2013 UPS Corporate Sustainability Report: Supplemental Data

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1 2013 UPS Corporate Sustainability Report: Supplemental Data Table of Contents Water Effluents and Waste Compliance... 5 Key Performance Indicators About this document In 2013, UPS migrated to the GRI G4 framework for its annual Corporate Sustainability Report. We reported at the In accordance - Comprehensive level, the most rigorous option available under the new G4 framework. As part of the G4 framework, we also conducted an updated global materiality assessment. The results of this assessment guided our 2013 Corporate Sustainability Report structure and focused the content on the most material sustainability issues for UPS. As a result, some issues that we disclosed in previous years are no longer included in our 2013 Corporate Sustainability Report. While some of these issues did not meet our GRI G4 threshold for materiality, we provide information on them in this supplemental document because they are important elements of disclosures we provide to other sustainability entities or because they are of particular importance to select stakeholders. The disclosures contained in this supplemental document are provided in the same format as the associated GRI aspects. The connection between the contents of this report and our GRI G4 disclosures can be found in Appendix F of our Corporate Sustainability Report, available here: For questions on this supplemental document, or our Corporate Sustainability Report, please contact pr@ups.com, or write to: UPS Attention: Sustainability Report Editor 55 Glenlake Parkway N.E. Atlanta, Georgia

2 Water EN8 Over the next few decades, UPS (like many businesses around the world) will see water scarcity and water stress issues that affect a significant number of locations where we have facilities. While our own water needs are modest compared to many other industries, water scarcity and water stress can be devastating to local communities. To address this concern UPS has in place a global water stewardship strategy based on 3 pillars: Transparency Disclosing comprehensively measured water data for our domestic and international operations. Conservation Focusing on the top 20 percent of facilities with the highest water use, which accounts for 80 percent of our total water usage and cost. We are also applying best practices for water conservation throughout the company. Engagement Collaborating with world leaders on water and reporting, by sharing our knowledge, and helping them disseminate ideas and guidance. As we do with our global logistics network, we are addressing conservation opportunities in our infrastructure and technology, in our systems and processes, and with our people. Our experience is that the best results come when we combine all three. Washing our vehicles shows how this combination can work: We wash vehicles only as necessary to maintain appearance. We use an environmentally friendly enzyme wash agent that reduces the need for rinse water. At some of our larger hub facilities, we reclaim water from vehicle washing activities. In 2013, we continued to assess and implement water conservation techniques that we have employed in the past, and sought new techniques and technologies that are suitable to the types of buildings and facilities we operate. We are particularly interested in improving water efficiency in cooling towers, irrigation systems, and water-cooled ice machines used to maintain hydration of employees during warm weather. In some cases our facilities are required by local ordinances to maintain landscape appearance in ways that currently require significant volumes of water for irrigation. In 2013, we implemented a pilot project and provided two California facilities with weather forecasting technology and other methods to maintain landscape appearance with less water. We are monitoring the results to assess the value of the technology. The chart below shows our global water consumption by business segment over the past four years, as measured in millions of cubic meters (m3). Our water intensity KPI from our U.S. Domestic Package Segment, our largest business segment, is presented on page 7. In our U.S Domestic Package segment, our largest business segment, we have successfully maintained a downward trend in water consumption for a number of years. Our water consumption decreased more than 2 percent in 2013 compared to 2012, even though our business grew in packages processed and revenue. This is due in part to more engagement with district and facility managers as part of our water stewardship strategy, using data gathered with the WBCSD Global Water Tool. In some cases, unusual water consumption patterns in our data enabled us to alert facility managers to anomalies with underlying causes, such as undetected leaks, that they could quickly correct. We continue to increase our data-gathering capabilities for water by refining and collecting more data from our international operations. Global Water Consumption U.S. Domestic Package International Package Global Supply Chair & Freight % Change 12/ % % Total Water Consumption % 2

3 Effluents and Waste UPS is currently collecting and disclosing data for solid, hazardous, and non-hazardous waste for operations in the United States, based on information provided by our waste disposal vendors. We continue to improve our internal processes for collecting this waste data in our International segment. Because UPS is not involved in manufacturing, our management and mitigation of effluents and waste is limited primarily to solid waste disposal and recycling from supplier packaging, pallets, scrap metal, office paper, plastics and mixed recycling, and facility-generated waste from aircraft maintenance, vehicle maintenance, and facility operations. The complete breakdown of waste by type in the United States is shown in the table on the next page. Waste Management Solid Waste Management Despite package volume growth in the U.S. Domestic Package segment and in the United States operations of our Supply Chain & Freight segment, facilities in the United States, cut their solid waste disposal by 2.1 percent in 2013 compared to Our initiative to improve our recycling programs and reporting at over 1,200 facilities in the United States resulted in a 69.6% increase in reported tonnage of solid waste recycled by our national vendor compared to 2012, this is in addition to the 37.5% increase in 2012 as compared to By fully utilizing our national vendor for recycling, UPS will be better suited to manage our recycling efforts and report more comprehensively moving forward. In 2013, this recycling effort saved UPS more than US$2.9 million in disposal costs, which benefits all our sustainability stakeholders. Hazardous and Non-hazardous Waste Management EN23 EN25 Zero Waste Initiative The hazardous and non-hazardous wastes we manage come from aircraft, vehicles, and facility operations. These wastes typically include spent antifreeze, used oil, spent solvents, spill residues, paint wastes, used filters, batteries, e-waste, and leaking packages. We recycle or dispose of non-hazardous waste locally through numerous vendors in the United States that we determine are capable of handling them. In 2013, UPS operating facilities in the United States generated 1,407 tons of hazardous waste, this is a 4.6% decrease as compared to To ensure hazardous wastes are properly disposed of, we manage these wastes through approved national vendors that have a documented track record of compliance with recognized industry disposal practices. These vendors are generally well established, observe industry standard safety procedures, and are regularly audited by UPS and/ or an outside auditor to ensure compliance with laws and regulations. Our contracts with national and local vendors specify that we receive a cradle to grave certification letter that specifies responsible waste and disposal methods. No hazardous waste generated within the U.S. is shipped outside of the U.S.; data is not available for locations located outside of the U.S. The Vision 2050 of the World Business Council for Sustainable Development describes a pathway toward a more sustainable future. One of the pathway s ambitious elements aims at not a particle of waste, with landfills phased out within the next two decades. In 2011, we began incorporating this element to our environmental sustainability program. We first identified two facilities that were good candidates for diverting at least 90 percent of their waste from landfill or incineration. (This is the generally recognized threshold for zero waste to landfill goals or programs.) We used these first two facilities as test beds in 2012, to collect baseline data and establish a waste transition process. Both facilities achieved the target waste diversion rate of 90 percent. We are now continuing to move forward with the deployment and implementation of 19 additional facilities located throughout the U.S. with a goal of meeting the zero waste initiative in 2014 for these facilities. 3

4 Waste Disposal & Recycling (U.S. tons) U.S. Domestic Package, Supply Chain & Freight Incinerated Landfilled Recovery Recycled Total 1. Solid Waste Disposal Total 0 72, ,439 National vendors 70,251 Local vendors 2, Solid Waste Recycling Total ,693 95,693 Corrugated containers National vendors 17,827 Pallets & wood waste National vendors 53,037 Metals National vendors 9,946 Mixed recycling National vendors 13,831 Office paper National vendors 843 Plastics National vendors 209 Solid waste recycling Locan vendors 1 Not Reported 3. Hazardous Waste Total ,407 damaged packages, etc. National vendors 2 damaged packages, etc. Local vendors Non-Hazardous Waste Total ,356 10,043 12,259 damaged packages, etc. National vendors ,981 Electronic waste National vendors ,454 Batteries National vendors damaged packages, etc. Local vendors ,591 Total Waste by Disposal Method 1,216 72,698 1, , , We are in the process of collecting more refined data to disclose local vendors solid waste recycling tonnage in future reports 2. Approved national vendor approval process consists of vendor site visits, audits and other internal controls 3. Rechargeable and non-rechargeable batteries excluding automotive batteries 4

5 Compliance Our policy is to comply with all applicable laws and regulations of all countries in which we operate, and in accordance with our company s high standards of business conduct. This is the policy stated in our Code of Business Conduct, which governs all employees and representatives of UPS. Through our Corporate Environmental Affairs Department, we have established site-specific and activity-specific programs for environmental compliance and pollution prevention. We continually evaluate improved technology and seek opportunities to improve environmental performance. Everyone who is part of the UPS organization is expected to support our effort to maintain a leadership role in protecting the environment. Our environmental responsibilities include: Properly storing, handling, and disposing of hazardous materials and other waste. Managing wastewater and storm water in compliance with applicable regulations. Monitoring and maintaining the integrity of underground storage tanks. Complying with laws regarding clean air. Protecting against and appropriately responding to spills and releases. Seeking ways to minimize waste and prevent pollution. Environmental Policy and Responsibility Organizational responsibility for executing our environmental policies and management approach, as outlined below, rests with Rhonda Clark, Chief Sustainability Officer. Mrs. Clark is responsible for managing all sustainability initiatives and strategies, including performance metrics. In addition, further accountability for specific performance metrics rests with managers of the relevant business units and departments throughout UPS. Our management approach to the environment includes an Environmental Policy Statement and a set of Environmental Guidance Statements that specify how the policy is to be implemented. We include these Statements at ups.com/sustainability. UPS has in place an extensive Environmental Management System (EMS) in the United States for monitoring environmental performance and following up on issues and opportunities that may arise from our monitoring activities. We developed our EMS to mirror most of the principles of the ISO standard. To ensure that our policies are practiced, we employ Region Environmental Managers and District Environmental Coordinators throughout our operations. Their role is to monitor and maintain compliance with environmental regulations, to train other operational personnel, and to raise awareness regarding all environmental aspects of our operations. Training programs to assist Environmental Coordinators cover a wide range of topics, including, among others: Water and air quality; Automotive environmental procedures; Hazardous waste management; Spill response plans; and Underground storage tanks. Our environmental training and auditing programs identify areas for improvement and outline strategies. We use a number of metrics to manage our compliance effort. Outside the United States, all UPS facility operations have environmental programs guided by the UPS Global Environmental Standards Manual. This manual mirrors the environmental programs in the United States, and is largely consistent with the ISO structure. The manual provides environmental guidelines and specific detail for compliance with environmental regulations as determined by national, provincial, state, and local laws. Region Environmental Managers work directly with facility personnel to ensure environmental compliance is maintained. We are currently certified to ISO in a number of locations in Europe within our Supply Chain and Freight business segment in response to business demands. We are taking a similar approach in the U.S. 5

6 Compliance (continued) Agency Environmental Inspections EN29 UPS operates in a regulation-intensive environment due to the number and types of hazardous and non-hazardous materials, wastes, and effluents required to maintain a large number of operating facilities as well as a very large, highly diverse fleet of ground vehicles and airplanes. Compliance procedures are extensive and detailed, and even seemingly small procedural errors in documenting our compliance can lead to financial penalties. Nevertheless, we strive for error-free performance and the lowest possible risk to UPS and our stakeholders. We therefore cooperate fully with all environmental regulatory agencies that oversee our facilities and activities, and report transparently on the results of their inspections. In 2013, federal and state environmental agencies in the United States conducted 865 environmental inspections at UPS facilities, a 12 percent decrease from Of the total environmental inspections, 709 were conducted in our U.S. Domestic Package segment and 156 were conducted in our Supply Chain & Freight segment. We had a total of 44 notices of violation as compared to 42 in We paid a total of twelve fines in 2013, with total penalties of US$48,378. All penalties occurred in the U.S. Domestic Package segment. For comparison, we paid seven fines in 2012, with total penalties of US$12,350. Five penalties occurred in the U.S. Domestic Package segment and two in the Supply Chain & Freight segment. Incidental Spills EN24 An incidental spill is defined as a spill or release that is required to be reported to a federal or state regulatory agency. A spill at UPS typically occurs on pavement or in a building, and requires a cleanup either by trained company personnel or an outside spill response contractor. In 2013, the volume from reportable spills in the U.S. declined 12.5 percent, to 4,133 gallons as compared to 4,723 gallons, and the number of reportable spills declined 19.5 percent, to 116 spills as compared to 144 spills in A high percentage of our spills typically occur from accidents and equipment failure. We continue to address common causes in an effort to reduce the number and volume of spills moving forward. Outside the U.S., we conduct spill management programs as part of implementing our Global Environmental Standards Manual, which is modeled on the ISO environmental standard. Multi-year data for this KPI is presented on page 7. The overall success of our environmental program is reflected in the result of our KPI Penalties as a Percent of Total Inspections achieving a combined result of 1.39% for both our U.S. Domestic Package and Supply Chain & Freight segments in Multi-year data for this KPI is presented on page 7. 6

7 Key Performance Indicators (KPIs) KPI Description Units Result Water Consumption Normalized U.S. Domestic Package Water consumption (U.S.) includes all facility related water and water used to wash vehicles expressed in cubic meters. m 3 /1,000 packages m 3 /US$1,000 of revenue % decline in water usage in our largest business segment Penalties as a Percentage of Total Environmental Inspections U.S. Domestic Package, U.S. Supply Chain & Freight penalty % U.S. DP penalty % U.S. SC&F 1.12% 1.24% 1.18% 2.30% 0.62% 1.14% 1.69% 0.00% Total environmental penalties remain low Environmental related fines paid (U.S.) as a percent of total environment related agency inspections. Number of Reportable Spills U.S. Domestic Package, U.S. Supply Chain & Freight spills U.S. DP spills U.S. SC&F Number and volume of spills decline Spills that meet criteria of beind federal or state reportable. Results improved from 2012 Results declined from

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