquidity.                                                                            corruption risk assessments in 13 high-
                                                    countries where we operate. The UPS                                                         nance Documents” tabs.
for growth, and government policies and                                                                                                                                                     risk countries. We use the information
                                                    Code of Business Conduct includes poli-        COMPLIANCE.
legislation often have a deep impact on                                                                                                                                                     gathered from these assessments to
                                                    cies and procedures that prohibit UPS          Our policy is to comply with all appli-
how we do business. We present our                                                                                                                   A description of our corporate
                                                    employees, and the people acting on            cable laws, rules and regulations, in all                                                take appropriate measures. Information
                                                                                                                                                     philanthropy strategy is available
views on these topics to a wide range                                                                                                                                                       pertaining to such matters is reviewed
                                                    our behalf, from engaging in anti-com-         countries where we operate. The UPS               online at ups.com/foundation.
of policymakers and stakeholder groups,                                                                                                                                                     and acted on promptly by senior
                                                    petitive behavior, antitrust activities or     Code of Business Conduct includes poli-
with particular emphasis on the impor-                                                                                                                                                      management, up to and including the
                                                    monopolistic practices.                        cies and procedures that prohibit UPS
tance of free enterprise, fair competition                                                                                                                                                  Management Committee.
and global trade. Our venues for making             In February 2009, UPS received infor-
                                                                                                   employees, and the people acting on          Organizational
                                                                                                   our behalf, from engaging in unlawful
this case include active participation              mation requests from the European
                                                                                                   activities, including violations of the      Responsibility                              Philanthropy,
in trade associations, interactions with            Commission (“the Commission”) relating
                                                                                                   U.S. Foreign Corrupt Practices Act and
public officials, submitted op-ed pieces             to its investigation of certain pricing
                                                                                                   other applicable anti-bribery laws, rules    Organizational responsibility for           Volunteerism
in the media and support for regulatory             practices in the freight forwarding
and legislative action that we believe              industry. This request followed similar
                                                                                                   and regulations in various countries.        ensuring our business conduct and           and Urgent
                                                                                                   On occasion, UPS resolves routine civil      compliance policies as described above
is beneficial to UPS, our markets and                requests in October, 2007 and June,
                                                                                                   administrative matters and associated        rests with Teri McClure, Senior Vice        Humanitarian Relief
the communities we serve. Our non-                  2008. We responded to each request.
                                                                                                   penalties when they arise. However,          President of Legal, Compliance & Public
partisan political action committee,                After the close of 2009, UPS received
                                                                                                   we are not aware of any breaches of          Affairs, General Counsel and Corporate      Philanthropy at UPS is conducted
UPSPAC, enables our U.S. employees                  a Statement of Objections by the Com-
                                                                                                   compliance that are material to our          Secretary, along with the Nominating        primarily by The UPS Foundation. UPS
to aggregate and channel their political            mission. This document contains the
                                                                                                   operations or penalties that are material    and Corporate Governance Committee of       employees also contribute strongly
donations to political candidates who               Commission’s preliminary view with
                                                                                                   to company assets.                           the Board of Directors. Additionally, the   to the United Way campaign each
support such action. In 2009, UPSPAC                respect to alleged anti-competitive
                                                                                                                                                UPS Audit Committee is responsible for      year in the United States, Puerto Rico
donated approximately US$2.4 million                behavior in the freight forwarding
in the United States to candidates at the           industry by 18 freight forwarders,             Goals and Performance                        overseeing the company’s compliance
                                                                                                                                                obligations related to accounting and
                                                                                                                                                                                            and Canada. Both UPS and The UPS
                                                                                                                                                                                            Foundation contribute to urgent humani-
federal, state, and local levels.                   including UPS. The Statement of Objec-
                                                                                                                                                financial reporting.                         tarian relief efforts around the world.
                                                    tions enables the addressees to respond.       At UPS, we devote three of our Key Per-
As a sustainability leader in our industry,                                                                                                                                                 UPS’s philanthropic contributions are
                                                    Although it alleges anti-competitive           formance Indicators (KPIs) to corporate      Organizational responsibility for execut-
we invest significant time and energy in                                                                                                                                                     described below.
                                                    behavior, it does not prejudge the Com-        philanthropy and charitable donations        ing our philanthropic policies rests
bringing elected officials and policymak-                                                                                                        with Ken Sternad, President, The UPS        THE UPS FOUNDATION.
                                                    mission’s final decision, as to facts or        by our employees and retirees. These
ers to our operations centers so they                                                                                                           Foundation.                                 The UPS Foundation directs its financial
                                                    law (which is subject to appeal to the         KPIs are presented and explained in
can learn firsthand how increasing the                                                                                                                                                       and non-monetary contributions to
                                                    European courts). UPS intends to present       “Philanthropy, Volunteerism and Disaster
efficiency of global logistics and trans-
port helps the world economy operate
                                                    a vigorous defense in this proceeding.         Relief” below.                               Training and Awareness                      organizations that support the changing
                                                                                                                                                                                            needs of communities worldwide in
more sustainably. We also publicize                 UPS also received and responded to
                                                                                                                                                                                            one of five areas: Diversity, Community
innovations, such as our investments in             related information requests from com-                                                      We have trained 97% of approximately
                                                                                                                                                                                            Safety, Environmental Sustainability,
alternative fuel technology and emis-               petition authorities in other jurisdictions.                                                44,000 full-time management employ-
                                                                                                                                                                                            Nonprofit Effectiveness, and Economic
sions reductions, that can help create              UPS is cooperating with each of these                                                       ees on anti-corruption practices and the
                                                                                                                                                                                            and Global Literacy. One of our top
                                                    inquiries. At this time, UPS is unable to                                                   UPS Code of Business Conduct.
Community—Philanthropy Volunteerism and Urgent Humanitarian Relief                                                                                                                            2009 UPS CSR | 62


        To read related highlights, visit page 13




criteria in selecting a grantee organi-             “driving” test that enables teens to get
zation are recommendations by UPS                   immediate feedback on how much             KEY PERFORMANCE INDICATOR
                                                                                               Total Charitable Contributions—Global Philanthropy,
                                                                                                                                                       The UPS Foundation: 2009
employees who are already volunteering              they have learned. More than 1,200
for the organization. We believe that the           teenagers participated in the program
                                                                                               In-Kind Support and United Way Employee Contributions   Programs and Highlights
                                                                                               (U.S. Dollars in millions)
combination of financial or in-kind sup-             in its first year.
port from the Foundation and hands-on                                                                                                                  • Global philanthropy totaled US$44.4 million, ben-
                                                    The UPS Global Signature Program is a
volunteer time from UPS employees
                                                    multi-year partnership between The UPS     Charitable Contributions                                  efiting more than 1,600 non-profit organizations.
significantly increases the likelihood of
a positive result for the organization and
                                                    Foundation and the World Association of    Decreased in 2009.                                      • International grants increased to 17% of total
                                                    Girl Guides and Girl Scouts (WAGGGS).                                                                funding.
its constituents.
                                                    Foundation funding has helped WAGGGS
The UPS Foundation manages its grants               increase the recruitment and reten-                                                                • Nearly 50% of grant recipients were local com-
globally and locally. In 2009, its global           tion of volunteers, support volunteers                                                               munity based.
philanthropy totaled US$44.4 million,               through training and self-development,     2011                $103.5                              • A Foundation grant enabled UPS volunteers to
including more than US$786,000 in                   and introduce a system to monitor                                                                    present Road CodeSM, a multimedia safe-driving
in-kind support. More than 1,600                    and appraise volunteer leadership in                                                                 program for teenagers, in ten cities around the
non-profit organizations benefited                    Brazil, China, Malaysia, Mexico, and                                                                 United States (this page).
from Foundation philanthropy. Funding               South Africa. In 2009, the Foundation
                                                                                                                                                       • The Foundation’s Global Signature Program, a
directed outside the United States rose             approved a new five-year US$2 million
                                                                                                                                                         partnership with Women and Girl Guides and Girl
to 17 percent of the total in 2009, an              extension with WAGGGS with an empha-       2009            $97.6
                                                                                                                                                         Scouts (WAGGGS), was extended for five years
increase from 14 percent in 2008 and                sis on programs in Brazil, South Africa
                                                                                                                                                         with US$2 million grant (this page).
10 percent in 2007. Nearly 50 percent               and India. The grant includes several
of Foundation grants are local in nature,           key initiatives including a leadership                                                             • Foundation support continued for micro-lending
benefitting local communities across                 development series for exceptional                                                                   organizations around the world, including Oppor-
the globe, including local agencies                 candidates, development of a robust        2008              $100.9                                  tunity International and ACCION International.
supported by UPS employees who vol-                 e-Learning training program and global                                                               (page 60).
unteered at the agencies’ programs or               environmental sustainability advocacy
facilities. See the accompanying charts             programs focusing on carbon reduction
for a multi-year quantitative view of the           and resource conservation.
                                                                                                                                                         Complete information on The UPS Foundation is available
Foundation’s global philanthropy.
                                                                                               2007            $98.8                                     online at ups.com/foundation.
One of the Foundation’s recent grants                    Further information on The UPS
                                                         Foundation, its priorities and
enabled UPS to sponsor and develop
                                                         its programs is available at
Road Codesm, a safe-driving program for                  ups.com/foundation.
teenagers. In 2009, UPS Road CodeSM
was offered in conjunction with Boys &                                                         2006           $96.9
Girls Clubs of America in ten                                                                                                        Actual Data
cities around the United States. The                                                                                                 Goal
four-session training program is taught
by UPS volunteers and based on UPS’s
own safe driving methods. It features
a computer driving simulator and a
Community—Philanthropy Volunteerism and Disaster Relief                                                                                                                                              2009 UPS CSR | 63


       To read related highlights, visit page 13




UNITED WAY CONTRIBUTIONS                           URGENT HUMANITARIAN RELIEF
REMAIN STRONG.                                     EFFORTS EXPAND.                             Total In-Kind Transportation                    UPS Volunteer Hours
Along with their time, UPS employees               Each year, UPS provides both funding
donate funds to our annual United Way              and expertise to agencies providing         Movements—Global                                                                      % OF
                                                                                                                                                           Activity
campaign. More than 229,000 employ-                urgent humanitarian aid and disaster                                                                                              TOTAL
ees participated, in a campaign that               relief around the world. In 2009, The       2009                US$0.79
raised a total of US$53.2 million. As              UPS Foundation announced a multi-year                                                          Board Activities                    8.0%
a result, UPS was the second-highest               initiative to improve the capabilities of   2008                      US$1.00
corporate contributor to the United Way            relief organizations to respond to global                                                      Coaching &
                                                                                                                                                                                      24.6%
in 2009 and remains the top corporate              emergencies. This commitment includes
                                                                                               2007                       US$1.01                 Recreational Activities

contributor to United Way over time,               UPS support for the world’s most                                                               Fundraising, Conferences
                                                                                                                                                                                      22.8%
with nearly $1 billion in total support            respected relief organizations, including                                                      & Special Events
since the partnership began in 1982.               the American Red Cross, UNICEF, the                Charitable Contributions (in millions)
See the accompanying chart for a                   World Food Programme, CARE, and the                                                            Health & Wellness                   8.0%
multi-year quantitative view of United             Aidmatrix Foundation.
Way contributions by UPS employees                                                                                                                Renovation,
and retirees.
                                                   In addition to Foundation activities,       Total United Way Donations                         Revitalization & Repair
                                                                                                                                                                                       7.6%
                                                   UPS as a whole continued to expand its
EMPLOYEE VOLUNTEER HOURS.                          international humanitarian relief role.                                                        Teaching, Training
                                                                                                                                                                                      14.9%
UPS employees and their family mem-                For example, we became a member of          2009                        US$53.2                & Tutoring

bers contributed 1.2 million hours of              the American Red Cross Annual               2008                        US$53.0                Other                               14.1%
volunteer service in 2009. During Global           Disaster Giving Program in 2009, and
Volunteer Month in October 2009, more              hosted joint training with other            2007                       US$51.4                                                    100.0%
than 30,000 people in more than 50                 logistics companies for the Logistics
countries donated more than 170,000                Emergency Teams (LETs) program
hours of their time. The UPS Foundation            that we helped launch in coopera-
                                                                                                      Charitable Contributions (in millions)   Total UPS Volutneer hours include hours volunteered
pledged $100,000 to community organi-              tion with the United Nations. Our LETs
                                                                                                                                               by Employees, Retirees, Family and Friends in the
zations on behalf of 10 UPS employees              responders supported the World Food                                                         United States, Canada, and Puerto Rico.
who participated in Global Volunteer               Programme following devastating
Month community service projects.                  floods in the Philippines and a massive
The number of hours of volunteer time              earthquake on the island of Sumatra
in 2009 held steady, despite the fact              in Indonesia. Our growing experience
that our workforce was smaller than in             in disaster relief in 2009 positioned
recent years.                                      us to begin responding within hours of
                                                   the major earthquake that struck Haiti
                                                   in the early days of 2010, pledging
                                                   and providing both financial aid, skilled
                                                   volunteers and in-kind support.
GRI Index—Strategy and Analysis – Report Parameters                                                                                                                                                 2009 UPS CSR | 64




GRI Index                                                                                                                                        LEGEND:


                                                                                                                                                       Fully Reported                   Partially Reported

                                                                                                                                                       Not Reported               N/A   Not Applicable to UPS




G3 Indicator   Description                                                                                       2009 Response
               STRATEGY & ANALYSIS
1.1            Statement from the most senior decision-maker of the organization about the relevance             Letter from the Chairman, p.4
               of sustainability to the organization and its's strategy
1.2            Description of key impacts, risks and opportunities                                               Letter from the Chairman, p.4; Profile, p.24; Environment; p.53
               ORGANIZATIONAL PROFILE
2.1            Name of Organization                                                                              Cover
2.2            Primary brands, products, and/or services.                                                        Profile, p.24; 2009 Annual Report, p.4-5; Form 10-K, p.5; investors.ups.com
2.3            Operational structure of the organization, including main divisions, operating companies,         Profile, p.24; 2009 Annual Report, p.4-5; Form 10-K, p.2-4; investors.ups.com
               subsidiaries, and joint ventures.
2.4            Location of organization's headquarters.                                                          Profile, p.25; 2009 Annual Report, backcover; investors.ups.com
2.5            Number of countries where the organization operates, and names of countries with either major     Profile, p.24; Form 10-K, p.2-3; investors.ups.com
               operations or that are specifically relevant to the sustainability issues covered in the report.
2.6            Nature of ownership and legal form.                                                               Form 10-K, front cover; investors.ups.com
2.7            Markets served (including geographic breakdown, sectors served, and types of customers/           2009 Annual Report, p.4-5; Form 10-K, p. 1-5; investors.ups.com
               beneficiaries).
2.8            Scale of the reporting organization.                                                              Profile, p.24; 2009 Annual Report, p.3; Form 10-K, p.1; investors.ups.com
2.9            Significant changes during the reporting period regarding size, structure, or ownership.           Profile, p.24; 2009 Annual Report, p.3; Form 10-K, p.1; investors.ups.com
2.10           Awards received in the reporting period.                                                          Recognition, p.19; pressroom.ups.com/About+UPS/Awards
               REPORT PARAMETERS
3.1            Reporting period (e.g., fiscal/calendar year) for information provided.                            Profile, p.25
3.2            Date of most recent previous report (if any).                                                     2008
3.3            Reporting cycle (annual, biennial, etc.)                                                          Annual
3.4            Contact point for questions regarding the report or its contents.                                 About this report, p.3
3.5            Process for defining report content.                                                               Profile, p.24; Management Approach, p.27, 29, 31, 55 and 60
3.6            Boundary of the report (e.g., countries, divisions, subsidiaries, leased facilities,              Profile, p.24; Environment Reporting Scope and Boundaries, p.35-37
               joint ventures, suppliers). See GRI Boundary Protocol for further guidance.
GRI Index—Report Parameters – Governance, Commitments, and Engagements                                                                                                                       2009 UPS CSR | 65




3.7      State any specific limitations on the scope or boundary of the report (see completeness             Profile, p.24; Environment Reporting Scope and Boundaries, p.35-37
         principle for explanation of scope).
3.8      Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations,     Profile, p.24; Environment Reporting Scope and Boundaries, p.35-37
         and other entities that can significantly affect comparability from period to period and/or
         between organizations.
3.9      Data measurement techniques and the bases of calculations, including assumptions and               Profile, p.24; Environment Reporting Scope and Boundaries, p.35-37
         techniques underlying estimations applied to the compilation of the Indicators and other
         information in the report. Explain any decisions not to apply, or to substantially diverge from,
         the GRI Indicator Protocols.
3.10     Explanation of the effect of any re-statements of information provided in earlier reports, and     Profile, p.24; Environment Reporting Scope and Boundaries, p.35-37
         the reasons for such re-statement (e.g.,mergers/acquisitions, change of base years/periods,
         nature of business, measurement methods).
3.11     Significant changes from previous reporting periods in the scope, boundary, or measurement          Profile, p.24; Environment Reporting Scope and Boundaries, p.35-37
         methods applied in the report.
3.12     Table identifying the location of the Standard Disclosures in the report.                          KPI chart, p.28, GRI chart, p.64-71
3.13     Policy and current practice with regard to seeking external assurance for the report.              Assurance statement, p.23
         GOVERNANCE, COMMITMENTS, AND ENGAGEMENT
4.1      Governance structure of the organization, including committees under the highest gover-            Governance, p.26
         nance body responsible for specific tasks, such as setting strategy or organizational oversight.
4.2      Indicate whether the Chair of the highest governance body is also an executive officer.             Governance, p.26
4.3      For organizations that have a unitary board structure, state the number of members of the          Governance, p.26
         highest governance body that are independent and/or non-executive members.
4.4      Mechanisms for shareholders and employees to provide recommendations or direction to the           Contact Board page, Investor Relations website, investors.ups.com
         highest governance body.
4.5      Linkage between compensation for members of the highest governance body, senior manag-             Profile, p.26; Organizational Responsibility, p.53, 56, 61; 2009 Proxy Statement, p.16;
         ers, and executives (including departure arrangements), and the organization's performance         investors.ups.com
         (including social and environmental performance).
4.6      Processes in place for the highest governance body to ensure conflicts of interest are avoided.     Governance, p.26
4.7      Process for determining the qualifications and expertise of the members of the highest              Board of Directors includes people with broad knowledge and experience in the area
         governance body for guiding the organization's strategy on economic, environmental,                of sustainability; 2009 Proxy Statement, p. 9, investors.ups.com
         and social topics.
4.8      Internally developed statements of mission or values, codes of conduct, and principles             Management approach. p.27, 29, 31, 55 and 60
         relevant to economic, environmental, and social performance and the status of their
         implementation.
GRI Index—Governance, Commitments, and Engagements – Environment                                                                                                                          2009 UPS CSR | 66




4.9     Procedures of the highest governance body for overseeing the organization's identification       Profile, p.24; Governance, p.26; Corporate Governance, investors.ups.com
        and management of economic, environmental, and social performance, including relevant
        risks and opportunities, and adherence or compliance with internationally agreed standards,
        codes of conduct, and principles.
4.10    Processes for evaluating the highest governance body's own performance, particularly with       The Board and its committees perform annual self-evaluations, investors.ups.com
        respect to economic, environmental, and social performance.
4.11    Explanation of whether and how the precautionary approach or principle is addressed by the      Climate Change Statement, p.34
        organization.
4.12    Externally developed economic, environmental, and social charters, principles, or other         Commitment to external initiatives, p.26
        initiatives to which the organization subscribes or endorses.
4.13    Memberships in associations (such as industry associations) and/or national/international       Commitment to external initiatives, p.26
        advocacy organizations in which the organization: * Has positions in governance bodies; *
        Participates in projects or committees; * Provides substantive funding beyond routine
        membership dues; or * Views membership as strategic.
4.14    List of stakeholder groups engaged by the organization.                                         Stakeholder engagement, p.26-27
4.15    Basis for identification and selection of stakeholders with whom to engage.                      Stakeholder engagement, p.26-27
4.16    Approaches to stakeholder engagement, including frequency of engagement by type                 Stakeholder engagement, p.26-27
        and by stakeholder group.
4.17    Key topics and concerns that have been raised through stakeholder engagement, and how the       Stakeholder engagement, p.26-27
        organization has responded to those key topics and concerns, including through its reporting.
        ENVIRONMENT
DMA     Goals and performance                                                                           p.35
DMA     Policy                                                                                          p.52
DMA     Organizational responsibility                                                                   p.53
DMA     Training and awareness                                                                          p.53
DMA     Monitoring and follow up                                                                        p.53
EN1     Materials used by weight or volume.                                                             UPS purchased a total of 41,970 U.S. tons of packaging & paper products globally in 2009.
EN2     Percentage of materials used that are recycled input materials.                                 56% of the 41,970 or 23,393 U.S. tons of the packaging materials & office papers
                                                                                                        purchased are recycled materials. For a breakdown of the percentage of recycled content
                                                                                                        in all UPS packaging see link at: ups.com/environment
EN3     Direct energy consumption by primary energy source.                                             Energy & Emissions, p.38
EN4     Indirect energy consumption by primary source.                                                  Energy & Emissions, p.38
EN5     Energy saved due to conservation and efficiency improvements.                                    Energy & Emissions, p.38-39; Telematics, p.41; Air Fleet Efficiency, p.42-43
EN6     Initiatives to provide energy-efficient or renewable energy based products and services,         Energy & Emissions, p.38; Automotive Fleet Efficiency, p.21; KPIs, p.38, 39;
        and reductions in energy requirements as a result of these initiatives.                         Telematics, p.41
GRI Index—Environment                                                                                                                                                                   2009 UPS CSR | 67




EN7     Initiatives to reduce indirect energy consumption and reductions achieved.                      Not reported
EN8     Total water withdrawal by source.                                                               Water, p.49
EN9     Water sources significantly affected by withdrawal of water                                      Not applicable                                                                             N/A

EN10    Percentage and total volume of water recycled and reused                                        Not applicable                                                                             N/A

EN11    Location and size of land owned, leased, managed in or adjacent to, protected areas and         Not reported
        areas of high biodiversity value outside protected areas
EN12    Description of significant impacts of activities, products and services on biodiversity          Biodiversity, p.33, 51
        in protected areas and areas of high biodiversity value outside protected areas
EN13    Habitats protected or restored                                                                  Not reported
EN14    Strategies, current actions, and future plans for managing impacts on biodiversity              Biodiversity, p.33, 51
EN15    Number of IUCN Red List species and national conservation list species with habitats in areas   Not reported
        affected by operations, by level of extinction risk
EN16    Total direct and indirect greenhouse gas emissions by weight.                                   Energy & Emissions, p.38
EN17    Other relevant indirect greenhouse gas emissions by weight.                                     Energy & Emissions, p.38
EN18    Initiatives to reduce greenhouse gas emissions and reductions achieved.                         Energy & Emissions, p.38-39; Telematics, p.41; Air Fleet Efficiency, p.42-43
EN19    Emissions of ozone-depleting substances by weight                                               Not applicable                                                                             N/A

EN20    NOx, SOx, and other significant air emissions by type and weight.                                Not reported
EN21    Total water discharge by quality and destination                                                Not applicable                                                                             N/A

EN22    Total weight of waste by type and disposal method.                                              Effluents & Waste, p.47
EN23    Total number and volume of significant spills.                                                   Compliance, p.51
EN24    Weight of transported, imported, exported or treated waste deemed hazardous under the           Not reported
        terms of the Basel Convention Annex I, II, III, and VIII, and percentage of transported waste
        shipped internationally
EN25    Identity, size, protected status and biodiversity value of water bodies and related habitats    Not applicable                                                                             N/A

        signicifanctly affected by the reporting organization's discharges of water and runoff
EN26    Initiatives to mitigate environmental impacts of products and services, and extent of impact    Energy & Emissions, p.38; Carbon Neutral, p. 8, 46; Automotive Fleet Efficiency, p.21;
        mitigation.                                                                                     Air Fleet Efficiency, p.42-43
EN27    Percentage of products sold and their packaging materials that are reclaimed by category.       Not applicable
EN28    Monetary value of significant fines and total number of non-monetary sanctions for                Compliance, p.50
        noncompliance with environmental laws and regulations.
EN29    Significant environmental impacts of transporting products and other goods and materials         Not reported
        used for the organization's operations, and transporting members of the workforce
EN30    Total environmental protection expenditures and investments by type                             Not reported
GRI Index—Human Rights – Labor Practices and Decent Work                                                                                                                                     2009 UPS CSR | 68




         HUMAN RIGHTS
DMA      Goals and performance                                                                              p.59
DMA      Policy                                                                                             p.59
DMA      Organizational responsibility                                                                      p.59
DMA      Training and awareness                                                                             p.59
DMA      Monitoring and follow up                                                                           p.26
HR1      Percentage and total number of significant investment agreements that include human rights          Not reported
         clauses or that have undergone human rights screening
HR2      Percentage of significant suppliers and contractors that have undergone screening on human          Less than 3% of Corporate Procurement contracts include human rights language.
         rights and actions taken.
HR3      Total hours of employee training on policies and procedures concerning aspects of human            Human Rights, p.59
         rights that are relevant to operations, including the percentage of employees trained.
HR4      Total number of incidents of discrimination and actions taken.                                     Not reported
HR5      Operations identified in which the right to exercise freedom of association and collective          Many of our employees are represented by labor unions and we support their rights to
         bargaining may be at significant risk, and actions taken to support these rights.                   become members of a union. In addition, we encourage positive relationships with our
                                                                                                            employees and unions by adhering to the principles outlined in our company policy book
                                                                                                            and our collective bargaining agreements. Workforce, p.59
HR6      Operations identified as having significant risk for incidents of child labor, and measures          UPS manages its business in compliance with all applicable laws and regulations of the
         taken to contribute to the elimination of child labor                                              countries in which it operates, and in accordance with the Company’s high standards of
                                                                                                            business conduct. UPS is unaware of any incidents, violations, complaints, or concerns in
                                                                                                            its operations involving the use of child labor. Compliance, p.61
HR7      Operations identified as having significant risk for incidents of forced or compulsory labor,        UPS adheres to all applicable laws and we are not aware of any incidents of violations
         and measures to contribute to the elimination of forced or compulsory labor.                       regarding forced or compulsory labor.
HR8      Percentage of security personnel trained in the organization’s policies or procedures              100% of UPS’s security personnel receives training on the proper use of force.
         concerning aspects of human rights that are relevant to operations.
HR9      Total number of incidents of violations involving rights of indigenous people and actions taken.   We are not aware of any incidents of violations involving the rights of indigenous people.
         LABOR PRACTICES & DECENT WORK
DMA      Goals and performance                                                                              p.55
DMA      Policy                                                                                             p.56
DMA      Organizational responsibility                                                                      p.56
DMA      Training and awareness                                                                             p.56
DMA      Monitoring and follow up                                                                           p.57
DMA      Key successes and shortcomings                                                                     p.57-58
LA1      Total workforce by employment type, employment contract, and region.                               UPS Facts, p.25; Employment, p.55
GRI Index—Labor Practices and Decent Work – Society                                                                                                                                      2009 UPS CSR | 69




LA2      Total number and rate of employee turnover by age group, gender, and region.                 KPI, p.56
LA3      Benefits provided to full-time employees that are not provided to temporary or part-time      Workplace, p.55-56
         employees, by major operations.
LA4      Percentage of employees covered by collective bargaining agreements.                         Of our 408,000 employees, we have 254,000 International Brotherhood of Teamsters,
                                                                                                      2,300 Independent Pilots Association, 3,400 with International Association of Machinists
                                                                                                      and Aerospace workers. This represents 76% of the U.S. workforce.
LA5      Minimum notice period(s) regarding operational changes, including whether it is specified     The collective bargaining agreement between UPS and the International Brotherhood
         in collective agreements.                                                                    of Teamsters requires a minimum of 45 days notice prior to any significant opera-
                                                                                                      tional change. In addition, certain provisions in our Independent Pilots Association and
                                                                                                      International Association of Machinists and Aerospace Workers agreements have notice
                                                                                                      requirements if certain changes are made.
LA6      Percentage of total workforce represented in formal joint management–worker health and       The framework for UPS’s formal joint management-worker health and safety committees,
         safety committees that help monitor and advise on occupational health and safety programs.   called CHSP, is designed to include approximately 10% of the total non-management
                                                                                                      workforce. See also our safety information, page 57-58.
LA7      Rates of injury, occupational diseases, lost days, and absenteeism, and number of work       KPI’s, p.58, Our focus on safety, p.57. In 2009, fatal accidents claimed the lives of 11 UPS
         related fatalities by region.                                                                employees (9 in auto accidents).
LA8      Education, training, counseling, prevention, and risk-control programs in place to assist    See Training & Awareness about Workplace issues, p.57
         workforce members, their families, or community members regarding serious diseases.
LA9      Health and safety topics covered in formal agreements with trade unions.                     All of our collective bargaining agreements contain provisions that address the Health and
                                                                                                      Safety of our employees. These agreements include but are not limited to the following
                                                                                                      topics: Health and Safety Committees, hazardous materials handling, vehicle and personal
                                                                                                      safety equipment, accidents and reports, and others.
LA10     Average hours of training per year per employee by employee category.                        UPS offers extensive training across all employee groups around the world. We are report-
                                                                                                      ing U.S. data for hours per year for the following major employee categories: Middle
                                                                                                      management—39; front-line management—52.3; drivers—18.5; part-time non-manage-
                                                                                                      ment—8.8. These categories represent 86% of U.S. Operations employees. Total hours for
                                                                                                      all U.S. employees is 6,045,476.
LA11     Programs for skills management and lifelong learning that support the continued              UPS provides skills and leadership training for the continued development of its man-
         employability of employees and assist them in managing career endings.                       agement employees using both internal and external resources. Examples of internal
                                                                                                      programs include “UPS Management Onboarding: ‘Our Culture, Our Heritage, Our Vision’,
                                                                                                      ‘Develop Yourself, Deliver Results’, and ‘Manage Your Team with Integrity and Excel-
                                                                                                      lence’.” The UPS Community Internship Program also provided delopment for staff level
                                                                                                      management. External programs for continued development include access to online
                                                                                                      management and job specific courses delivered via the UPS Learning Center, UPS Educa-
                                                                                                      tion Assistance Program, professional certifications, seminars, and conferences. Regarding
                                                                                                      transition assistance programs for those who have retired or were terminated, support is
                                                                                                      provided on an individual, situational and case by case basis, and has included job place-
                                                                                                      ment, severance, financial planning, training, and counseling.
GRI Index—Society – Product Responsibility                                                                                                                                                    2009 UPS CSR | 70




LA12     Percentage of employees receiving regular performance and career development reviews.              The percentage of employees receiving performance reviews is 95.58%. The percentage
                                                                                                            of employees receiving career development reviews is 62%. (These statistics include U.S.
                                                                                                            small-package, the corporate office, Supply Chain Solutions (SCS) (US) and Canada. Latin
                                                                                                            America (LATAM) and Europe, Middle East and Africa (EMEA) SCS use a separate system
                                                                                                            that does not factor into our reporting results.)
LA13     Composition of governance bodies and breakdown of employees per category according                 Composition of Management Committee, UPS’s primary governance group: 10 men, two
         to gender, age group, minority group membership, and other indicators of diversity.                women; by race: 10 white, two African American. Board of Directors—8 men, 2 women;
                                                                                                            by race: 9 white, 1 African American. Women as a percent of officers and managers: 29%.
                                                                                                            Minorities as a percentage of officers and managers: 31%. U.S. Workforce: Asian 4%, Black
                                                                                                            17%, Hispanic 9%, Native American/other 1%.
LA14     Ratio of basic salary of men to women by employee category                                         Not reported
         SOCIETY
DMA      Goals and performance                                                                              p.61-63
DMA      Policy                                                                                             p.61
DMA      Organizational responsibility                                                                      p.61
DMA      Training and awareness                                                                             p.61
DMA      Monitoring and follow up                                                                           p.61
SO1      Nature, scope and effectiveness of any programs and practices that access and manage the           Not reported
         impacts of operations on communities, including entering, operating and exiting
SO2      Percentage and total number of business units analyzed for risks related to corruption.            During 2009, onsite corruption risk assessments were completed for our top thirteen
                                                                                                            high-risk countries.
SO3      Percentage of employees trained in organization’s anti-corruption policies and procedures.         97% of all full-time management employees (approx.44,000) have been trained.
SO4      Actions taken in response to incidents of corruption.                                              UPS is not aware of any allegations of corruption in 2009 from any government agency
                                                                                                            around the world responsible for oversight of this issue.
SO5      Public policy positions and participation in public policy development and lobbying.               Public Policy, p.61
SO6      Total value of financial and in-kind contributions to political parties, politicians, and related   In the United States, UPS’s Political Action Committee donations to U.S. federal, state and
         institutions by country.                                                                           local candidates totaled US$2.4 million.
SO7      Total number of legal actions for anti-competetive behavior, anti-trust, and monopoly              Anti-competetive behavior, p.61
         practices and their outcomes
SO8      Monetary value of significant fines and total number of non-monetary sanctions for                   On occasion, UPS resolves routine civil administrative matters and associated penalties
         non-compliance with laws and regulations                                                           when they arise. However, we are not aware of any breaches of compliance that are
                                                                                                            material to our operations or penalties that are material to company assets.
         PRODUCT RESPONSIBILITY
DMA      Goals and performance                                                                              p.26, Code of Business Conduct Statement of Policy, investors.ups.com
DMA      Policy                                                                                             p.26, Code of Business Conduct Statement of Policy, investors.ups.com
GRI Index—Economic                                                                                                                                                                    2009 UPS CSR | 71




DMA     Training and awareness                                                                        p.26, 61
DMA     Organizational responsibility                                                                 p.61
DMA     Monitoring and follow up                                                                      p.26
PR1     Life cycle stages in which health and safety impacts of products and services are assessed    Not reported
        for improvement, and percentage of significant products and services categories subject to
        such procedures
PR2     Total number of incidents of non-compliance with regulations and voluntary codes              Not reported
        concerning health and safety impacts of products and services during their lifecycle
        by type of outcomes
PR3     Type of product and service information required by procedures and percentage of              Not reported
        significant products and services subject to such information requirements
PR4     Total number of incidents of non-compliance with regulations and voluntary codes              Not reported
        concerning product and service information and labeling by type of outcomes
PR5     Practices related to customer satisfaction, including results of surveys measuring customer   UPS extensively monitors customer comments via internal and external channels. An
        satisfaction.                                                                                 important tool is a survey that collects comments from more than 2,500 shipper inter-
                                                                                                      views each year. And focus groups are held throughout the year.
PR6     Programs for adherence to laws, standards, and voluntary codes related to marketing com-      All communications materials, including advertising enterprise-wide, goes through a legal
        munications, including advertising, promotion, and sponsorship.                               review to determine compliance with all pertinent laws and regulations.
PR7     Total number of incidents of non-compliance with regulations and voluntary codes              Not reported
        concerning marketing communications including advertising, promotion and sponsorship
        by type of outcome
PR8     Total number of substantiated complaints regarding breaches of customer privacy and losses    Not reported
        of customer data.
PR9     Monetary value of significant fines for noncompliance with laws and regulations concerning      Not reported
        the provision and use of products and services.
        ECONOMIC
DMA     Goals and performance                                                                         p.29-30
DMA     Policy                                                                                        p.29, 60-61
DMA     Key successes and shortcomings                                                                p.30
EC1     Direct economic value generated and distributed, including revenues, operating costs,         2009 Annual Report, p.6-7; Form 10-K, p.28, 30, 32, 36, 37, 46, 53-55; Philanthropy,
        employee compensation, donations and other community investments, retained earnings,          Volunteerism and Urgent Humanitarian Relief, p.61-63
        and payments to capital providers and governments.
EC2     Financial implications and other risks and opportunities for the organization’s activities    Risks and Opportunities p.24-25, UPS 2010 Carbon Disclosure Project Report, cdproject.
        due to climate change.                                                                        net and UPS Annual Report (p.13)
EC3     Coverage of the organization’s defined benefit plan obligations.                                2009 Annual Report, Form 10-K, investors.ups.com
                                                                                                                                                                                  2009 UPS CSR | 72




EC4   Significant financial assistance received from government.                                   Not reported
EC5   Range ratios of standard entry level wage compared to local minimum wage at significant     Not reported
      locations of operations.
EC6   Policy, practices, and proportion of spending on locally-based suppliers at significant     Our emphasis is on diversity spend rather than local. We do, however, track local, which
      locations of operation.                                                                    is approximately 7-12 percent of total spend.
EC7   Procedures for local hiring and proportion of senior management hired from the local       We recruit, train and develop local management people to lead our operations. In 2009,
      community at locations of significant operation.                                            out of 69,011 employees working in operations outside the U.S., fewer than 202 were
                                                                                                 foreign expatriates working in host countries, including only 57 U.S. expats. A majority
                                                                                                 of country leadership positions are held by managers hired locally. Available positions
                                                                                                 are posted on www.upsjobs.com. UPS also promotes from within.
EC8   Development and impact of infrastructure investments and services provided primarily for   UPS has 20 employees that are trained experts on LETS (Logistics Emergency Response
      public benefit through commercial, in kind of pro bono engagement                           Teams). They are deployed when requested on a pro-bono basis to assist global relief
                                                                                                 agencies (primarily the World Food Program) with UPS's disaster relief efforts.
EC9   Understanding and describing significant indirect economic impacts, including the extent    See Marketplace, p.29-30.
      of impacts.

				
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