UPS 2016 Corporate Sustainability Report Supplemental Data About This Document In 2016, UPS reported its annual Corporate Sustainability Report in accordance with the GRI Standards: Comprehensive option. The In accordance Comprehensive option is the most rigorous option available under the GRI Standards. We refreshed our global materiality assessment in 2016, integrating the results of the regional assessments we conducted in 2016. The results of this assessment guided our 2016 Corporate Sustainability Report structure to ensure the content is focused on the most material sustainability issues for UPS. As a result, some topics that we disclosed in previous years are no longer included in our Corporate Sustainability Report. While some of these issues did not meet our threshold for materiality, we provide information on them because they are important elements of disclosures we provide to other sustainability entities or are of particular importance to select stakeholders. The disclosures contained in this supplemental document are provided in the same format as the associated GRI topics. Table of Contents Water 2 Effluents and Waste 3 Compliance 5 The UPS Corporate Sustainability Report is available at www.ups.com/sustainabilityreport. For questions on this supplemental document, or our Corporate Sustainability Report, please contact sustainability@ups.com, or write to: UPS Attention: Sustainability Report Editor 55 Glenlake Parkway N.E. Atlanta, Georgia 30328 1
303-1 Water Over the next few decades, UPS, like many companies around the world, will see water scarcity and water stress issues that affect a significant number of locations where we have operations. While our own water needs are modest relative to other industries, water scarcity and water stress can be harmful to local communities. To address this concern, UPS has a global water stewardship strategy based on three pillars: Transparency Disclosing comprehensively measured water data for our domestic and international operations. Conservation Applying best practices for water conservation throughout the company, focusing on the top 20 percent of facilities with the highest water use. These facilities represent 80 percent of our total water usage and cost. Engagement Collaborating with world leaders on water and reporting, by sharing our knowledge, and helping them disseminate ideas and guidance. Our approach to water conservation is similar to how we manage our global logistics network we leverage our infrastructure and technology, our systems and processes, and our people. In our experience, the best results come when we combine all three. Our approach to washing our vehicles demonstrates this in action: We wash vehicles only as necessary to maintain a clean and professional appearance. We use an enzyme wash agent that is better for the environment and reduces the need for rinse water. At some of our larger hub facilities, we reclaim water from vehicle washing activities. We continue to assess and implement water conservation techniques that we have employed in the past, and seek 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, local ordinances require that our facilities maintain landscape appearance in ways that currently require significant volumes of water for irrigation. We have implemented weather-forecasting technology in two California facilities, as well as other methods to maintain landscape appearance with less water. Our annual global water consumption data, and water intensity from our U.S. Domestic Package Segment, our largest business segment, are presented in the tables below. Water consumption includes all facility-related water usage. GLOBAL WATER CONSUMPTION (MILLION m 3 ) % Change 15/16 U.S. DOMESTIC PACKAGE 3.74 3.84 3.66 3.67-2.6% INTERNATIONAL PACKAGE 0.72 0.72 0.70 0.64 0.0% GLOBAL SUPPLY CHAIN & FREIGHT* 0.82 0.74 0.76 0.74 10.8% TOTAL WATER CONSUMPTION 5.28 5.30 5.12 5.05-0.4% * 2016 was the first year reporting water usage for Coyote Logistics U.S. DOMESTIC PACKAGE WATER CONSUMPTION NORMALIZED CUBIC METERS / 1,000 PACKAGES 0.90 0.97 0.94 1.01 CUBIC METERS / US $1,000 OF REVENUE 0.098 0.105 0.102 0.108 2
306-2 Effluents and Waste UPS is currently collecting and disclosing data for solid, hazardous, and non-hazardous waste for operations in the U.S., based on information provided by our waste disposal vendors. 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 generated waste from aircraft maintenance, vehicle maintenance, and facility operations. The complete breakdown of waste by type in the U.S. is shown on the next page. Solid Waste Management Efforts to improve our recycling programs and reporting at more than 1,200 U.S. facilities have led to an increase in reported tonnage of solid waste recycled. By expanding our recycling programs and fully utilizing national recycling vendors, UPS is better equipped to manage recycling efforts and report data more comprehensively. 2013 Increased solid waste management through a national vendor (solid waste recycling) 2014 First year reporting on scrap metal recycling from vehicle retirements (non-hazardous waste) 2015 and 2016 Increased pallet recycling program (solid waste recycling) Hazardous and Nonhazardous Waste Management The hazardous and nonhazardous 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, scrap metal and leaking packages. We work with national vendors to recycle or dispose of hazardous and nonhazardous waste, and local vendors to recycle or dispose of nonhazardous waste. Hazardous waste vendors are well-established, observe industry standard safety procedures, and are regularly audited by UPS and/or an external 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 details responsible waste and disposal methods. No hazardous waste generated within the U.S. is shipped outside of the United States. For waste generated outside the U.S., waste data is not available at this time. UPS Vehicle Retirement UPS employs a structured vehicle retirement process based on the performance and cost to maintain the vehicle. As an example, UPS delivery vehicles are typically retired after 20 years of service. We utilize all salvageable parts from the vehicle, drain and recycle all fluids, then recycle the remainder of the vehicle. Zero Waste Initiative 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. We began incorporating this element into our environmental sustainability program in 2011. We first identified two facilities that were good candidates for diverting at least 90 percent of waste from landfill or incineration the generally recognized definition for zero waste programs. These facilities served as pilot projects in 2012 to collect baseline data and establish a waste transition process. As of 2016, eight UPS facilities met the zero waste initiative. We continue to evaluate and deploy zero waste initiatives at additional facilities throughout the United States. U.S. WASTE DISPOSAL & RECYCLING (U.S. TONS) SOLID WASTE DISPOSAL TOTAL 76,635 80,919 77,102 72,439 SOLID WASTE RECYCLING TOTAL 242,325 210,908 138,166 95,693 HAZARDOUS WASTE TOTAL 1,575 1,524 1,394 1,407 NONHAZARDOUS WASTE TOTAL 44,534 50,856 54,875 12,259 TOTAL WASTE 365,069 344,207 271,537 181,798 3
2016 U.S. WASTE DISPOSAL & RECYCLING (U.S. TONS) U.S. Domestic Package, Supply Chain & Freight Incinerated Landfilled Recovery Recycled Total SOLID WASTE DISPOSAL TOTAL 44 76,591 0 0 76,635 NATIONAL VENDORS 44 74,063 LOCAL VENDORS 2,528 SOLID WASTE RECYCLING TOTAL 0 0 0 242,325 242,325 CORRUGATED CONTAINERS NATIONAL VENDORS PALLETS & WOOD WASTE NATIONAL VENDORS 23,623 196,198 METALS NATIONAL VENDORS 8,875 MIXED RECYCLING NATIONAL VENDORS 13,156 OFFICE PAPER NATIONAL VENDORS 421 PLASTICS NATIONAL VENDORS 132 HAZARDOUS WASTE TOTAL 674 31 441 429 1,575 DAMAGED PACKAGES, ETC. NATIONAL VENDORS 1 DAMAGED PACKAGES, ETC. LOCAL VENDORS 674 31 441 429 NONHAZARDOUS WASTE TOTAL 890 276 2,535 40,833 44,534 DAMAGED PACKAGES, ETC. NATIONAL VENDORS 630 153 1,461 5,272 ELECTRONIC WASTE NATIONAL VENDORS 739 BATTERIES NATIONAL VENDORS 2 16 SCRAP METAL FROM VEHICLE RETIREMENT 29,923 DAMAGED PACKAGES, ETC. LOCAL VENDORS 259 123 1,074 4,882 TOTAL WASTE BY DISPOSAL METHOD 1,607 76,898 2,977 282,847 365,069 1. Approved national vendor approval process consists of vendor site visits, audits, and other internal controls 2. Rechargeable and nonrechargeable batteries, excluding automotive batteries 4
306-3 307-1 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 - and activity - specific programs for environmental compliance and pollution prevention. We continually evaluate new technologies and seek opportunities to improve environmental performance where possible. Everyone who is part of the UPS organization is expected to support efforts 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 Tamara Barker, Chief Sustainability Officer. She is responsible for managing all sustainability initiatives and strategies, including companywide performance metrics. Managers of relevant business units and departments are accountable for specific performance metrics. Our management approach includes an Environmental Policy Statement and a set of Environmental Guidance Statements that specify how the policy is to be implemented. These Statements are available at Policies & Procedures UPS 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 the EMS to mirror most of the principles of the ISO 14001 standard. To ensure that our policies are enforced, we employ Region Environmental Managers and District Environmental Coordinators who monitor and maintain compliance with environmental regulations, train other operational personnel, and raise awareness of the environmental aspects of our operations. Environmental training programs 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. Environmental programs in non-u.s. facilities are guided by the UPS Global Environmental Standards Manual. This manual mirrors our environmental programs in the U.S and is largely consistent with the ISO 14001 structure. The manual provides environmental guidelines and specific detail for compliance with regulations as determined by national, provincial, state, and local laws. Environmental Managers in our international regions work directly with facility personnel to ensure compliance is maintained. We are currently certified to ISO 14001 in several locations in Europe within our Supply Chain & Freight business segment in response to business demands. 5
Agency Environmental Inspections UPS operates in a highly regulated environment due to the volume of various materials, wastes, and effluents required to maintain a large number of operating facilities and 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 2016, U.S. federal and state environmental agencies conducted 1,036 environmental inspections at UPS facilities, 862 in our U.S. Domestic Package segment, and 174 in our Supply Chain & Freight segment. We had a total of 47 notices of violation, on which we received four fines in the U.S. Domestic Package segment amounting to a total of US$1,115. The overall success of our environmental program is reflected in the result of the metric Penalties as a Percent of Total Environmental Inspections, see below. PENALTIES AS A PERCENT OF TOTAL ENVIRONMENTAL INSPECTIONS U.S. DOMESTIC PACKAGE 0.46 0.77 0.13 1.69 U.S. SUPPLY CHAIN & FREIGHT 0.00 1.35 1.29 1.14 Incidental Spills 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. We continue to address common causes of our spills 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. Multiyear data for the number of reportable spills, along with the total volume of reportable spills is presented below. NUMBER OF REPORTABLE SPILLS U.S. DOMESTIC PACKAGE 58 69 73 79 U.S. SUPPLY CHAIN & FREIGHT 12 27 14 37 VOLUME OF REPORTABLE SPILLS (GALLONS) U.S. DOMESTIC PACKAGE 2,346 1,656 2,106 2,048 U.S. SUPPLY CHAIN & FREIGHT 862 1,362 721 2,085 6