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 firstname.lastname@example.org 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 email@example.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 To read related highlights, visit page 15 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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