UPS 2018 GRI Content Index

Our Reporting Strategy

We are pleased to present UPS’s 17th annual Corporate Sustainability Progress Report. Continuous improvement, leadership, and transparency have been hallmarks of our reporting efforts through the years.


For the 2018 reporting cycle, we’ve updated this GRI Content Index with relevant data and information to be in accordance with the Global Reporting Initiative (GRI) Standards Comprehensive level. The interactive Corporate Sustainability Progress Report, chronicles UPS’s performance, initiatives, and engagements in 2018. Management of UPS is responsible for the completeness, accuracy, and validity of the disclosures in the GRI Index included within the 2018 Corporate Sustainability Report of UPS. Management is responsible for the collection, quantification, and presentation of the sustainability disclosures and for the selection of the criteria, which management believes provide an objective basis for measuring and reporting on the sustainability disclosures. Measurement of certain disclosures includes estimates and assumptions that are subject to inherent measurement uncertainty resulting for example from accuracy and precision of conversion and other factors. The selection by management of different but acceptable measurement methods, input data, or assumptions may have resulted in materially different amounts or metrics being reported. Management asserts that the sustainability disclosures in the 2018 GRI Content Index referenced within the 2018 Corporate Sustainability Progress Report of UPS for the year ended December 31, 2018 are presented in accordance with the GRI Sustainability Reporting Standards under its Comprehensive option. We engaged Deloitte & Touche LLP to conduct a review, in accordance with attestation standards established by the American Institute of Certified Public Accountants, to provide a limited level of assurance on management's assertion over the sustainability disclosures in the 2018 GRI Content Index referenced within the 2018 Corporate Sustainability Progress Report, as well as a reasonable level of assurance on our Statement of Greenhouse Gas Emissions for the year ended December 31, 2018. Both documents (referenced together as “this Report” or "Our Corporate Sustainability Report") can be found at ups.com/sustainability in digital and downloadable PDF formats.

General Disclosures

Organizational Profile

Standard Disclosure: 102-1

Report the name of the organization.

United Parcel Service, Inc.

Standard Disclosure: 102-2

Report the primary brands, products and services.

United Parcel Service, Inc. (“UPS”) was founded in 1907 as a private messenger and delivery service in Seattle, Washington. Today, we are the world’s largest package delivery company, a leader in the U.S. less-than-truckload industry and the premier provider of global supply chain management solutions. We deliver packages each business day for 1.5 million shipping customers to 9.1 million receivers (“consignees”) in more than 220 countries and territories. In 2018, we delivered an average of 20.7 million pieces per day, or a total of 5.2 billion packages. Total revenue in 2018 was $71.9 billion. No UPS brands, products, or services are banned in markets where we operate.

Standard Disclosure: 102-3

Report the location of the organization's headquarters.

Atlanta, GA USA.

Standard Disclosure: 102-4

Report the number of countries where the organization operates.

We serve more than 220 countries and territories around the world, along with domestic delivery service within 54 countries.

Standard Disclosure: 102-5

Report the nature of ownership and legal form.

Publicly traded company.

Standard Disclosure: 102-6

Report the markets served (including geographic breakdown, sectors served, and types of customers and beneficiaries).

UPS serves more than 220 countries and territories in the operating regions of USA, Americas, Europe, Asia-Pacific, and ISMEA (Indian Subcontinent, Middle East, and Africa). UPS serves both public and private sectors, and all industries.

Standard Disclosure: 102-7

Report the scale of the organization.

Total Number of Employees 481,000
Total Number of Operations 2,500+ worldwide operating facilities
Revenue $71.9 billion
Total Capitalization $25.8 billion
Quantity of Products or Services Provided 5.2 billion packages delivered in 2018

Standard Disclosure: 102-8

Breakdown of employee type.

See Disclosure 401-1 - New Employee Hires and Employee Turnover and Disclosure 405-1 - Diversity & Equal Opportunity.

Standard Disclosure: 102-9

Describe the organization's supply chain.

See Disclosure 204 — Procurement Practices.

Standard Disclosure: 102-10

Report any significant changes during the reporting period regarding the organization’s size, structure, ownership, or its supply chain

We closely monitor global trade and economic, geopolitical, regulatory and environmental factors, as well as other areas of risk and change to ensure we quickly adjust to a fast-moving world. In 2018, we acquired full ownership of our express services unit in India, signaling a new era of opportunity and operational design in a high-growth international market. We are reviewing the feasibility of including data related to this acquisition in our 2019 reporting cycle. UPS is continually investing in our network in significant ways. To learn more, see 2018 UPS® Sustainability Progress Report — Making Our Logistics Network Smarter Than Ever, pages 26-27 and 2018 Annual Report - Form 10-K, Item 1, pages 2-5.

Standard Disclosure: 102-11

Report whether and how the precautionary approach or principle is addressed by the organization.

UPS has not formally adopted the precautionary principle. Adoption of the principle would apply primarily to potential harm related to use of fossil fuels and emission of greenhouse gases. We are fully aware of these risks, we are deeply engaged with the stakeholders regarding them, and we manage our business to reduce, avoid, or mitigate them.

Standard Disclosure: 102-12

List externally developed economic, environmental, and social charters, principles, or other initiatives to which the organization subscribes or which it endorses.

Examples of major external initiatives we voluntarily engage in - other than those mentioned elsewhere in this Report - include the following:

Standard Disclosure: 102-13

List memberships of associations (such as industry associations) and national or international advocacy organizations

Strategy

Standard Disclosure: 102-14

Provide a statement from the most senior decision-maker of the organization.

See 2018 UPS® Sustainability Progress Report - CEO Message, pages 3-4.

Standard Disclosure: 102-15

Describe key impacts, risks and opportunities.

Ethics & Integrity

Standard Disclosure: 102-16

Describe the organization’s values, principles, standards, and norms of behavior such as codes of conduct and codes of ethics.

See Disclosure 205 — Anti-Corruption.

Standard Disclosure: 102-17

Report the internal and external mechanisms for seeking advice on ethical and lawful behavior, and matters related to organizational integrity, such as helplines or advice lines.

See Disclosure 205 — Anti-Corruption.

Governance

Standard Disclosure: 102-18

Report the governance structure of the organization, including committees of the highest governance body.

We publish the governance structure for UPS, including the committees of our Board of Directors, committee charters, and committee membership, in the governance section of our investor website. This website also includes detailed information about other corporate governance at UPS, including our policies and processes.

Standard Disclosure: 102-19

Report the process for delegating authority for economic, environmental, and social topics from the highest governance body to senior executives and other employees

The Board delegates authority for day-to-day management of economic, environmental, and social topics to UPS's Management Committee, which is comprised of the most senior managers of all our major corporate functions. The Management Committee further delegates relevant authority for economic, environmental, and social topics - particularly including all the material aspects discussed in UPS's Corporate Sustainability Report - to the appropriate organizations in the Company.

Standard Disclosure: 102-20

Report whether the organization has appointed an executive-level position or positions with responsibility for economic, environmental, and social topics, and whether post holders report directly to the highest governance body.

UPS has two executive-level positions for corporate responsibility: our Chief Sustainability Officer (CSO) and our Chief Diversity & Inclusion Officer. Our CSO regularly reviews sustainability strategies, priorities, goals, and performance with the Board of Directors. Our Chief Diversity & Inclusion Officer also provides periodic reports to the Board of Directors on matters of the advancement of diversity and inclusion programs, including those of UPS's suppliers, customers, and communities.

Standard Disclosure: 102-21

Report processes for consultation between stakeholders and the highest governance body on economic, environmental, and social topics.

Consultation between members of the Board of Directors and outside stakeholders occurs formally and informally throughout the year. Among the formal processes are reports to the Board by our CSO and our Chief Diversity & Inclusion Officer, as described above. In addition, the Company engages regularly with stakeholders on economic, environmental and social topics, and shares feedback from these engagements the Board of Directors or the Board's committees when appropriate. Stakeholders who wish to communicate directly with a member of our Board of Directors, with our lead independent director or with our nonmanagement directors as a group, may do so by writing to UPS via our Corporate Secretary at:

  • UPS, c/o Corporate Secretary
  • 55 Glenlake Parkway, N.E.
  • Atlanta, Georgia 30328

Advertisements, solicitations for business, requests for employment, matters that may be better addressed by management, or other inappropriate materials will not be forwarded to our directors.

Standard Disclosure: 102-22

Report the composition of the highest governance body and its committees.

See Disclosure 102-18 - Governance Structure.

Standard Disclosure: 102-23

Report whether the Chair of the highest governance body is also an executive officer.

David Abney, UPS Chief Executive Officer, currently serves as Chairman of the Board. The Board believes that Mr. Abney, who has primary responsibility for managing the Company’s day-to-day operations and has extensive knowledge and understanding of the Company, is best positioned to focus the Board’s attention on the issues of greatest importance to the Company and its shareholders.

The Board also has a Lead Independent Director and a majority of independent directors who meet regularly in executive session. Independent directors chair the Board’s Audit, Compensation, Risk, and Nominating and Corporate Governance Committees. Other than our Chief Executive Officer, all UPS directors are independent and have no material relationships with Company management or the Company other than as a UPS director. A complete discussion of our Board leadership structure can be found in the 2019 Annual Proxy Statement — Corporate Governance, pages 10-19.

Standard Disclosure: 102-24

Report the nomination and selection processes for the highest governance body and its committees, and the criteria used for nominating and selecting highest governance body members.

The Nominating and Corporate Governance Committee of the Board reviews and recommends director nominees to the Board, including candidates to fill vacancies. When evaluating director candidates, the Nominating and Corporate Governance Committee considers factors such as personal character, values and disciplines, ethical standards, other outside commitments, professional background and skills. The Nominating and Corporate Governance Committee seeks to create a board that reflects a range of professional backgrounds and skills relevant to our business, as well as diversity with respect to gender, age, and ethnicity. This evaluation is done in the context of the Board’s current and expected future needs. Director nominees are presented to our shareholders as part of our Annual Meeting process, which, because of the nature of UPS shareholding, means stakeholders with a broad range of views and interests are able to influence whether nominees become directors.

Standard Disclosure: 102-25

Report processes for the highest governance body to ensure conflicts of interest are avoided and managed.

Our investor website, specifically our Code of Business Conduct pages 16-17, includes processes and policies for avoiding or managing conflicts of interest.

Standard Disclosure: 102-26

Report the highest governance body’s and senior executives’ roles in the development, approval, and updating of the organization’s purpose, value, or mission statements, strategies, policies, and goals related to economic, environmental, and social impacts.

Two governance bodies oversee sustainability at UPS: a Sustainability Steering Council and a Sustainability Leadership Committee, both of which support the Management Committee and Board of Directors. The Sustainability Steering Council is chaired by the Chief Information and Engineering Officer and comprised of four Management Committee members along with function leaders from Marketing, Human Resources, Industrial Engineering, Automotive, Procurement, and other departments. The Council convenes quarterly and ensures UPS’s sustainability strategy is aligned with the Company’s enterprise strategy and growth imperatives. The chairperson of the Sustainability Steering Council meets regularly with the Board of Directors.

The Sustainability Leadership Committee is a cross-functional team led by the Senior Director of Global Sustainability & Environmental Affairs that develops the sustainability strategy and implements programs that create business value and drive progress toward UPS’s sustainability goals. The Leadership Committee convenes individual working groups to address specific sustainability issues and initiatives, such as urban logistics and last mile delivery, electric vehicles, renewable electricity, and airline efficiency.

Board of Directors

Standard Disclosure: 102-27

Report the measures taken to develop and enhance the highest governance body’s collective knowledge of economic, environmental, and social topics.

Our Board of Directors continually develops and enhances its knowledge of economic, environmental, and social impacts through activities such as:

  • Reviewing economic, environmental, and social impacts regularly at Board meetings and Board committee meetings.
  • Receiving regular reports from our CSO and other governance bodies regarding sustainability strategies, priorities, goals, and performance.
  • Receiving periodic reports from our Chief Diversity & Inclusion Officer regarding the strategy, programs, and progress of UPS’s diversity and inclusion initiatives.
  • Overseeing efforts by UPS management to develop, approve, and update our vision, values, strategies, policies, and goals related to economic, environmental, and social impacts.
  • Reviewing the contents of the UPS Corporate Sustainability Report each year, and the Board’s Audit Committee oversees our process of securing third-party assurance and verification for the Report’s contents.
  • Overseeing strategic risk management efforts at UPS, including identifying and managing risks and opportunities associated with economic, environmental, and social impacts.

Standard Disclosure: 102-28

Report the processes for evaluation of the highest governance body’s performance with respect to governance of economic, environmental, and social topics.

The Board’s Nominating and Corporate Governance Committee coordinates an annual self-evaluation of the Board of Directors and each committee, with the exception of the Executive Committee. The evaluation includes a review of performance with respect to governance of economic, environmental, and social topics. The Board and each committee review the results of the evaluations and take appropriate actions to address any areas of concern.

Standard Disclosure: 102-29

Report the highest governance body’s role in the identification and management of economic, environmental, and social impacts, risks, and opportunities.

See Disclosure 102-26 - Governance Body's Roles.

Standard Disclosure: 102-30

Report the highest governance body’s role in reviewing the effectiveness of the organization’s risk management processes for economic, environmental, and social topics.

See 2019 Annual Proxy Statement, page 19, Sustainability.

Standard Disclosure: 102-31

Report the frequency of the highest governance body’s review of economic, environmental, and social impacts, risks, and opportunities.

See Disclosures 102-26 - Governance Body's Roles and 102-27 - Governance Body's Knowledge.

Standard Disclosure: 102-32

Report the highest committee or position that formally reviews and approves the organization’s sustainability report.

UPS’s annual Sustainability Report is reviewed by the Board of Directors prior to publication.

Standard Disclosure: 102-33

Report the process for communicating critical concerns to the highest governance body.

Should a critical concern arise regarding sustainability, the Board of Directors would receive a report via the Management Committee, which communicates with all major corporate functions and is responsible for addressing and resolving such concerns.

Standard Disclosure: 102-34

Report the nature and total number of critical concerns that were communicated to the highest governance body and the mechanism(s) used to address and resolve them.

See Disclosure 102-33 - Process for Communicating Critical Concerns. In 2018, no such critical concerns arose.

Standard Disclosure: 102-35

Report the remuneration policies for the highest governance body and senior executives.

The Compensation Committee is responsible for reviewing and approving compensation for the Company’s executive officers, establishing the performance goals on which the compensation plans and programs are based, and setting the overall compensation principles that guide the Compensation Committee’s decision making. These policies are described in our 2019 Annual Proxy Statement — Executive Compensation, pages 30-43. The Compensation Committee annually engages an independent compensation consultant to make recommendations concerning executive compensation, including input on trends that may be important to investors.

Standard Disclosure: 102-36

Report the process for determining remuneration.

UPS offers competitive hourly wages, salaries, and total compensation plans to both full-time and part-time employees. The primary process for setting compensation levels for our nonmanagement employees is contract negotiations via collective bargaining. Unions represent more than 75 percent of all UPS workers in the United States. Many of our workers in other countries are also represented by collective bargaining organizations. Through collective bargaining, unions have historically ensured broad equality in remuneration for union workers.

UPS provides for equal remuneration policies with regard to women and men and complies with all applicable laws and regulations.

Standard Disclosure: 102-37

Report how stakeholders’ views are sought and taken into account regarding remuneration.

“Say on Pay” allows shareowners to vote, on an advisory basis, on whether they approve the compensation of our executive officers as disclosed in our proxy statement. Our most recent Say on Pay vote took place in May 2017, and more than 88 percent of shares voted were in favor of our executive compensation. Our next Say on Pay vote will occur at our 2020 annual meeting of shareowners. In addition, the Company regularly engages with stakeholders regarding compensation matters and shares feedback from these engagements with the Compensation Committee of the Board pf Directors when appropriate.

Standard Disclosure: 102-38

Report the ratio of the annual total compensation for the organization’s highest-paid individual in each country of significant operations to the median annual total compensation for all employees.

See 2019 Annual Proxy Statement – Median Employee to CEO Pay Ratio, page 53.

Standard Disclosure: 102-39

Report the ratio of percentage increase in annual total compensation for the organization’s highest-paid individual in each country of significant operations to the median percentage increase in annual total compensation for all employees (excluding the highest-paid individual) in the same country.

Due to confidentiality constraints, UPS does not report ratios based on individual compensation or make pay decisions based on these ratios.

Stakeholder Engagement

Standard Disclosure: 102-40

List of stakeholder groups.

  • Customers
  • Active and Retired Employees
  • Policymakers and Government Officials
  • Investors
  • Communities
  • NGOs
  • Suppliers

Standard Disclosure: 102-41

Report the percentage of total employees covered by collective bargaining agreements.

More than 75 percent of our employees in the U.S. are covered by collective bargaining agreements, including almost everyone who handles or transports packages. The United States is our most significant area of operations, and we do not track total employees covered by collective bargaining agreements internationally. We do not have plans to report this data in the future because in some countries that we operate in it is illegal to ask or track union membership.

Standard Disclosure: 102-42

Report the basis for identification and selection of stakeholders with whom to engage.

We consider stakeholder engagement an essential aspect of UPS corporate governance. We are one of the world’s largest private employers; we serve millions of customers in more than 220 countries and territories; and hundreds of thousands of investors include UPS stock shares in their portfolios either directly or via mutual funds. Regular dialogue with employees, customers, investors, community leaders, universities, public officials, suppliers, and third-party providers through formal and informal channels is essential to conducting our business, as well as developing and implementing our sustainability strategies.

Standard Disclosure: 102-43

Report the organization’s approach to stakeholder engagement.

We maintain ongoing dialogue with a broad array of stakeholders - even those who may be critical of us.

We stay in regular contact with stakeholders on emerging sustainability issues and trends, and periodically receive inquiries and requests for engagement from stakeholder groups. We are also open to initiating new stakeholder engagement activities to help inform our strategy. For example, the Sustainability Leadership Committee has responsibility for our material issues, and helped to develop a framework to focus current engagements and identify new opportunities.

Standard Disclosure: 102-44

Report key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded to those key topics and concerns.

The following table summarizes the highlights of our stakeholder engagement on sustainability issues during 2018. More in-depth discussions on many of these topics may be found throughout this GRI Content Index.

Summary of 2018 Stakeholder Dialogue & Outcomes

Stakeholder Group Mechanisms for Engagement Stakeholer Expectations Actions Taken
Customers
  • Customer Satisfaction Survey
  • Quarterly Business Reviews and regular meetings
  • Market research
  • UPS.com
  • Social media
  • UPS-sponsored events
  • UPS drivers
  • Reliable service and on-time delivery
  • Consumer convenience
  • Innovative supply chain solutions
  • Streamlined returns
  • Collaborated with TerraCycle to test innovative Loop™ packaging, which is a circular economy model to reduce single-use packaging.
  • Expanded last-mile service offerings to give customers more convenience and control: grew UPS My Choice® membership to 57 million worldwide; expanded the UPS Access Point™ network to 28,000 locations in 20+ countries and territories; and tested Latch smart lock technology in two cities.
  • Launched Ware2Go, a digital platform to match available warehouse space and fulfillment services with e-commerce merchants.
  • Renewed an investment in Optoro, a reverse logistics platform to help retailers streamline e-commerce returns and reduce waste sent to landfill.
  • Opened 22 new or retro-fit automated facilities, adding more than 5 million square feet of package processing capacity with up to 35% greater efficiency.
  • Continued to take delivery of new, fuel-efficient Boeing 747-8 air freighters to address increasing demand and volume growth.
Active and Retired Employees
  • Business Resource Groups
  • Daily Prework Communications Meetings
  • Health & Safety Committees
  • UPSers.com and UPSers Connect
  • Social media
  • Union representatives
  • Joint labor-management committees
  • Town Hall meetings
  • Competitive pay and benefits
  • Clear communication
  • Work/life balance
  • Career and growth opportunities
  • Support of a diverse workforce
  • Effective off-boarding
  • Created an internal business incubation and disruption program to foster employee ideas and innovative solutions.
  • Hosted the UPS Safety Relay, which encourages employee mentorship and reinforces a culture of safety and teamwork.
  • Grew the number of UPS Business Resource Groups around the world 12% to more than 200 chapters.
  • Created the Fuel Analytics and Sustainability Team to develop innovative solutions that streamline operations and reduce the carbon footprint of UPS Airlines.
  • Held “Brown Friday” events across the U.S. to engage with local communities and recruit seasonal talent.
  • Hosted our fourth TED@UPS event to celebrate diverse UPSer perspectives.
Policymakers and Government Officials
  • Global advocacy and relationship building
  • Multifaceted thought leadership strategy
  • Facility visits and targeted outreach
  • Collaborative partnerships
  • Facilitating cross-border commerce
  • Innovative solutions to congestion, noise, and air pollution
  • Support for infrastructure investment and maintenance
  • Support for a level playing field with logistics operators and postal entities
  • Continued advocacy for cross-border trade and the development of emerging markets
  • Collaborated with city officials to continue developing sustainable urban delivery solutions in the U.S., Europe and Asia
  • Created the UPS Women Exporters Program, a training and communication program that fosters inclusive and sustainable development of women-led businesses around the world.
Investors
  • Investor Conference
  • Quarterly earnings communications
  • Shareholder meeting
  • Annual report
  • Proxy statement
  • Ratings and rankings
  • Investor website
  • Return on investment
  • Continued investment in innovation
  • Transparent reporting with credible data
  • UPS's climate strategy, programs, and performance were recognized on CDP's "A" list for global climate action efforts.
  • Listed on Dow Jones Sustainability World Index for the sixth consecutive year.
Communities
  • The UPS Foundation
  • Employee Volunteer Program
  • Community involvement committees
  • Humanitarian relief and resilience activities
  • Leveraging UPS expertise and resources to support humanitarian aid efforts
  • Employee volunteerism and local support
  • Road safety programs
  • Delivered 623 in-kind support shipments to 71 countries in response to 29 disasters around the world.
  • Devoted more than $2 million in cash and in-kind support to the humanitarian response and recovery following Hurricanes Florence and Michael.
  • Contributed more than 3 million volunteer hours to local communities.
  • Planted more than 2.7 million trees around the world.
NGOs
  • Regular dialogue
  • Topic-specific conferences and events
  • Private-sector expertise and resources
  • Collaboration on innovative solutions
  • Transparent reporting with credible data
  • Collaborated with Freight in Time and Gavi, the Vaccine Alliance in Uganda to implement Uganda’s first last-mile cold chain delivery and visibility network for the delivery of medicine, vaccines, and other health commodities.
  • Expanded partnership with Gavi, the Vaccine Alliance and drone maker Zipline for delivery of medical supplies for hard-to-reach areas of Rwanda.
  • Continued collaborations with BSR’s Future of Fuels and Sustainable Air Freight Alliance programs, and WBCSD’s Transforming Urban Mobility working group.
Suppliers
  • Top Supplier meetings
  • Supplier Diversity Strategy, including conferences, events, training, and other programming
  • Research and development of alternative vehicle technologies
  • One on one meetings with suppliers, including assessments and reviews
  • Leadership in testing and scaling alternative fuels and vehicle technologies
  • Capacity-building support for local and diverse suppliers
  • Spent $2.6 billion in diverse supplier support programs.
  • Spent 95% of procurement budget with local suppliers, growing the communities we serve.
  • Through collaborations with fuel suppliers and original equipment manufacturers, added more than 1,100 vehicles to our rolling laboratory of alternative fuel and advanced technology vehicles.
  • Supported Outside Service Providers in Western Europe and Asia to implement sustainable fleet initiatives.

Reporting Practices

Standard Disclosure: 102-45

List all entities included in the organization’s consolidated financial statements or equivalent documents.

See 2018 Annual Report - Form 10-K, Reporting Segments and Products & Services, pages 2-5. This Report's data on GHG emissions, energy, water, and occupational health & safety includes acquisitions through 2017, while other data covers acquisitions through 2015.

Standard Disclosure: 102-46

Explain the process for defining the report content and the Topic Boundaries.

Materiality is a critical input of our corporate sustainability strategy because it ensures our initiatives and reporting are aligned with stakeholder expectations and issues most important to our business. We have worked with BSR (formerly Business for Social Responsibility) to conduct regular materiality assessments since 2011. Our global and regional materiality process and insights from the most recent assessment in 2016 can be found at https://sustainability.ups.com/media/UPS_Corporate_Materiality_2016.pdf.

Standard Disclosure: 102-47

List all the material Topics identified in the process for defining report content.

UPS Materiality Content

Material Issue for UPS UN Sustainable
Development Goals
Alignment(1)
Corresponding GRI Standards Material Topic
Workforce Diversity 5, 8 Diversity and Equal Opportunity, Equal Remuneration for Women and Men
Employee Health, Safety & Wellness 3, 8 Employment, Occupational Health and Safety
Safe Driving 3, 8 Occupational Health and Safety
Recruitment & Development 4, 5, 8 Training and Education
Labor Relations 3, 4, 5, 8, 10, 16 Labor/Management Relations, Freedom of Association and Collective Bargaining
Ethical Conduct 12, 16 Anti-Corruption, Anti-Competitive Behavior, Socioeconomic Compliance
Package Contents Responsibility 12 This issue arose during the materiality process but does not map directly to a GRI Standards material topic.
Economic Performance(2) 1, 2, 3, 5, 7, 8, 9, 10, 11, 12, 13, 17 Economic Performance, Market Presence, Indirect Economic Impact, Procurement Practices
Management of Third-Party Representatives 8, 16 Supplier Environmental Assessment, Supplier Assessment for Labor Practices, Supplier Human Rights Assessment, Freedom of Association and Collective Bargaining, Anti-Corruption
Data Privacy 16 Customer Privacy
Digital & Physical Asset Security 16 Customer Privacy
Humanitarian Relief & Resilience 1, 2, 3, 5, 7, 8, 9, 10, 11, 17 Indirect Economic Impact
Greenhouse Gas Policy 3, 12, 13, 14, 15 Energy, Emissions
Emissions & Fuel Supply 3, 7, 8, 9, 11, 12, 13, 14, 15 Energy, Emissions
Congestion 11 This issue arose during the materiality process but does not map directly to a GRI Standards material topic.
Transparency & Reporting 12, 16 This issue arose during the materiality process but does not map directly to a GRI Standards material topic.
Contextual Trend UN Sustainable
Development Goals
Alignment(1)
Description
Global Trade 1, 8, 9 This trend arose during the materiality process. We provide additional information in the Report to explain its significance to UPS.
Emerging Markets 1, 8, 9, 10 This trend arose during the materiality process. We provide additional information in the Report to explain its significance to UPS.

(1) Please visit sustainabledevelopment.un.org/sdgs to identify corresponding goals.

(2) Our Materiality Matrix implicitly recognizes that our economic performance is a material influence on our business success, so it does not appear in the matrix as a separate issue or aspect. We fully discuss our economic performance, in line with GRI Standards guidelines.

Standard Disclosure: 102-48

Report the effect of any restatements of information provided in previous reports, and the reasons for such restatements.

In 2018, UPS adopted new revenue recognition accounting standards that require restatements for our financial totals in 2017. Full explanation of the adjustments are explained in note 1 of the consolidated financial statements on page 67 of 2018 Annual Report - Form 10-K. These new standards required restatements for UPS Financial Highlights in GRI 201, Energy Intensity Within the Organization by Business Unit in GRI 302-3, and CO2e Intensity by Business Unit in GRI 305-4.

Standard Disclosure: 102-49

Report significant changes from previous reporting periods in the list of Material Topics and Topic Boundaries.

Our GHG emissions, energy, water, and occupational health & safety disclosures include data from acquisitions made in 2017, including STTAS Global Holdings, Inc. ("Sandler & Travis Trade Advisory Services" or "STTAS"), Eirpost Group Unlimited Company ("Nightline"), and Freightex, Limited. Freightex, Ltd. has been consolidated into Coyote Logistics.

Standard Disclosure: 102-50

Reporting period for information provided.

The report presents data for the 2018 calendar year.

Standard Disclosure: 102-51

Date of most recent report.

Our previous report presented data for the 2017 calendar year.

Standard Disclosure: 102-52

Reporting cycle.

We issue our Corporate Sustainability Report on an annual basis.

Standard Disclosure: 102-53

Provide a contact point for questions regarding the report or its contents.

Please send comments or questions about this Report to sustainability@ups.com, or in writing to:

  • UPS
  • Attention: Sustainability Report Editor
  • 55 Glenlake Parkway N.E.
  • Atlanta, Georgia 30328

Standard Disclosure: 102-54

Report the ‘in accordance’ option the organization has chosen.

This Report has been prepared in accordance with the GRI Standards, Comprehensive option. UPS has voluntarily followed GRI reporting guidelines since 2003.

Standard Disclosure: 102-55

Report the GRI content index, which specifies each of the GRI Standards used andlists all disclosures included in the report.

This document is organized by GRI Indicators and serves as our GRI Content Index.

Standard Disclosure: 102-56

Describe the organization’s policy and current practice with regard to seeking external assurance for the report.

We engage with experienced and respected third parties to assure and verify our sustainability reporting. Authorization for these engagements, and approval of the providers we select, comes from the Audit Committee of our Board of Directors, which is our highest governance body.

For this Report, we engaged Deloitte & Touche LLP to conduct a review, in accordance with attestation standards established by the American Institute of Certified Public Accountants, to provide a limited level of assurance on management's assertion over the sustainability disclosures in the 2018 GRI Content Index referenced within the 2018 Corporate Sustainability Progress Report.

We also engaged Deloitte & Touche LLP to conduct an examination, in accordance with attestation standards established by the American Institute of Certified Public Accountants, to provide a reasonable level of assurance on our Statement of Greenhouse Gas Emissions for the year ended December 31, 2018.

Deloitte Independent Accountants' Examination Report
Deloitte Independent Accountants' Review Report

Topic-Specific Standards

201 Economic Performance

Standard Disclosure: 103-1,2,3

Management Approach

We report on the structure of our organization, changes in structure and financial performance primarily through our Annual Report and on the SEC filings page at www.investors.ups.com. In our Corporate Sustainability Report, we focus on economic performance as it relates to sustainability. Our economic success ensures our long-term viability and enables us to execute our sustainability strategies. For this reason, we consider economic performance our most material aspect and a reference point by which we define all other material issues.

UPS contributes to sustainability by making logistics as resource-efficient as possible, and our scale allows us to reduce the emissions intensity of global supply chains. This capability will grow and become even more important as emerging markets develop, global population increases, and the flow of goods and services expands. In addition, we believe our ability to operate even more effectively will increase because of our proven capabilities for measuring, managing, and mitigating greenhouse gas emissions, support of the emergence of new technology innovations, and ongoing collaboration with stakeholders.

Tax Policy

UPS’s fundamental tax policy is to ensure the tax results for our global entities are properly reported in accordance with applicable laws, rules, and regulations. We operate our business where our customers are located. While tax management is important to the Company, how and where we conduct business activities aligns with our goal of providing superior customer service and shareholder value. We consider UPS’s reputation, brand, and corporate responsibility when we evaluate our tax positions. Accordingly, we enter only into structures or transactions designed to further our commercial purpose. We believe in transparency and work to develop positive relationships with tax authorities based on trust and professional interactions. Where appropriate, we proactively seek agreement with tax authorities on positions taken on our tax returns.

Standard Disclosure: 201-1

Direct economic value generated and distributed.

UPS Financial Highlights

(In US$) 2018 2017
Revenue(1) $71.9 billion $66.6 billion
Operating Costs(1) $64.8 billion $59.1 billion
Employee Compensation & Benefits $37.2 billion $34.6 billion
Taxes Paid $2.9 billion $2.8 billion
Long-Term Debt Repaid $2.9 billion $3.9 billion
Dividends Paid to Shareholders $3.2 billion $2.9 billion
Payments to Small & Diverse Suppliers $2.6 billion $1.2 billion
Total Charitable Contributions $114.9 million $118.3 million
Retained Earnings(1) $8 billion $5.9 billion

(1) In 2018, UPS adopted new revenue recognition accounting standards that require restatements for our financial totals in 2017. Full explanation of the adjustments are explained in note 1 of the consolidated financial statements on page 67 of 2018 Annual Report - Form 10-K.

Standard Disclosure: 201-2

Financial implications and other risks and opportunities due to climate change.

Standard Disclosure: 201-3

Defined benefit plan obligations and other retirement plans.

We provide detailed disclosures and discussions about our pension and post-retirement plan obligations in our 2018 Annual Report, primarily in Notes 4 and 5 to the Consolidated Financial Statements beginning on page 88.

Standard Disclosure: 201-4

Financial assistance received from government.

UPS does not receive significant financial assistance from the government. We do participate in public-private partnerships that may involve tax incentives, such as the Interstate Clean Transportation Corridor (ICTC) in the United States, or certain incentives related to our purchase of alternative fuel vehicles.

202 Market Presence

Standard Disclosure: 103-1,2,3

Management Approach

See Disclosure 201 - Economic Performance Management Approach.

Standard Disclosure: 202-1

Ratios of standard entry-level wage by gender compared to local minimum wage.

The ratio of our standard entry-level hourly wage to local minimum wage varies from location to location around the world. This variation is necessary to comply with local conditions and with national wage minimums in countries that set them. In the United States, which represents 83 percent of our employee base, we comply with local minimum-wage laws in each state and pay no less than the local minimum wage or the federal minimum wage. We do not vary entry-level compensation by gender. We do not have a significant proportion of other workers (excluding employees) performing the organization’s activities that are compensated based on minimum- wage rules.

Standard Disclosure: 202-2

Proportion of senior management hired from the local community.

We hire nearly all senior managers, defined as managers two levels from the CEO, within their home country. More than 99 percent of full-time management employees, from entry level to senior management, worked in their home country in 2018. Because UPS serves more than 220 countries and territories around the world, it is extremely difficult to define “local” and “significant” operations.

203 Indirect Economic Impacts

Standard Disclosure: 103-1,2,3

Management Approach

See Disclosure 201 - Economic Performance Management Approach.

Much of our indirect economic impact is provided through the global Humanitarian Relief & Resilience program by The UPS Foundation (our corporate philanthropy arm). This effort is organized around building more effective public-private partnerships to catalyze innovation and enhance community disaster risk reduction and preparedness efforts, supporting urgent response and speeding post-crisis recovery.

Every year, natural disasters and global crises create devastating human suffering that demands coordinated, swift relief efforts. Humanitarian crises can disrupt businesses, destroy infrastructure, and bring most forms of productive commerce to a halt. It’s important to us that our employees and customers live in strong and safe communities that are well prepared for and equipped to recover from disasters in a timely manner to minimize long-term social and economic impact.

As a global leader in logistics, we are ready to leverage our extensive global assets and logistics expertise to speed relief and recovery to those in need when a natural or man-made disaster strikes. At the core of our preparedness, response, and recovery efforts are the strong relationships we have developed with the world’s leading humanitarian relief organizations. In addition, we often have people on the ground who are ready to help. UPSers around the world are empowered to volunteer and provide relief assistance to their local communities during sudden-onset disasters.

The breadth and depth of talent among UPS employees provides a valuable platform to help speed disaster response and recovery. UPSers work side-by-side with our strategic partners and play an integral role in our humanitarian relief program. The UPS Humanitarian Experts on Mission Program places UPS logistics professionals on long-term assignment to our partner organizations. We also participate in formal programs such as the Logistics Emergency Teams (LET), which provide proficiency and response services to the Global Logistics Cluster of the United Nations led by the World Food Programme. LET companies, which are large global logistics and transportation businesses, provide pro bono assets and services and deploy highly trained experts to join the United Nations staff in disaster areas.

In addition to humanitarian relief and resilience efforts, The UPS Foundation also works with leading health organizations and ministries of health to support public health systems and enhance response and resilience in the face of complex health challenges. The UPS Foundation promotes access to immunization and life-saving healthcare products throughout the world through innovative delivery networks, thought leadership, and support for technological advancements that optimize end-to-end transport of medical supplies. For example, in 2018 through joint effort with Gavi, Freight in Time, and the Uganda Ministry of Health, we are pioneering a unique last-mile cold chain logistics network for the delivery of medicine, vaccines, and other health commodities in Uganda. See 2018 UPS® Sustainability Progress Report - Delivering care Where It's Needed Most, page 55.

The key performance indicator for indirect economic benefit is the sum of our charitable contributions by UPS; The UPS Foundation; and UPS employees, retirees, and their families.

Standard Disclosure: 203-1

Infrastructure investments and services supported.

Our business generates a wide range of indirect economic benefits, including charitable contributions, access to markets through our local points of presence in the form of retail outlets, procurement activity throughout our supply chain, and venture capital funding. We provide roughly 150,000 entry points where customers can tender a package and access our network, including our drivers, drop boxes, UPS Access Point™ locations, The UPS Store™ locations, authorized shipping outlets, and UPS facilities. These local entry points help small and diverse businesses participate more fully in the global economy. UPS’s support of and advocacy for free trade around the world benefits businesses, communities, and countries of all sizes. Similarly, continual investments in our global logistics network - rather than infrastructure and specific services - benefit all of our communities by facilitating commerce and providing jobs.

We also use our scale to stimulate the markets for alternative fuels and advanced fleet technologies. Our continued investments help drive supply and demand for these promising sustainable solutions.

Standard Disclosure: 203-2

Significant indirect economic impacts.

Solely funded by UPS, The UPS Foundation provides cash and in-kind contributions to organizations that promote its four focus areas: Diversity and Inclusion, Global Volunteerism, Community Safety, and Environmental Sustainability. In-kind donations are primarily transportation services, including ground, ocean, and air shipments. For example, we donated in-kind flights to and from 71 countries for humanitarian relief and resilience efforts in 2018. Charitable contributions also include a 15 percent match of employee pledges to United Way, a major nonprofit provider of community-based social services.

In 2018, total charitable contributions were US$114.9 million, a 2.8% reduction due to a deferment of $3.4 million from the 2018 to the 2019 philanthropic budget. In addition, UPSers contributed 3 million volunteer hours in 2018, which had an economic value of more than US$76 million, based on the valuation of volunteer time released by Independent Sector on April 11, 2019.

Total Charitable Contributions

Program Area (Year Ending December 31, 2018) Allocation (US$ In Millions)
Local Grants 9.1
Corporate Grants 25.8
In-Kind Services 5.8
Internal Scholarship Programs 2.1
United Way Corporate Contribution 8.4
Charitable Contributions and Sponsorships 8.9
The UPS Foundation Contribution Total 60.1
United Way Employee Contribution (active and retired) 54.8
Total Charitable Contributions 114.9

204 Procurement Practices

Standard Disclosure: 103-1,2,3

Management Approach

UPS has a highly distributed and diverse supply chain, with providers ranging from global multinationals to local small businesses. As a service provider, the UPS supply chain is primarily dependent on goods and services that are highly regulated or commodity based, such as transportation, brokerage, and energy. Therefore, UPS considers our supply chain to be resilient and at low risk against problems related to the environment, labor practices, and human rights.

At the same time, we are entering into more contractual relationships with third parties, such as agents, providers, outside service providers, and authorized service contractors, who may interact with government officials or outside parties on behalf of UPS. It is vital that all third-party representatives convey UPS’s integrity and commitment to compliance when they represent our brand, products, and services in the marketplace. We consider effective management of such representatives as material to the sustainability of our business.

Since UPS is a service provider, our supply chain partners tend to be other service providers, rather than raw material or finished goods suppliers. Support of locally based and diverse suppliers has also been a core part of UPS procurement processes since 1992. Supply chain partners can be broadly grouped into three categories:

  • Production Suppliers represent the majority of total procurement spending. They provide purchased transportation services and energy to operate our global logistics network. At the region and country levels, we contract with suppliers of transportation services, such as airlines, trucking companies, railroads, and ocean carriers, as well as fuel suppliers. We also contract with third-party representatives that provide domestic delivery services in certain countries and territories.
  • Capacity Suppliers provide the equipment and facilities we purchase, build, and maintain. Our supply chain includes a number of suppliers of strategic, high-value assets that we purchase in limited numbers in select years, such as jet aircraft and alternative fuel or advanced technology vehicles. We work on a continual basis with original equipment manufacturers to design and develop our ground and air fleets in a way that minimizes their environmental impacts.
  • Support Suppliers provide standardized products and services that support our business, such as marketing, advertising, human resources, shipping materials, and other professional services.

During our assessment of potential suppliers, we survey the market and analyze supplier risks, including those related to economic, environmental, and social issues, if deemed necessary. We require suppliers with access to sensitive UPS data to execute a security agreement to ensure compliance with UPS privacy and security standards. Procurement professionals are located in our corporate, regional, and local offices to help suppliers understand and meet our requirements.

The UPS Code of Business Conduct, which applies to UPS entities globally, governs our relationships with third-party representatives. We direct them to the Code as part of the Supplier’s Principles Agreement provided during the proposal process, and they must certify they have read the Code and are aware that compliance with the Code is both expected and subject to audit. To ensure the requirements of the UPS Code of Business Conduct are clear, we produce an Anti-Corruption Compliance Manual for Third-Party Representatives. This manual, available in 24 languages, further explains our expectations and requirements, including the need to report actual or suspected compliance violations.

Collaboration and engagement are other vital components of supplier management. We work with many governmental and nongovernmental organizations, as well as with suppliers, to develop and integrate sustainability best practices in our supply chain.

UPS seeks to extend opportunities to small businesses, as well as minority-, women-, veteran-owned companies, among other diverse suppliers. Since 2015, we have conducted an annual third-party study with supplier.io to measure the economic impact of these investments. In 2018, the study found that UPS contributed more than US$4.8 billion to the U.S. economy (U.S. GDP) and sustained more than 33,800 jobs in the supply chain and local communities. A breakdown of that US$4.8 billion includes US$2.6 billion in direct economic benefit from suppliers’ operations and activities; US$1.1 billion in indirect impact from the economic benefit and employment supported in the suppliers’ respective supply chains from procuring goods and services; and US$1.1 billion in community impact from the wider economic benefits that arise when the suppliers’ employees and those in their supply chains spend their earnings.

UPS uses a risk-based due diligence process to assess potential suppliers’ ownership, financial transparency, local licensure status, compliance record, labor practices, environmental practices, and more. This information is recorded in a proprietary global database to enable more effective ongoing monitoring and auditing of these third-party relationships.

Standard Disclosure: 204-1

Proportion of spending on local suppliers.

UPS spent approximately 95 percent of our 2018 procurement budget on local suppliers, which we define as being based in the same country as the operation to which the procured items were delivered. For the purposes of this disclosure, we define significant areas of operation as any country where UPS has owned operations.

205 Anti-Corruption

Standard Disclosure: 103-1,2,3

Management Approach

UPS is a company of honesty, quality, and integrity. This legacy is fundamental to our ability to earn customer trust, support the communities in which we operate, and protect our reputation. Ethical business practices enable us to take proven compliance practices and core values with us when we enter new markets; identify suppliers that align with our approach to compliance; and successfully identify, acquire, and integrate businesses that fit into our culture of integrity.

The UPS Code of Business Conduct sets out the behavior we expect from our employees, the processes available to them for raising concerns about ethical conduct, and the channels we use to respond. The Code is available in 22 languages so that our employees, agents, and third-party representatives in other countries and territories can fully understand our guiding principles.

Our policy is to comply with all applicable laws, rules, and regulations in the more than 220 countries and territories where we operate. The Code includes policies and procedures that prohibit UPS employees, and others acting on our behalf, from engaging in anti-competitive behavior or any unlawful activities, including violations of the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, and other applicable anti-bribery laws, rules, and regulations.

We ensure understanding of these regulations with refresher courses and job-specific courses on compliance and ethics to employees, using a risk-based approach to identify the most appropriate audiences. Anti-corruption training is required for management, including management committee members.

We encourage employees to raise concerns about compliance, ethics, or business conduct with their direct supervisors or human resources representatives. Employees may also submit a report to the UPS Ethics Hotline online or by phone. Both of these channels are monitored by an independent service provider and are available 24 hours a day, 7 days a week, and reports may be anonymous. Translators are available to assist when needed. Our policy is that employees will not face retaliation if they report any violation or suspected violation in good faith. In 2018, UPS received approximately 12,000 reports of employee concerns through the UPS Ethics Hotline and other reporting avenues. We investigated these cases and took corrective or disciplinary action where appropriate.

A focus area for UPS is package contents responsibility, or the policies and protocols related to UPS shippers who tender regulated goods into our system. UPS requires that shippers only tender packages for shipment that comply with all applicable laws and regulations, and prohibits shipments that are unlawful under applicable federal, state, or local laws or policies. UPS may also, at its discretion, determine that carriage of a particular commodity is not feasible.

We follow a multilayered process to ensure that compliance is continuously improving within our U.S. Domestic Package, International Package, and Supply Chain & Freight business entities. Our global compliance team facilitates this process for employees around the world.

UPS managers and select nonmanagers receive training on compliance matters. We regularly review the UPS Code of Business Conduct with these employees, and we periodically conduct comprehensive training on ethics and compliance.

We analyze our business units for compliance risks. One of our primary tools is our Business Compliance and Ethics Questionnaire, which we use to survey our management team each year to identify events, situations, or relationships that could pose ethical or legal risks. In 2018, 49,176 employees completed the questionnaire.

Beyond training, we conduct systematic risk assessments of UPS sites, auditing methodically for evidence of fraud, corruption, and other process risks. As part of our audit process, we also pay particular attention to significant changes in a UPS business entity or its regulatory environment that could increase the risk of unethical practices or inadequate controls.

The information we generate through these activities goes to our senior management, up to and including the Management Committee, for prompt review and response.

Standard Disclosure: 205-1

Operations assessed for risks related to corruption.

This information is unavailable. UPS conducts a number of corruption-related audits but does not report on the percentage or significant risks due to confidentiality.

Standard Disclosure: 205-2

Communication and training about anti-corruption policies and procedures.

As part of our Director Orientation Program, new Board members are provided with the UPS Code of Business Conduct, which includes a section on our Anti-Corruption Program and sets forth standards applicable to all representatives of UPS.

Of more than 45,000 eligible employees, which includes all full-time managers, supervisors, and specialists, all employees of International Finance and Accounting, and all nonmanagement employees who may interact with non-U.S. government employees, 97.9 percent completed anti-corruption training as of the end of 2018. UPS also vets third-party providers worldwide and monitors their compliance with our ethical standards.

Our Nominating and Corporate Governance Committee of the Board of Directors maintains organizational responsibility for our business conduct and compliance policies, and our Chief Financial Officer holds administrative responsibility. In addition, the UPS Audit Committee of the Board of Directors oversees the Company’s compliance obligations related to auditing (both financial and operational), accounting, and financial reporting. The Chief Internal Audit and Compliance & Ethics Executive reports to the Audit Committee. The Board of Directors’ Risk Committee provides oversight for management’s identification and evaluation of enterprise risks, including the Company’s risk management framework and the policies, procedures, and practices employed to manage risks.

Standard Disclosure: 205-3

Confirmed incidents of corruption and actions taken.

We are not aware of any material incidents of corruption in 2018.

206 Anti-Competitive Behavior

Standard Disclosure: 103-1,2,3

Management Approach

See Disclosure 205 - Anti-Corruption Management Approach.

Standard Disclosure: 206-1

Legal actions for anti-competitive behavior, anti-trust, and monopoly practices.

All material litigation and enforcement matters related to competition law are disclosed to the SEC and available in our 2018 Annual Report - Form 10-K, Note 9. Legal Proceedings and Contingencies, Update to pages 111-112.

302 Energy

Standard Disclosure: 103-1,2,3

Management Approach

We help the world grow more prosperous by providing transportation and logistics solutions that facilitate global trade. This role requires the use of substantial amounts of energy, primarily in the form of fuel and electricity for our vehicles, planes, distribution facilities, warehouses, and data centers. In addition to the energy used in our own network operations, we also rely on other third-party transportation providers who use fuel and energy on our behalf to transport goods via all modes of transportation, including air, ocean, road, and rail.

We take a comprehensive, global approach to reducing energy use and GHG emissions within our network, as well as major portions of our value chain, including customers and suppliers. We believe everyone shares responsibility to improve energy efficiency and to reduce GHG emissions in the atmosphere. UPS supports global efforts to mitigate the impact of climate change. Our full statement on climate change is also publicly available on the UPS Pressroom.

Our optimized global logistics network, combined with our global GHG strategy, helps improve our efficiency and reduce our environmental impacts. This strategy includes:

  • Setting an ambitious goal to reduce absolute GHG emissions 12 percent by 2025 throughout our global ground operations, with supporting goals for fuel, energy, and alternative vehicles;
  • Utilizing operational improvements through technology to create overall network and delivery efficiencies beyond reducing miles/fuel, (e.g., higher trailer utilization, decreased sortation time, increased safety, reduced errors/duplication of work, higher asset utilization/less waste, etc.) that reduce GHG footprint;
  • Expanding our fleet of alternative fuel and advanced technology vehicles, known as our rolling laboratory, in order to reduce the proportion of conventional fuels we use;
  • Reducing conventional energy use and increasing the use of renewable energy in our facilities and alternative fuel in our fleet;
  • Providing customers with services that help them reduce their environmental impact; and
  • Helping increase supplier awareness about GHG emissions and how to reduce them.

We also contribute actively to public discussions about environmental sustainability. This includes collaborating with leading NGOs, regulators, and industry consortiums to propel the cause of environmental sustainability forward. We also participate in public policy forums, where we advocate for prudent innovation and investment in new technologies and infrastructure development.

In 2016, we committed to reducing absolute greenhouse gas emissions across our global ground operations 12 percent by 2025 (2015 baseline). E-commerce growth is driving a need for increased capacity across our network, including fleet expansion and facility automation, both of which resulted in the use of more energy and generated more emissions. Increasing the use of renewable energy across our fleet and facilities is the key pathway to achieving this goal.

We also continue to report on our GHG intensity goal, the Transportation Intensity Index, introduced in 2010. Our goal is to reduce overall carbon intensity 20 percent by 2020 (2007 baseline). This Index captures the overall efficiency of our global network by measuring GHG emissions associated with transporting packages and freight for our customers in a given year. Separate carbon intensity metrics measuring the Scope 1 and Scope 2 CO2e emissions for each of our three business segments are included in the Index. As of 2018, UPS has realized an overall carbon intensity reduction of 16.5 percent; however, this reflects a decline in performance relative to 2017 performance due to increased absolute emissions referenced above.

UPS measures the effectiveness of its energy and greenhouse gas emission strategy by tracking progress against a set of goals that are detailed in our 2018 UPS® Sustainability Progress Report - Goals & Progress,, pages 9-10.

Standard Disclosure: 302-1

Energy Consumption within the organization.

Energy Consumption Within the Organization

Global Energy ('000 GJs) 2018 2017 % Change 18/17 Base Year (2015)
Direct Energy 191,976 180,656 6.3% 173,665
Indirect Energy 6,444 6,036 6.8% 5,861
Total Energy 198,420 186,692 6.3% 179,526

Energy Consumption Within the Organization by Source

Global Energy ('000 GJs) 2018 % TO TOTAL ENERGY 2017 Base Year (2015)
Direct Energy
Direct Energy
Airline Fuel 117,597 59.3% 111,315 104,279
Ground Vehicle Fuel 68,776 34.7% 65,006 64,804
Diesel 39,989 20.1% 39,998 46,240
Gasoline 16,403 8.3% 13,945 12,096
CNG 5,879 3.0% 4,662 751
Propane/LPG 1,074 0.5% 1,181 1,101
LNG 2,347 1.2% 2,042 3,109
Renewable Fuel (Biomass) 3,084 1.6% 3,178 1,507
Facility Fuel (Heat) 5,603 2.8% 4,335 4,582
Natural Gas 5,337 2.7% 4,120 4,365
Heating Oil 70 —— 62 72
Propane 196 0.1% 153 145
Direct Energy Subtotal 191,976 96.8% 180,656 173,665
Indirect Energy
Indirect Energy
Electricity 6,433 3.2% 6,028 5,850
Renewable Electricity 11 0.0% 8 11
Indirect Energy Subtotal 6,444 3.2% 6,036 5,861
Total Energy 198,420 100.0% 186,692 179,526

Energy Consumption Within the Organization by Business Unit

U.S. Domestic
Package
International
Package
Global Supply
Chain & Freight
Totals
Global Energy ('000 GJs) 2018 2017 Base Year (2015) 2018 2017 Base Year (2015) 2018 2017 Base Year (2015) 2018 2017 Base Year (2015)
Direct Energy U.S. Domestic Package 119,955 109,852 102,865 International Package 61,340 60,672 58,757 Global Supply Chain & Freight 10,681 10,132 12,043 Totals 191,976 180,656 173,665
Indirect Energy U.S. Domestic Package 4,946 4,500 4,231 International Package 499 592 549 Global Supply Chain & Freight 999 944 1,081 Totals 6,444 6,036 5,861
Total Energy U.S. Domestic Package 124,901 114,352 107,096 International Package 61,839 61,264 59,306 Global Supply Chain & Freight 11,680 11,076 13,124 Totals 198,420 186,692 179,526

Standard Disclosure: 302-2

Energy consumption outside the organization.

Energy Consumption Outside the Organization

Global Energy ('000 GJs) 2018 2017 % Change 18/17 Base Year (2015)
Upstream
Upstream
Purchased Goods and Services Not Reported Not Reported Not Reported
Capital Goods Not Reported Not Reported Not Reported
Fuel & Energy-Related (not incl. Scope 1&2) Not Reported Not Reported Not Reported
Transportation & Distribution 125,838 111,001 13.4% 104,276
Waste Generated in Operations Not Relevant Not Relevant Not Relevant
Business Travel 1,254 1,264 (0.8)% 1,107
Employee Commuting 29.997 28,214 6.3% 26,570
Leased Assets Not Relevant Not Relevant Not Relevant
Downstream
Downstream
Transportation & Distribution Not Relevant Not Relevant Not Relevant
Processing of Sold Products Not Relevant Not Relevant Not Relevant
Use of Sold Products Not Relevant Not Relevant Not Relevant
End-of-life Treatment of Sold Products Not Relevant Not Relevant Not Relevant
Leased Assets Not Relevant Not Relevant Not Relevant
Franchises 392 390 0.4% 356
Investments Not Relevant Not Relevant Not Relevant
Total Energy Consumption Outside the Organization 157,481 140,869 11.8% 132,309

Standard Disclosure: 302-3

Energy intensity.

Energy Intensity Within the Organization by Business Unit

U.S. Domestic
Package
International
Package
Global Supply
Chain & Freight
Totals
Global Energy (‘000 GJs/$M Revenue) 2018 2017(1) Base Year (2015) 2018 2017(1) Base Year (2015) 2018 2017(1) Base Year (2015) 2018 2017(1) Base Year (2015)
Revenues in Millions U.S. Domestic Package $43,593 $40,761 $36,747 International Package $14,442 $13,342 $12,149 Global Supply Chain & Freight $13,826 $12,482 $9,467 Totals $71,861 $66,585 $58,363
Direct Energy U.S. Domestic Package 2.752 2.695 2.799 International Package 4.247 4.547 4.836 Global Supply Chain & Freight 0.773 0.812 1.272 Totals 2.671 2.713 2.976
Indirect Energy U.S. Domestic Package 0.113 0.110 0.115 International Package 0.035 0.044 0.045 Global Supply Chain & Freight 0.072 0.076 0.114 Totals 0.090 0.091 0.100
Total Energy U.S. Domestic Package 2.865 2.805 2.914 International Package 4.282 4.591 4.881 Global Supply Chain & Freight 0.845 0.888 1.386 Totals 2.761 2.804 3.076

(1) In 2018, UPS adopted new revenue recognition accounting standards that require restatements for our financial totals in 2017. Full explanation of the adjustments are explained in note 1 of the consolidated financial statements on page 67 of 2018 Annual Report - Form 10-K.

Standard Disclosure: 302-4

Reduction of energy consumption.

Reduction of Energy Consumption

Energy Saved Due to Conservation
and Efficiency Improvements
Absolute Energy
Avoided 2018 vs 2015
(gigajoules)(1)
2018 Energy
Intensity
2015 Energy
Intensity
Comments
U.S. Domestic Package: Absolute Energy Avoided
U.S. Domestic Package: Absolute Energy Avoided
Contributing factors/initiatives: E-commerce growth is driving a need for increased capacity across our network, including fleet expansion and facility automation, both of which require more energy and generate more emissions. (5,410,000) 28.26 27.03
  • Energy Intensity factor expressed in gigajoules per 1,000 Packages
  • Scope is U.S. Domestic Package Operations
  • Includes all direct and indirect energy usage for this specific business segment
  • Avoided Absolute Energy = (2015 Energy Intensity x 2018 # of packages) – (2018 Energy Intensity x 2018 # of packages)
International Package: Absolute Energy Avoided
International Package: Absolute Energy Avoided
Contributing factors/initiatives: Miscellaneous initiatives in our airline, including lower flight speeds, computer-optimized flight plans, single-engine taxi. 7,613,000 75.62 85.65
  • Energy Intensity factor expressed in gigajoules per 1,000 Packages
  • Scope is international Package Operations
  • Includes all direct and indirect energy usage for this specific business segment
  • Avoided Absolute Energy = (2015 Energy Intensity x 2018 # of packages) – (2018 Energy Intensity x 2018 # of packages)
Global Supply Chain & Freight: Absolute Energy Avoided
Global Supply Chain & Freight: Absolute Energy Avoided
Contributing factors/initiatives: Implementation of telematics, improved dispatching of drivers, consolidation of shipments, loading efficiency in ways that keep miles driven to a minimum. 1,197,000 1.10 1.21
  • Energy Intensity factor expressed in gigajoules per 1,000 lbs of freight hauled
  • Scope is Global Supply Chain & Freight Operations
  • Includes all direct and indirect energy usage for this specific business segment
  • Avoided Absolute Energy = (2015 Energy Intensity x 2018 lbs of freight) – (2018 Energy Intensity x 2018 lbs of freight)
Total 3,400,000 gigajoules

(1) Absolute energy avoided in 2018 was estimated from the energy intensity factor improvements from 2015 (baseline year) to 2018.

Standard Disclosure: 302-5

Reductions in energy requirements of products and services.

See Disclosure 302-4 — Reduction of Energy Consumption.

303 Water

Standard Disclosure: 103-1,2,3

Management Approach

NOTE: Water is not a material issue for UPS, but we provide some perspective in this report for those stakeholders who have an interest in this issue.

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.

Standard Disclosure: 303-1

Water withdrawal by source.

Total Water Consumption — Absolute (millions m3)

Source 2018 2017 2016 2015 % CHANGE 18/17
U.S. Domestic Package 4.18 3.92 3.74 3.84 6.6%
International Package 0.73 0.64 0.72 0.72 14.1%
Global Supply Chain & Freight(1) 0.95 0.86 0.82 0.74 10.5%
Total Water Consumption 5.86 5.42 5.28 5.3 8.1%

(1) 2016 was the first year reporting water usage for Coyote Logistics.

305 Emissions

Standard Disclosure: 103-1,2,3

Management Approach.

See Disclosure 302 - Energy Management Approach.

Standard Disclosure: 305-1

Direct (Scope 2) GHG emissions.

Statement of Greenhouse Gas (GHG) Emissions

for the years ended December 31, 2018 and 2017

GHG Performance

Global CO2e Emissions ('000 tonnes) 2018 2017 % Change 17/18 Base Year (2015)
Scope 1 13,851 13,047 6.2% 12,197
Scope 2 (market-based) 784 745 5.2% 814
Gross Scope 1 & 2 14,635 13,792 6.1% 13,011
Scope 3 21,783 20,071 8.5% 16,877
Gross Scope 1, 2 & 3 36,418 33,863 7.5% 29,888
Voluntary carbon offsets for Scope 1 carbon neutral service (retired) (95.9) (77.9) (44.9)
Voluntary carbon offsets for Scope 2 carbon neutral service (retired) (7.6) (6.3) (3.2)
Voluntary carbon offsets for Scope 3 carbon neutral service (retired) (13.8) (10.4) (4.8)
Net Global CO2e Emissions 36,301 33,768 7.5% 29,835
Biomass CO2 Emissions 2018 2017 % Change 17/18 Base Year (2015)
Mobile Combustion — Biomass CO2 (e.g. ethanol, bio-diesel) 257 292 (12)% 108
Stationary Combustion—Biomass CO2 0 —%
Total Biomass CO2 (reported separately as per GHG Protocol) 257 292 (12)% 108
SCOPE 2 CO2e EMISSIONS ('000 tonnes)(1) 2018 2017 % Change 17/18 Base Year (2015)
Scope 2 (market-based method) 784 745 5.2% 814
Scope 2 (location-based method) 784 745 5.2% 814

(1) Location-based and market-based Scope 2 emissions are being reported as per the new GHG Protocol Scope 2 Guidance.

GHG Reporting Policies

The statement of greenhouse gas (GHG) emissions was prepared based on a calendar reporting year that is the same as the United Parcel Service, Inc. (UPS or the Company) financial reporting period. Organizational responsibility for our GHG Emissions reporting rests with our Chief Sustainability Officer.

Scope 1 and 2 GHG emissions information was prepared in accordance with the World Resources Institute/World Business Council for Sustainable Development Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard, Revised Edition.

Scope 3 GHG emissions information was prepared in accordance with the World Resources Institute/World Business Council for Sustainable Development Greenhouse Gas Protocol: Corporate Value Chain (Scope 3), Accounting and Reporting Standard.

Scope 3 emissions include all relevant Scope 3 categories, nine of the 15 categories as defined by the GHG Protocol.

Collectively, the Corporate Accounting and Reporting Standard, Revised Edition and the Corporate Value Chain (Scope 3), Accounting and Reporting Standard are referred to as the “GHG Protocol” in this document.

The following includes information on GHG emissions by business unit and emission source, as well as intensity disclosures.

Base Year GHG Emissions

The base year GHG emissions for Scope 1, 2, and 3 is 2015.

Greenhouse Gases

All GHG emissions figures are reported in metric tonnes of carbon dioxide equivalents (CO2e) and include four of the seven greenhouse gases covered by the GHG Protocol—carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), and hydrofluorocarbons (HFCs). Perfluorocarbons (PFCs), sulphur hexafluoride (SF6), and nitrogen triflouride (NF3) emissions were omitted from our reporting as they are not a material source of greenhouse gases for the Company.

The GHG Protocol defines global warming potential (GWP) as “a factor describing the radiative forcing impact (degree of harm to the atmosphere) of one unit of a given GHG relative to one unit of CO2.” By using GWPs, GHG emissions from multiple gases can be standardized to a carbon dioxide equivalent (CO2e). The global warming potentials used are:

Gas Global Warming Potential (GWP) Reference
Carbon Dioxide (CO2) 1 Fifth Assessment Report (SAR) published by Intergovernmental Panel on Climate Change
Methane (CH4) 28 Fifth Assessment Report (SAR) published by Intergovernmental Panel on Climate Change
Nitrous Oxide (N2O) 265 Fifth Assessment Report (SAR) published by Intergovernmental Panel on Climate Change
HFC-134a 1300 Fifth Assessment Report (SAR) published by Intergovernmental Panel on Climate Change

GHG Reporting Scope and Boundary

The Statement of Greenhouse Gas Emissions includes Scope 1 (direct), Scope 2 (indirect), and Scope 3 (indirect) emissions that were reported for operations within the organizational boundary described below. GHG emissions have been reported from the entities where the Company has operational control as defined by the GHG Protocol. UPS is a global company operating in more than 220 countries and territories. Our three reportable business segments are U.S. Domestic Package, International Package, and Global Supply Chain & Freight.

UPS is a global company operating in more than 220 countries and territories. Our three reportable business segments are U.S. Domestic Package, International Package, and Global Supply Chain & Freight.

  1. The U.S. Domestic Package business consists of air and ground delivery of small packages - up to 150 pounds in weight - and letters to and from all 50 states.
  2. The International Package reporting segment includes the small package operations in Europe, Asia, Canada, Latin America, and the Indian Subcontinent, Middle East and Africa. Europe is our largest region outside the United States - accounting for approximately half of our international revenue. This includes our 2017 acquisition of Eirpost Group Unlimited Company ("Nightline"), an Ireland-based express delivery and logistics company.
  3. The Global Supply Chain & Freight segment consists of our forwarding and logistics services, truckload freight brokerage, UPS Freight, and our financial offerings through UPS Capital. Supply chain complexity creates demand for a global service offering that incorporates transportation, distribution, and international trade and brokerage services, with complementary financial and information services. This segment also includes acquisitions in 2017 which are now incorporated into our data, such as third party logistics broker Coyote Logistics (including international acquisition Freightex which was incorporated into Coyote), Marken, and STTAS, a global trade compliance management company.

In 2018, UPS also invested in more than 22 highly automated new or retrofit facilities serving various segments. Data from those 22 facilities is included in our reported GHG figures in this report. For more information on those investments, see 2018 UPS® Sustainability Progress Report—Making Our Logistics Network Smarter Than Ever, pages 27-28.

Operational Boundary—Detailed Description Scope 1 & 2(1)

Source Scope U.S. Package Operations International Package Operations Global Supply Chain & Freight
Jet-A (mobile) 1 All jet fuel used for UPS-owned aircraft (U.S. flights) All jet fuel used for UPS-owned aircraft (International flights) N/A — All Supply Chain & Freight moved on UPS-owned aircraft is captured in package operations (U.S. and International)
Diesel & Gasoline (mobile) 1 All diesel and gasoline used in UPS-owned/leased vehicles to transport, pick up, and deliver small packages
  • Diesel and gasoline used in UPS-owned/leased vehicles to transport, pick up, and deliver small packages
  • Gasoline used for Company-leased cars used by employees in Europe and Asia
  • Diesel and gasoline used in UPS-owned/leased vehicles to transport, pick up, and deliver freight or packages
  • Gasoline for Company-leased cars used by employees in U.S., Canada, Europe, and Asia
CNG (mobile) 1 All compressed natural gas used in UPS-owned vehicles to transport, pick up, and deliver small packages All compressed natural gas used in UPS-owned vehicles to transport, pick up, and deliver small packages All compressed natural gas used in UPS owned vehicles to transport, pickup and deliver freight or packages
Propane/LPG (mobile) 1 All propane fuel used in UPS-owned vehicles to transport, pick up, and deliver small packages All propane fuel used in UPS-owned vehicles to transport, pick up, and deliver small packages N/A — Fuel type is not a source of emissions from this business unit
LNG (mobile) 1 All liquefied natural gas used in UPS-owned vehicles to transport, pick up, and deliver small packages N/A — Fuel type is not a source of emissions from this business unit All liquefied natural gas used in UPS owned vehicles to transport, pickup and deliver freight or packages
Natural Gas, Heating Oil, Propane (stationary) 1 Natural gas, propane, and heating oil for facilities we own or lease Natural gas, propane, and heating oil for facilities we own or lease Natural gas, propane, and heating oil for facilities we own or lease
HFCs 1 Fugitive emissions from vehicle A/C systems Fugitive emissions from vehicle A/C systems Fugitive emissions from vehicle A/C systems
Electricity (stationary) 2 Electricity usage for facilities we own or lease Electricity usage for facilities we own or lease Electricity usage for facilities we own or lease

(1) No Scope 1 or 2 activities have been excluded from this Report.

Operational Boundary — Detailed Description Scope 3

Scope and Category Emissions Included/Excluded (UPS Scope & Boundary) Description of Methodology % Emissions Calculated Using Data Obtained from Value Chain Partners
Upstream Scope 3 Emissions
Upstream Scope 3 Emissions
1. Purchased Goods & Services The upstream extraction, production, and transportation of goods and services purchased by all UPS operations, not otherwise included in Categories 2-8

Exclusions: None
Economic input-output life cycle assessment (EIO-LCA) model 0%
2. Capital Goods The upstream extraction, production, and transportation of capital expenditures purchased by all UPS operations. Includes buildings, aircraft, vehicles, and information technology

Exclusions: None
Economic input-output life cycle assessment (EIO-LCA) model 0%
3. Fuel- and Energy-Related Activities Not Included in Scope 1 or 2 Includes the upstream (well-to-pump) emissions from raw material extraction up to the point of (but excluding) combustion for the following global fuel sources: Jet-A, Diesel, Gasoline, CNG, LPG, LNG, natural gas, heating oil, and propane

Includes the upstream emissions for the transmission and distribution losses of purchased electricity

Exclusions: None
The same primary data that is used to calculate the Scope 1 and 2 emissions for all energy usage is used to calculate the upstream emissions; the actual quantity of energy consumed is multiplied by the appropriate life cycle emission factor. 100%
4. Transportation & Distribution (Upstream) The emissions from purchased transportation (air, ground, rail, and ocean) for the pickup, transportation, and delivery of packages/ freight for our global operations includes emissions associated with:

U.S. Package Operations
  • Packages moved by third parties via aircraft, rail, and tractor-trailers
  • Last-mile delivery of packages by the U.S. Postal Service
International Package Operations
  • Packages moved by third parties via aircraft and tractor-trailers
  • Last-mile delivery of packages by the use of Agents and Outside Service Providers (OSPs)
  • Packages transported across the U.K. Channel by third parties via railroad or ferry
  • Packages transported by rail in Canada
Global Supply Chain & Freight
  • UPS Supply Chain Solutions™ Services: transportation, pickup, and delivery for freight/packages by other third parties via aircraft, rail, tractor-trailers, and ocean
  • UPS Freight™ Operations: transportation, pickup, and delivery for freight in the U.S. and Canada via various modes of transport, which include tractor-trailers, railroads, and ocean transport of freight, typically to Hawaii, Puerto Rico, Guam, and Alaska
Exclusions: Does not include Scope 2 emissions from third-party transportation companies. Does not include any optional life cycle assessment (LCA) emissions. Source has been excluded due to lack of means to measure emission source.
The primary method used to calculate the upstream emissions from purchased transportation is to multiply the actual weight and distance traveled for each shipment by the appropriate emission factor from the GHG Protocol. 35%
5. Waste Generated in Operations Includes the emissions that occur for landfilled, incinerated, recovery, and recycled wastes streams in the U.S.

Exclusions: Emissions associated with wastes generated in operations outside of the U.S. Does not include any optional LCA emissions. Source has been excluded due to lack of means to measure emission source.
Methodology used is actual waste disposed by waste stream multiplied by the appropriate LCA Emission factor. 100%
6. Business Travel Includes the emissions that occur from air and rail travel, rental cars, and the use of personnel vehicles for business-related activities for our global operations.

Exclusions: Does not include any optional life cycle emissions from hotel stays. Source has been excluded due to lack of means to measure emission source.
Travel agent provides a detailed breakdown of GHG emissions based upon actual travel activity 100%
7. Employee Commuting Includes the emissions that occur for the transportation of our employees between their homes and their workplace for our global operations.

Exclusions: Does not include any optional emissions from employee teleworking. Source has been excluded due to lack of means to measure emission source.
Actual number of employees multiplied by average gallons used per employee (UPS calculated this factor) multiplied by the emission factor for gasoline (8.81 kg CO2 per gallon). The UPS factor for estimated gallons per employee was created by combining a host of information from the U.S. Census data, Department of Transportation, the Federal Highway Administration, and other sources. 0%
8. Upstream Leased Assets Not Relevant — We do not report on this category since the category as described by the WRI Guidelines is not applicable to our business because upstream leased assets are included in our Scope 1 and 2 emissions. Not Relevant Not Relevant
Downstream Scope 3 Emissions
Downstream Scope 3 Emissions
9. Transportation & Distribution Not Relevant — We do not report on this category since the category as described by the WRI Guidelines is not applicable to our business because UPS does not offer a sold product. For our sold service, emissions from non-UPS vehicles are reported in category 4 because they are purchased directly by UPS. Not Relevant Not Relevant
10. Processing of Sold Products Not Relevant — We do not report on this category since the category as described by the WRI Guidelines is not applicable to our business because UPS does not offer an intermediate sold product. Not Relevant Not Relevant
11. Use of Sold Products Not Relevant — We do not report on this category since the category as described by the WRI Guidelines is not applicable to our business because UPS does not offer an intermediate sold product. Not Relevant Not Relevant
12. End-of-Life Treatment of Sold Products Includes the global emissions that occur for landfilled and recycled waste from UPS-branded packaging materials sold to customers.

Exclusions: None
Number of pounds of purchased UPS-branded packaging multiplied by the appropriate LCA Emission factor 100%
13. Downstream Leased Assets Not Relevant — We do not report on this category since the category as described by the WRI Guidelines is not relevant because UPS does not have any significant downstream leased assets. Not Relevant Not Relevant
14. Franchises Estimated electricity and natural gas usage for over 5,000 The UPS Store® locations serving the U.S. and Canada.

Exclusions: Does not include any optional LCA emissions. Source has been excluded due to lack of means to measure emission source.
Using square footage of The UPS Store™ franchises multiplied by an average energy emission factor established by the EPA Energy Star Program 0%
15. Investments Not Relevant — We do not report on this category since the category as described by the WRI Guidelines is not relevant because UPS does not have any significant investments that fit this category. Not Relevant Not Relevant

Uncertainty

As calculations of GHG emissions contain uncertainty for a variety of reasons, we conducted an uncertainty analysis to quantify estimates of the likely or perceived difference between the reported GHG emissions and a qualitative description of the likely causes of the difference such as uncertainty in data inputs and calculation methodologies; uncertainty associated with mathematical equations used to characterize the relationship between various parameters and emission processes; and uncertainty associated with quantifying the parameters used as inputs to estimation models. UPS continues to improve internal processes for primary data collection to reduce uncertainty in its GHG inventory reporting for Scopes 1 and 2. UPS continues to work with the third parties responsible for providing the data necessary to calculate Scope 3 emissions and will continue to work on improving the data management and the methodologies used to estimate these emissions to reduce the uncertainty in its GHG inventory reporting. Using the GHG Protocol “Measurement and Estimation Uncertainty of GHG Emissions” guidance and analyzing the collected data through Monte Carlo simulations by using the @Risk statistical analysis software at 95 percent confidence interval, we are able to estimate the uncertainty for our 2018 GHG inventory as follows:

Scope Uncertainty Main Source of Uncertainty % Change 18/17
Scope 1 +/- 1% International Operations North America Operations (Small Package, Supply Chain & Freight) and UPS Airlines are our largest source of Scope 1 emissions and represent 98 percent of the total Scope 1 emissions. Well-established processes are in place to capture the primary data for these sources.

International Operations represent 2 percent of the total Scope 1 emissions.
Scope 2 +/- 3% International Operations North America Operations (Small Package, Supply Chain & Freight) are our largest source of Scope 2 emissions, representing 94 percent of the total Scope 2 emissions. Well-established processes are in place to capture the primary data for these sources.

International Operations represent 6 percent of the total Scope 2 emissions.
Scope 3 +/- 8% Use of secondary data UPS reports on all relevant Scope 3 categories described in the Greenhouse Gas Protocol Corporate Value Chain (Scope 3) Accounting & Reporting Standard.

Calculations for Scope 3 use various sources of secondary data since primary data is unavailable. Examples of the type of secondary data used vary from estimated miles driven, number of packages picked-up/delivered to estimated shipment information (weight and distance per shipment).

GHG Emission Factors

The carbon dioxide equivalent emissions associated with the activities described in the detailed description of our operational boundaries were determined on the basis of measured or estimated energy and fuel use, multiplied by relevant carbon emission factors. Published emission factors were used to calculate emissions from operations.

Emissions Source Emission Factor Employed
Scope 1 — Global GHG Protocol Emission Factors from Cross-Sector Tools, March 2017
EPA Emission Factor Hub_Nov 2015v2
Scope 2 — U.S. U.S. Environmental Protection Agency eGRID_2016
Scope 2 — Canada Environment Canada, National Inventory Report, 1990-2014
Scope 2 — Other CO2 Emissions from Fuel Combustion Highlights (2017 Edition © OECD/IEA)
Scope 3 — Global Category 1 & 2: GHG Protocol Scope 3 Evaluator

Category 3: Argonne National Laboratory GREET_1 2018 Model

Category 3: U.S. Environmental Protection Agency eGRID_2016

Category 4: EPA SmartWay Carrier Rankings and Emission Rates (railroad only)

Category 6: EPA Emission Factors For GHG Inventories, Mar 2018

Category 4, 7, 14: GHG Protocol Emission Factors from Cross-Sector Tools, March 2017

Category 5 & 12: DBEIS 2018 Government GHG Conversion Factors for Company Reporting

Methodology

For Scopes 1 and 2, primary usage data is used to calculate GHG Emissions. The primary data is collected through various internal processes and data systems which are inputted into our sustainability performance management software that quantifies associated emissions through the application of the GHG emission factors described above.

GHG emission calculations for Scope 3 use various sources of secondary data since primary data is unavailable. The secondary data used varies from estimated miles driven, number of packages picked-up/delivered to estimated shipment information (weight and distance per shipment). The appropriate GHG activity factor is applied to estimate the emissions reported.

Carbon Offset Purchases From UPS Carbon Neutral Product

A carbon offset is a certified financial instrument aimed at a reduction in GHG emissions. The offsets we purchase meet the key standard of additionality, which means that the carbon reduction project in question (such as reforestation) produced a reduction in CO2e generation or sequestration of CO2e in addition to what would have been achieved by activities already planned or underway.

Project Name Project Location Offset Standard Project Type 2018 Metric Tonnes Retired 2017 Metric Tonnes Retired
Garcia River Forest U.S. (California) CAR Reforestation 10,196 36,165
Big River and Salmon Creek Forests U.S. (California) CAR Reforestation 3,783 34,258
Wolf Creek Landfill U.S. (Georgia) CAR Landfill Gas 22,000 10,000
Chol Charoen Group Wastewater Treatment with Biogas System 1 Thailand VCS Wastewater Methane Destruction 17,908 14,105
Darkwoods Canada VCS Reforestation 63,442
Total Carbon Offsets 117,329 94,528

Standard Disclosure: 305-2

Energy indirect (Scope 2) GHG emissions.

See Disclosure 305-1 — Direct (Scope 2) GHG emissions.

Standard Disclosure: 305-3

Other indirect (Scope 3) GHG emissions.

Scope 3 Emissions by Category

Global CO2e Emissions ('000 Tonnes) 2018 2017 Base Year 2015
Total Scope 3 Emissions 21,783 20,071 16,877
Upstream
Upstream
1 Purchased Goods & Services 3,063 2,739 2,533
2 Capital Goods 4,635 3,914 1,746
3 Fuel & Energy Related (not incl. Scope 1 & 2) 2,937 3,426 3,226
Jet A (well to pump) 1,607 2,149 1,926
Diesel (well to pump) 676 681 760
Gasoline (well to pump) 294 343 271
CNG (well to pump) 105 72 11
Propane/LPG (well to pump) 15 11 9
LNG (well to pump) 79 54 72
Biomass (well to pump) 55 25 63
Natural Gas, Heating Oil, Propane (stationary) 69 49 55
Electricity (T&D losses/generation of) 37 42 59
4 Transportation & Distribution 8,946 7,903 7,417
Subcontracted Air 4,742 3,823 3,804
Subcontracted Ground 3,367 3,214 2,784
Subcontracted Rail 439 439 368
Subcontracted Ocean 398 427 461
5 Waste Generated in Operations 17 25 19
Landfilled, Incinerated, Recovery, Recycled 17 25 19
6 Business Travel 88 89 78
Business Travel — Air/Rail/Car 88 89 78
7 Employee Commuting 2,030 1,909 1,798
U.S. Domestic Package 1,565 1,452 1,341
International Package 343 336 332
Global Supply Chain & Freight 122 121 125
8 Leased Assets Not Relevant Not Relevant Not Relevant
Downstream
Downstream
9 Transportation & Distribution Not Relevant Not Relevant Not Relevant
10 Processing of Sold Products Not Relevant Not Relevant Not Relevant
11 Use of Sold Products Not Relevant Not Relevant Not Relevant
12 End-of-Life Treatment of Sold Products 11 10 9
Landfilled/Recycled 11 10 9
13 Leased Assets Not Relevant Not Relevant Not Relevant
14 Franchises 56 56 51
The UPS Store® — Electricity/Natural Gas 56 56 51
15 Investments Not Relevant Not Relevant Not Relevant

Standard Disclosure: 305-4

GHG emissions intensity.

Emissions by Business Unit

U.S. Domestic Package International Package Global Supply Chain & Freight Totals
Global CO2e Emissions ('000 tonnes) 2018 2017 Base Year (2015) 2018 2017 Base Year (2015) 2018 2017 Base Year (2015) 2018 2017 Base Year (2015)
Scope 1 U.S. Domestic Package 8,572 7,857 7,186 International Package 4,507 4,459 4,150 Global Supply Chain & Freight 772 731 861 Totals 13,851 13,047 12,197
Scope 2 U.S. Domestic Package 619 567 602 International Package 46 67 71 Global Supply Chain & Freight 119 111 141 Totals 784 745 814
Total Scope 1 & 2 U.S. Domestic Package 9,191 8,424 7,788 International Package 4,553 4,526 4,221 Global Supply Chain & Freight 891 842 1,002 Totals 14,635 13,792 13,011
Scope 3 U.S. Domestic Package 12,110 10,987 8,287 International Package 2,451 2,790 2,552 Global Supply Chain & Freight 7,222 6,294 6,038 Totals 21,783 20,071 16,877
Total Scope 1, 2 & 3 U.S. Domestic Package 21,301 19,411 16,075 International Package 7,004 7,316 6,773 Global Supply Chain & Freight 8,113 7,136 7,040 Totals 36,418 33,863 29,888

CO2e Intensity by Business Unit

U.S. Domestic Package International Package Global Supply Chain & Freight Totals
Global CO2e Emissions ('000 tonnes) 2018 2017(1) Base Year (2015) 2018 2017(1) Base Year (2015) 2018 2017(1) Base Year (2015) 2018 2017(1) Base Year (2015)
Revenue in Millions U.S. Domestic Package $43,593 $40,761 $36,747 International Package $14,442 $13,342 $12,149 Global Supply Chain & Freight $13,826 $12,482 $9,467 Totals $71,861 $66,585 $58,363
Scope 1 U.S. Domestic Package 0.197 0.193 0.196 International Package 0.311 0.334 0.341 Global Supply Chain & Freight 0.056 0.059 0.091 Totals 0.193 0.196 0.209
Scope 2 U.S. Domestic Package 0.014 0.014 0.016 International Package 0.004 0.005 0.006 Global Supply Chain & Freight 0.008 0.009 0.015 Totals 0.011 0.011 0.014
Total Scope 1 & 2 U.S. Domestic Package 0.211 0.207 0.212 International Package 0.315 0.339 0.347 Global Supply Chain & Freight 0.064 0.068 0.106 Totals 0.204 0.207 0.223
Scope 3 U.S. Domestic Package 0.278 0.270 0.225 International Package 0.170 0.209 0.210 Global Supply Chain & Freight 0.523 0.504 0.638 Totals 0.303 0.301 0.289
Total Scope 1, 2 & 3 U.S. Domestic Package 0.489 0.477 0.437 International Package 0.485 0.548 0.557 Global Supply Chain & Freight 0.587 0.572 0.744 Totals 0.507 0.508 0.512

(1) In 2018, UPS adopted new revenue recognition accounting standards that require restatements for our financial totals in 2017. Full explanation of the adjustments are explained in note 1 of the consolidated financial statements on page 74 of 2018 Annual Report - Form 10-K.

Carbon Offset Purchases from UPS Carbon Neutral Product

Scope 1 and Scope 2 Emissions by Source

Global CO2e Emissions ('000 Tonnes) 2018 2018 Percent to Total 2017 Base Year (2015)
Airline Fuel 8,652 59.1% 8,190 7,375
Ground Vehicle Fuel 4,906 33.5% 4,631 4,587
Diesel 2,997 20.5% 2,998 3,345
Gasoline 1,228 8.4% 1,044 823
CNG 339 2.3% 269 43
Propane/LPG 73 0.5% 80 70
LNG 256 1.7% 223 299
Biomass (CH4 and N2O only) 6 10
HFCs (fugitive) 7 0.1% 7 7
Facility Fuel 293 2.0% 226 235
Natural Gas 275 1.9% 212 221
Heating Oil 5 —% 4 5
Propane 13 0.1% 10 9
Facility Electricity 784 5.4% 745 814
Grand Total 14,635 13,792 13,011

Standard Disclosure: 305-5

Reduction of GHG emissions.

2018 Carbon Intensity Emissions Avoided Since Base Year (2015)

Emissions Reduction Description: The Following Three Metrics Are the Components of the UPS Transportation Intensity Index Absolute CO2e
Emissions Avoided
Since 2015 (Metric
Tonnes)
2018 CO2e
Intensity
2015 CO2e
Intensity
Comments
U.S. Domestic Package: Absolute CO2e Avoided (Ground Operations Only) 400,000(1) 2.35 2.36
  • CO2e Intensity factor expressed in lbs CO2e per Package
  • Scope is U.S. Domestic Package ground movements
  • Avoided Absolute CO2e = (2015 CO2e Intensity x 2018 # of packages) – (2018 CO2e Intensity x 2018 # of packages)
Global UPS Airlines: Absolute CO2e Avoided 155,000(1) 1.36 1.40
  • CO2e Intensity factor expressed
  • Scope is UPS Airlines—Global Operations
  • Avoided Absolute CO2e = (2015 CO2e Intensity x 2018 ATM) – (2018 CO2e Intensity x 2018 ATM)
U.S. Supply Chain & Freight: Absolute CO2e Avoided 277,000(1) 0.18 0.19
  • CO2e Intensity factor expressed
  • Scope is UPS Freight® LTL ground movements
  • Avoided Absolute CO2e = (2015 CO2e Intensity x 2018 lbs.of freight) – (2018 CO2e Intensity x 2018 lbs of freight)
Total 832,000 metric tonnes

(1) Cumulative CO2e emissions avoided since 2015 are estimated from the Transportation Intensity Index improvements from 2015 to 2018.

2018 Intermodal Shift Emissions Avoidance

Emissions Reduction Description Absolute CO2e Emissions Avoided in 2018 (Metric Tonnes) Total Absolute CO2e Emissions Avoided Since 2015 (Metric Tonnes)
Air to Ground Mode Shift (U.S. Package Operations) 3,048,000(2) 8,284,000
Ground to Rail Mode Shift (U.S. Package Operations) 1,032,000(2) 2,972,000
Total 4,080,000 11,256,000

(2) Absolute CO2e emissions avoided in 2018, due to intermodal shifts that occur in the U.S. Domestic Package.

Standard Disclosure: 305-6

Emissions of ozone-depleting substances (ODS).

This indicator is not applicable since UPS does not produce, import, or export ODS.

Standard Disclosure: 305-7

Nitrogen oxides (NOX), sulfur oxides (SOX), and other significant air emissions.

The EPA Motor Vehicle Emission Simulator (MOVES) model is used to calculate ground vehicle emissions.

Particulate Emission Reduction

U.S. Domestic Package & U.S. Freight Operations

Emissions 2018 2017 2016 Base Year (2012) 2020 Goal
PM2.5 Emissions per Ground Vehicle (kg PM2.5/vehicle) 7
(64% reduction from 2012 baseline)
8 9 18 75% reduction from 2012 baseline
NOx Emissions per Ground Vehicle (kg NOx/vehicle) 183
(64% reduction from 2012 baseline)
216 251 503 60% reduction from 2012 baseline

306 Effluents & Waste

Standard Disclosure: 103-1,2,3

Management Approach

NOTE: Effluents and waste is not a material issue for UPS, but we provide some perspective in this report for those stakeholders who have an interest in this issue.

UPS is currently collecting and disclosing data for solid, hazardous, and nonhazardous 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, as well as generated waste from aircraft maintenance, vehicle maintenance, and facility operations.

Solid Waste Management
Efforts to improve our recycling programs and reporting 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. Achievements include increased national vendor contracts and enhanced recycling reporting.

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 environmental consultant 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.

Standard Disclosure: 306-2

Waste by type and disposal method.

U.S. Waste Disposal & Recycling Trend (U.S. Tons)

Waste Type 2018 2017 2016 2015
Solid Waste Disposal Total 116,605 98,290 76,635 80,919
Solid Waste Recycling Total 281,332 256,077 242,325 210,908
Hazardous Waste Total 1,882 1,760 1,575 1,524
Nonhazardous Waste Total 75,508 62,071 44,534 50,856
Total Waste 475,327 418,198 365,069 344,207

2018 U.S. Waste Disposal & Recycling (U.S. Tons)

U.S. Domestic Package, Supply Chain & Freight Incinerated Landfilled Recovery Recycled Total
Solid Waste Disposal Total 69 116,536 116,605
National Vendors 69 110,745
Local Vendors 5,791
Solid Waste Recycling Total 281,332 281,332
Corrugated Containers — National Vendors 23,144
Pallets & Wood Waste — National Vendors 234,264
Metals — National Vendors 7,862
Mixed Recycling — National Vendors 15,732
Office Paper — National Vendors 290
Plastics — National Vendors 40
Hazardous Waste Total 528 9 817 528 1,882
Auto, Aircraft, Facility Maintenance, Damaged Packages, Etc. — National Vendors(1) 528 9 817 528
Auto, Aircraft, Facility Maintenance, Damaged Packages, Etc. — Local Vendors
Nonhazardous Waste Total 1,228 317 1,452 72,510 75,507
Auto, Aircraft, Facility Maintenance, Damaged Packages, Etc. — National Vendors 776 176 935 7,136
Electronic Waste — National Vendors 1,304
Batteries — National Vendors(2) 12
Scrap Metal From Vehicle Retirement 57,612
Auto, Aircraft, Facility Maintenance, Damaged Packages, Etc. — Local Vendors 452 141 517 6,446
Total Waste By Disposal Method 1,825 116,862 2,269 354,370 475,326

(1) Approved national vendor — approval process consists of vendor site visits, audits, and other internal controls.

(2) Rechargeable and nonrechargeable batteries, excluding automotive batteries.

Standard Disclosure: 306-3

Significant spills.

In 2018, UPS had no significant spills. The numbers reported below are 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. Multi-year data for the number of reportable spills, along with the total volume of reportable spills is presented below.

Number of Reportable Spills

Type 2018 2017 2016 2015
U.S. Domestic Package 74 62 58 69
U.S. Supply Chain & Freight 14 21 12 27

Volume of Reportable Spills (gallons)

Type 2018 2017 2016 2015
U.S. Domestic Package 2,114 2,721 2,346 1,656
U.S. Supply Chain & Freight 1,337 4,241 862 1,362

Standard Disclosure: 306-4

Transport of hazardous waste.

No hazardous waste generated within the U.S. is shipped outside of the United States. For waste generated outside the U.S., data is not available at this time and we do not currently have a timeline for when we will begin to report on it.

307 Environmental Compliance

Standard Disclosure: 103-1,2,3

Management Approach

NOTE: Environmental compliance is not a material issue for UPS, but we provide some perspective in this report for those stakeholders who have an interest in this issue.

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 UPS is expected to support efforts to maintain a leadership role in protecting the environment.

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 https://sustainability.ups.com/resources/policies-and-procedures/.

Standard Disclosure: 307-1

Non-compliance with environmental laws and regulations.

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 2018, U.S. federal and state environmental agencies conducted 914 environmental inspections at UPS facilities, 758 in our U.S. Domestic Package segment, and 156 in our Supply Chain & Freight segment. We had a total of 108 notices of violation, on which we received four fines amounting to a total of US$15,850.

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

Type 2018 2017 2016 2015
U.S. Domestic Package 0.40 0.13 0.46 0.77
U.S. Supply Chain & Freight 0.64 1.35

308 Supplier Environmental Assessment

Standard Disclosure: 103-1,2,3

Management Approach

See Disclosure 204 — Supply Chain Management Approach.

Standard Disclosure: 308-1

New suppliers that were screened using environmental criteria.

Due to confidentiality constraints, UPS does not report specific numbers or percentages related to screening or impact assessments, as this information is subject to confidentiality constraints of our supplier contracts. In 2018, we were not aware of any significant environmental, social, or labor concerns related to our suppliers.

Standard Disclosure: 308-2

Negative environmental impacts in the supply chain and actions taken.

Due to confidentiality constraints, UPS does not report specific numbers or percentages related to screening or impact assessments, as this information is subject to confidentiality constraints of our supplier contracts. In 2018, we were not aware of any significant environmental, social, or labor concerns related to our suppliers.