2017 GRI Content Index

Our Reporting Strategy

We are pleased to present UPS’s 16th annual Corporate Sustainability Report. Continuous improvement and leadership have been hallmarks of our reporting efforts through the years. For the 2017 reporting cycle, we have introduced a new storytelling format to better meet the needs of our stakeholders and readers. This format separates stories about new initiatives and other developments from the data requirements of the Global Reporting Initiative (GRI). The UPS 2017 Corporate Sustainability Progress Report chronicles our 2017 performance, initiatives, and engagements across the four pillars that comprise our Committed to More™ sustainability strategy. All GRI Standards disclosures for our comprehensive level of reporting are now located directly in the 2017 UPS GRI Content Index. Both documents can be found at ups.com/sustainability in interactive and downloadable PDF formats.

Note: Unless noted, data for UPS subsidiaries Coyote Logistics and Marken is not included in statistics of this Report.

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 9.0 million receivers (“consignees”) in over 220 countries and territories. In 2017 we delivered an average of 20.0 million pieces per day, or a total of 5.1 billion packages. Total revenue in 2017 was $65.9 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, the Middle East, and Africa).

Standard Disclosure: 102-7

Report the scale of the organization.

Total Number of Employees 454,000
Total Number of Operations 2,500+ worldwide operating facilities
Net Revenues $65.9 billion
Total Capitalization $23.3 billion
Quantity of Products or Services Provided 5.1 billion packages delivered in 2017

Standard Disclosure: 102-8

Breakdown of employee type.

See 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.

In 2017, we formed and received approval for a joint venture with SF Express, China’s leading small package company, which will ultimately provide millions of potential customers in China with improved access to buyers and sellers around the world. We acquired Freightex, Ltd. (“Freightex”) to extend our platform-based freight transportation capabilities into both the U.K. and European markets. The acquisition of Eirpost Group Unlimited Company (“Nightline”) vaulted UPS to a leading market position in Ireland. We added shipping centers and healthcare and distribution facilities in Mexico, Colombia and India. In 2017, we also acquired STTAS Global Holdings, Inc. (“Sandler & Travis Trade Advisory Services” or “STTAS”), the world’s largest dedicated global trade compliance management company. UPS continues to focus on growth, including $5.2 billion in capital expenditures to meet increasing global demand. Within our facilities, we are expanding capacity, driving greater efficiencies, and providing additional network flexibilities. We also continue to invest in our air network capacity through aircraft acquisitions. See 2017 Annual Report - Form 10-K, Item 1, pages 1-2.

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 engage in—other than those aforementioned in this Report—include the following:

  • The World Resources Institute’s Greenhouse Gas Protocol
  • CDP’s climate change program
  • The President’s Advisory Council on Doing Business in Africa, where UPS serves as Vice Chair
  • The Business Roundtable, an association of CEOs promoting public policy in support of a thriving economy

Standard Disclosure: 102-13

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

  • Green Freight Asia, a transportation association addressing the climate impact of shipping
  • The North American Council for Freight Efficiency, an association committed to doubling the efficiency of North American goods movement
  • The National Clean Fleets Partnership, as part of the U.S. Department of Energy’s Clean Cities program, which works with large private fleets to reduce the use of petroleum-based fuels
  • The International Air Transport Association’s Air Cargo Carbon Footprint initiative
  • The Conference Board, which provides corporations with information to better serve society
  • Corporate Eco-Forum, which provides a forum for leaders to strategize and exchange best-practice insights
  • BSR Future of Fuels, whose mission is to drive sustainable transition to low-carbon commercial road freight
  • Airlines for America (A4A), which advocates and forms partnerships for airline safety, job creation, infrastructure modernization, and environmental responsibility
  • World Business Council for Sustainable Development
  • Low Carbon Vehicle Partnership (LCVP), a UK-based, public-private organization with the mission of accelerating the shift to low-carbon road fuels and technologies

Strategy

Standard Disclosure: 102-14

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

See Progress Report—CEO Message, pages 2-3

Standard Disclosure: 102-15

Describe key impacts, risks and opportunities.

  • See Progress Report—Economic Enhancement Overview, page 10-11
  • See 2017 Annual Report—Form 10-K, Item 1A Risk Factors, pages 9-15
  • See Disclosure 102-46—Topic Boundaries
  • See Disclosure 102-47—Material Topics

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 Disclosures 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 Disclosures 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, on our investor website. This website also includes detailed information about corporate governance at UPS, including structures, 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 the Management Committee, which comprises the senior managers for 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 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.

Our Chief Sustainability Officer regularly reports to the Board of Directors regarding sustainability strategies, priorities, goals, and performance.

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 as described above. Stakeholders who wish to communicate directly with a member of our Board of Directors, with our independent lead 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.

We publish the governance structure for UPS, including the committees of our Board of Directors, committee charters, and committee membership, on our investor website.

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 other than as a UPS director. A complete discussion of our Board leadership structure can be found in the 2018 Annual Proxy Statement Summary.

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 nominates directors based on their independence, as well as their experience and expertise in a variety of areas, including economic, environmental, and social topics. In evaluating each candidate, the Committee considers factors such as personal character, values and disciplines, ethical standards, diversity, professional background, and skills. Shareholders may nominate director candidates in accordance with our bylaws. Director nominations 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, 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.

We have two governance bodies dedicated to sustainability at UPS, a Sustainability Leadership Council and a Sustainability Steering Committee, both of which support the Management Committee and Board of Directors. The Sustainability Leadership Council has primary strategy-setting responsibility for sustainability at UPS. It comprises representatives from most major corporate functions, as well as representatives from each of our international regions and UPS Airlines. This Council, chaired by the Chief Sustainability Officer, brings critical issues and decisions to our Sustainability Steering Committee, which includes members of the UPS Management Committee and other senior executives. The chairperson of the Sustainability Steering Committee is the Chief Information and Engineering Officer, who is also a member of the Management Committee.

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 Chief Sustainability Officer (CSO) and other governance bodies regarding sustainability strategies, priorities, goals, and performance.
  • 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. While this is an internal self-assessment, all members of each committee are independent directors.

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 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 2018 UPS Proxy, page 14, Risk Oversight

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 provided to the UPS Board of Directors for review and comment.

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.

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. In 2017, no such critical concerns arose.

Standard Disclosure: 102-35

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

The Compensation Committee of the Board of Directors sets performance criteria and compensation for the CEO, and also reviews and approves compensation for other executive officers. These policies are spelled out in our 2018 Proxy Statement. 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. Additionally, the Committee keeps itself well-informed regarding compensation practices and policies within our industry and among companies of similar size in other industries.

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. UPS currently does not report further on the ratio of basic salary and remuneration of women to men by employee category, or by significant locations of operation. The U.S. Department of Labor is in the process of establishing rules to require reporting of average female salary and average male salary by employee level. UPS will report this information in accordance with the final regulations.

Standard Disclosure: 102-37

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

Our most recent “Say on Pay” vote took place in early May 2017, and shareholders approved our proposal by more than 88 percent. “Say on Pay” allows shareowners to vote, on an advisory basis, on whether they approve the compensation of the executive officers disclosed in our proxy statement. Our next “Say on Pay” vote will occur in May 2020.

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 2017 UPS Proxy, pages 50-51, Median Employee to CEO Pay Ratio.

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. We consider this data confidential.

Stakeholder Engagement

Standard Disclosure: 102-40

List of stakeholder groups.

  • Customers
  • Active and Retired Employees
  • Policymakers
  • 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.

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, a cross-functional group of internal stakeholders who have responsibility for our material issues 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 table on the following two pages summarizes the highlights of our stakeholder engagement on sustainability issues during 2017. More in-depth discussions on many of these topics may be found throughout the Report.

Summary of 2017 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
  • Enhanced service by introducing UPS® Ground on Saturday, giving customers as additional day to send and receive ground packages
  • Launched Packaging Innovation Center with Sealed Air to showcase and explore packaging innovation
  • Continued to expand UPS My Choice® membership and the UPS Access Point™ network services to offer customers and consumers more flexibility and control
  • Improved returns process through an alliance with Optoro, simplifying the e-commerce returns process and reducing waste sent to landfill
  • Began or continued development of more than 70 package and hub projects to improve the flexibility and strength of our network
  • Began to take delivery of new, fuelefficient Boeing 747-8 air freighters to address increasing demand and volume growth
Active and Retired Employees
  • Sustainability Ambassador Program
  • Business Resource Groups
  • Daily Prework Communications Meetings
  • Health & Safety Committees
  • Annual Employee Engagement Survey
  • 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 the Advanced Technology Group to explore and lead innovation opportunities across the enterprise
  • Launched UPSGo mobile app to streamline employee communication and access to company news, announcements, and other information
  • CEO David Abney signed the CEO Action for Diversity & Inclusion pledge to support creation of a safe and supportive workplace
  • Added new training components to our signature UPS Integrad™ program, including virtual reality and strategic simulations
  • Developed new tools to gather employee feedback at the local level in addition to our enhanced Employee Engagement Survey
  • Initiated new recruiting programs to improve the hiring process and overall retention
  • Hosted our third TED@UPS event to celebrate diverse UPSer perspectives
  • Celebrated Global Privacy Awareness week to educate employees on privacy best practices
  • Held a global sustainability month to engage employees in UPS’s sustainability efforts
Policymakers, 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. and in Europe
  • Promoted inclusivity through trade with programs such as the UPS Women Exporters Program and GREAT Women in ASEAN
Investors
  • Investor Conference earnings communications
  • Shareholder meeting
  • Annual report
  • Proxy statement
  • Ratings and rankings
  • Return on investment
  • Continued investment in innovation
  • Transparent reporting with credible data
  • Added more than 1,100 vehicles to our “rolling laboratory” of alternative fuel and advanced technology vehicles (approximately 9,100)
  • Listed on Dow Jones Sustainability World Index for the fifth consecutive year and recognized at the Leadership level of the CDP Climate Change performance review
Communities
  • The UPS Foundation
  • Employee Volunteer Program
  • Community relations committees
  • Humanitarian relief events
  • Leveraging UPS expertise and resources to support humanitarian aid efforts
  • Employee volunteerism and local support
  • Road safety programs
  • Delivered 546 in-kind support shipments to 61 countries in response to 26 disasters around the world
  • Contributed more than 2.9 million volunteer hours
  • 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 American Red Cross and CyPhy Works to test use of drones in assessing damage in the wake of natural disasters
  • Continued to explore possibilities with Gavi, the Vaccine Alliance and drone maker Zipline for delivery of medical supplies for hard-to-reach areas of Rwanda
  • Worked with UNICEF and Empire State Relief & Recovery Effort to deliver humanitarian relief to Puerto Rico in the wake of Hurricane Maria
  • Continued collaborations with BSR’s Future of Fuels program and WBCSD’s Low Carbon Freight and Zero Emissions Cities initiatives
Suppliers
  • Top Supplier meetings
  • Supplier Diversity Program
  • Research and development of alternative vehicle technologies
  • Leadership in testing and scaling alternative fuels and vehicle technologies
  • Capacity-building support for local and diverse suppliers
  • Invested $1.2 billion in local and diverse supplier support programs
  • Continued development of alternative fuel vehicles and technology through collaborations with vendors
  • Supported Outside Service Providers in Western Europe 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 2017 Annual Report—Form 10-K, Reporting Segments and Products & Services, pages 2-5. This Sustainability Report includes data from UPS subsidiary Coyote Logistics in our financial data and greenhouse gas inventories, but not in our employee counts. UPS subsidiaries Coyote Logistics and Marken are included in our health and safety data.

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 that our initiatives and reporting are aligned with what is most important to our stakeholders with respect to their association with UPS. To determine this, we have worked with BSR (formerly Business for Social Responsibility) to conduct materiality assessments every two years since 2011.

Our most recent assessment began in 2015 at the regional level, where we interviewed representatives from stakeholder groups in areas of the world where we have significant and growing operations: Asia-Pacific; Canada; Europe; and the Indian Subcontinent, Middle East and Africa. An additional assessment was completed during 2016 in Mexico. To learn more about these regional insights visit https://sustainability.ups.com/media/UPS_Corporate_Materiality_2016.pdf.

In 2016, we built upon our regional assessments by evaluating approximately 30 international sustainability frameworks, standards, ratings, and ranking assessments; interviewing members of UPS’s Management Committee; reviewing stakeholder engagements around the world; and gathering feedback from regulators, NGOs, academics, and investors.

Ultimately, we examined more than 50 issues, including areas of significant organizational impact, as well as broader sustainability trends that affect UPS. BSR ranked each issue’s relative importance based on an assessment of the aggregate feedback from stakeholders and UPS executives and supported us in making final adjustments to the ranking before we presented it to members of our Sustainability Leadership Council. This Council then submitted the results of the materiality process for approval to our Sustainability Steering Committee, which includes members of the Management Committee and other senior leaders of UPS.

Standard Disclosure: 102-47

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

UPS Materiality Content

Material Issue for UPS Unsustainable
Development Goals
Alignment*
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** 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.
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.

* Please visit sustainabledevelopment.un.org/sdgs to identify corresponding goals.

** 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.

We have made no material restatements of information provided in previous Reports.

Standard Disclosure: 102-49

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

There have been no significant changes to material topics. Reference 102-45 for Topic Boundaries.

Standard Disclosure: 102-50

Reporting period for information provided.

The report presents data for the 2017 calendar year.

Standard Disclosure: 102-51

Date of most recent report.

Our previous report presented data for the 2016 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 our 2017 Corporate Sustainability 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, 2017.

Independent Accountants' Examination Report

Independent Accountants' Examination Report

Independent Accountants' Review Report

Independent Accountants' Review Report

Topic Specific Disclosures - Economic

201 Economic Performance

Standard Disclosure: 103-1,2,3

Management Approach

See also UPS 2017 Sustainability Progress Report, Economic Enhancement Overview

We report on the structure of our organization, changes in structure and financial performance primarily through our Annual Report and 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 (GHG) 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$) 2017 2016
Revenue $65.9 billion $60.9 billion
Operating Costs $58.3 billion $55.4 billion
Employee Compensation & Benefits $34.6 billion $34.8 billion
Taxes Paid* $2.8 billion** $3.6 billion
Long-Term Debt Repaid $3.9 billion $3.8 billion
Dividends Paid to Shareholders $2.9 billion $2.8 billion
Payments to Small & Diverse Suppliers $1.2 billion $989.0 million
Total Charitable Contributions $118.3 million $116.6 million
Retained Earnings $5.9 billion $4.9 billion

* Due to U.S. tax reform, some values contain provisional estimates at time of publication.

** Increased additional payments funding our employee benefit plans, which were tax deductible for income tax purposes, resulted in continued lower tax liability in 2017 compared to 2016.

Standard Disclosure: 201-2

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

  • See 2017 UPS Sustainability Progress Report—Economic Enhancement Overview
  • See 2017 Annual Report—Form 10-K, Item 1A Risk Factors, pages 9-15

Standard Disclosure: 201-3

Defined benefit plan obligations and other retirement plans.

We provide detailed disclosures and discussions about our pension and postretirement plan obligations in our Annual Report, primarily in Notes 4 and 5 to the Consolidated Financial Statements beginning on page 78 of the UPS 2017 Annual Report Form 10-K.

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 82.3 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 within their home country. More than 99 percent of full-time management employees worked in their home country in 2017. 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 publicprivate 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.

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 more than 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 flights to and from 61 countries for humanitarian relief and resilience efforts in 2017. Charitable contributions also include a 15 percent match of employee pledges to United Way, a major nonprofit provider of community-based social services.

In 2017, total charitable contributions were US$118.3 million, an increase of US$1.7 million over 2016. In addition, UPSers contributed 2.9 million volunteer hours in 2017, which had an economic value of US$81.4 million, based on the U.S. Bureau of Labor Statistics’ valuation of volunteer time.

Total Charitable Contributions

Program Area (Year Ending December 31, 2017) Allocation (US$ In Millions)
Local Grants 9.8
Corporate Grants 25.0
In-Kind Services 5.8
Internal Scholarship Programs 2.3
United Way Corporate Contribution 8.5
Charitable Contributions and Sponsorships 9.5
The UPS Foundation Contribution Total 60.9
United Way Employee Contribution (active and retired) 57.4
Total Charitable Contributions 118.3

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 20 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 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.

Omission — Information unavailable. We are developing a methodology to define and track spending with local suppliers, and plan to have an update in our 2018 Sustainability Report.

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 to measure the economic impact of these investments. In 2017, the study found that UPS contributed more than US$2.9 billion to the U.S. economy (U.S. GDP) and sustained more than 18,100 jobs in the supply chain and local communities. A breakdown of that US$2.9 billion includes US$1.1 billion in direct economic benefit from suppliers’ operations and activities; US$780.3 million in indirect impact from the economic benefit and employment supported in the suppliers’ respective supply chains from procuring goods and services; and US$952.7 million in community impact from the wider economic benefits that arise when the suppliers’ employees and those in their supply chains spend their earnings.

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 Help Line 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 2017, UPS received more than 10,000 reports of employee concerns through the UPS Help Line 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 law. 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. 47,480 employees completed the 2017 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 51,000 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, 98 percent completed anti-corruption training as of the end of 2017. 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 this 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 2017.

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 timely disclosed to the SEC and publicly available in our SEC filings.

Topic Specific Disclosures - Environmental

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 can be found on our website.

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.

UPS measures the effectiveness of its energy and greenhouse gas emission strategy by tracking progress against a set of goals that are detailed on page 5 of our 2017 UPS Sustainability Progress Report.

Standard Disclosure: 302-1

Energy Consumption within the organization.

Energy Consumption Within the Organization

Global Energy ('000 GJs) 2017 2016 % Change 17/16 Base Year (2015)
Direct Energy 180,656 178,904 1.0% 173,665
Indirect Energy 6,036 5,913 2.1% 5,861
Total Energy 186,692 184,817 1.0% 179,526

Energy Consumption Within the Organization by Source

Global Energy ('000 GJs) 2017 % TO TOTAL ENERGY 2016 Base Year (2015)
Direct Energy
Direct Energy
Airline Fuel 111,315 59.6% 109,154 104,279
Ground Vehicle Fuel 65,006 34.9% 65,552 64,804
Diesel 39,998 21.4% 42,165 46,240
Gasoline 13,945 7.5% 13,299 12,096
CNG 4,662 2.5% 3,410 751
Propane/LPG 1,181 0.7% 1,194 1,101
LNG 2,042 1.1% 2,725 3,109
Renewable Fuel (Biomass) 3,178 1.7% 2,759 1,507
Facility Fuel (Heat) 4,335 2.3% 4,198 4,582
Natural Gas 4,120 2.2% 3,994 4,365
Heating Oil 62 0.0% 53 72
Propane 153 0.1% 151 145
Direct Energy Subtotal 180,656 96.8% 178,904 173,665
Indirect Energy
Indirect Energy
Electricity 6,028 3.2% 5,904 5,850
Renewable Electricity 8 0.0% 9 11
Indirect Energy Subtotal 6,036 3.2% 5,913 5,861
Total Energy 186,692 100% 184,817 179,526

Energy Consumption Within the Organization by Business Unit

U.S. Domestic
Package
International
Package
Global Supply
Chain & Freight
Totals
Global Energy ('000 GJs) 2017 2016 Base Year (2015) 2017 2016 Base Year (2015) 2017 2016 Base Year (2015) 2017 2016 Base Year (2015)
Direct Energy U.S. Domestic Package 109,852 108,452 102,865 International Package 60,672 60,214 58,757 Global Supply Chain & Freight 10,132 10,238 12,043 Totals 180,656 178,904 173,665
Indirect Energy U.S. Domestic Package 4,500 4,359 4,231 International Package 592 506 549 Global Supply Chain & Freight 944 1,048 1,081 Totals 6,036 5,913 5,861
Total Energy U.S. Domestic Package 114,352 112,811 107,096 International Package 61,264 60,720 59,306 Global Supply Chain & Freight 11,076 11,286 13,124 Totals 186,692 184,817 179,526

Standard Disclosure: 302-2

Energy consumption outside the organization.

Energy Consumption Within the Organization

Global Energy ('000 GJs) 2017 2016 % Change 17/16 Base Year (2015)(1)
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 111,005 104,813 5.9% 104,276
Waste Generated in Operations Not Relevant Not Relevant Not Relevant
Business Travel 1,264 1,310 -3.5% 1,107(1)
Employee Commuting 28,214 26,927 4.8% 26,570(1)
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 390 359 8.6% 356
Investments Not Relevant Not Relevant Not Relevant
Total Energy Consumption Outside the Organization 140,869 133,409 5.6% 132,309

(1) We previously reported in the FY16 published CSR that for the year ended December 31, 2015 we were responsible for energy consumption outside of the organization of 1,144 GJs for business travel and 26,558 GJs for employee commuting. This information was misstated and has been adjusted to accurately present the energy consumption outside the organization across business travel and employee commuting for the year ended December 31, 2015.

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) 2017 2016 Base Year (2015) 2017 2016 Base Year (2015) 2017 2016 Base Year (2015) 2017 2016 Base Year (2015)
Revenues in Millions U.S. Domestic Package $40,764 $38,301 $36,747 International Package $13,338 $12,350 $12,149 Global Supply Chain & Freight $11,770 $10,255 $9,467 Totals $65,872 $60,906 $58,363
Direct Energy U.S. Domestic Package 2,695 2,832 2,799 International Package 4,549 4,876 4,837 Global Supply Chain & Freight 0.861 0.998 1.272 Totals 2.743 2.937 2.976
Indirect Energy U.S. Domestic Package 0.110 0.114 0.115 International Package 0.044 0.041 0.045 Global Supply Chain & Freight 0.080 0.102 0.114 Totals 0.092 0.097 0.100
Total Energy U.S. Domestic Package 2,805 2,946 2,914 International Package 4,593 4,917 4,882 Global Supply Chain & Freight 0.941 1.100 1.386 Totals 2.835 3.034 3.076

Standard Disclosure: 302-4

Reduction of energy consumption.

Reduction of Energy Consumption

Energy Saved Due to Conservation
and Efficiency Improvements
Absolute Energy
Avoided 2017 vs 2015
(gigajoules)
2017 Energy
Intensity
2015 Energy
Intensity
Comments
U.S. Domestic Package: Absolute Energy Avoided
U.S. Domestic Package: Absolute Energy Avoided
Contributing factors/initiatives: Implementation of telematics, improved vehicle routing, conducting proactive maintenance on our vehicles, shifting travel to low-emission vehicles. 1,828,000(1) 26.61 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 2017 # of packages) – (2017 Energy Intensity x 2017 # of packages)
International Package: Absolute Energy Avoided
International Package: Absolute Energy Avoided
Contributing factors/initiatives: Miscellaneous initiatives in our airline, including lower flight speeds, computeroptimized flight plans, single-engine taxi. 6,374,000(1) 77.58 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 2017 # of packages) – (2017 Energy Intensity x 2017 # 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. 2,017,000(1) 1.03 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 2017 lbs of freight) – (2017 Energy Intensity x 2017 lbs of freight)
Total 10,219,000 gigajoules

(1) Absolute energy avoided in 2017 was estimated from the energy intensity factor improvements from 2015 (baseline year) to 2017.

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 2017 2016 2015 2014 % CHANGE 17/16
U.S. Domestic Package 3.92 3.74 3.84 3.66 4.8%
International Package 0.64 0.72 0.72 0.70 -11.1%
Global Supply Chain & Freight* 0.86 0.82 0.74 0.76 4.9%
Total Water Consumption 5.42 5.28 5.30 5.12 2.7%

* 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 1) GHG emissions.

Statement of Greenhouse Gas (GHG) Emissions

for the years ended December 31, 2017 and 2016

GHG Performance

Global CO2e Emissions ('000 tonnes) 2017 2016 % Change 16/17 Base Year (2015)
Scope 1 13,047 12,432 4.9% 12,197
Scope 2 (market-based) 745 831 (10.3)% 814
Gross Scope 1 & 2 13,792 13,263 4.0% 13,011
Scope 3 20,071 17,430 15.2% 16,877
Gross Scope 1, 2 & 3 33,863 30,693 10.3% 29,888
Voluntary carbon offsets for Scope 1 carbon neutral service (retired) (77.9) (95.7) (44.9)
Voluntary carbon offsets for Scope 2 carbon neutral service (retired) (6.3) (6.0) (3.2)
Voluntary carbon offsets for Scope 3 carbon neutral service (retired) (10.4) (9.0) (4.8)
Net Global CO2e Emissions 33,768 30,582 10.4% 29,835
Biomass CO2 Emissions ('000 tonnes, not included in above totals) 2017 2016 % Change 16/17 Base Year (2015)
Mobile Combustion — Biomass CO2 (e.g. ethanol, bio-diesel) 292 216 35.2% 108
Stationary Combustion — Biomass CO2 0 0 0% 0
Total Biomass CO2 (reported separately as per GHG Protocol) 292 216 35.2% 108
SCOPE 2 CO2e EMISSIONS ('000 tonnes)(1) 2017 2016 % Change 16/17 Base Year (2015)
Scope 2 (market-based method) 745 831 10.3% 814
Scope 2 (location-based method) 745 831 10.3% 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 GHG base year is set out below and has been prepared in accordance with the GHG Protocol.

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.

  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.
  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.

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 2017 GHG inventory as follows:

Scope Uncertainty Main Source of Uncertainty % Change 17/16
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 97 percent of the total Scope 1 emissions. Well-established processes are in place to capture the primary data for these sources.

International Operations represent 3 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 88 percent of the total Scope 2 emissions. Well-established processes are in place to capture the primary data for these sources.

International Operations represent 12 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
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 2014

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, Nov 2015

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

Category 5 & 12: 2012 Guidelines to DEFRA/DECC's 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 2017 Metric Tonnes Retired 2016 Metric Tonnes Retired
Garcia River Forest U.S. (California) CAR Reforestation 36,165 52,557
Big River and Salmon Creek Forests U.S. (California) CAR Reforestation 34,258 25,000
Wolf Creek Landfill U.S. (Georgia) CAR Landfill Gas 10,000 10,000
Chol Charoen Group Wastewater Treatment with Biogas System 1 Thailand VCS Wastewater Methane Destruction 14,105 13,257
Bangkok Kamphaeng Saen East: Landfill Gas to Electricity Project Thailand VCS Landfill Gas 0 10,000
Total Carbon Offsets 94,528 110,814

Standard Disclosure: 305-2

Energy indirect (Scope 2) GHG emissions.

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

Standard Disclosure: 305-3

Other indirect (Scope 3) GHG emissions.

Scope 3 Emissions by Category

Global CO2e Emissions ('000 Tonnes) 2017 2016(1) Base Year 2015(1)
Total Scope 3 Emissions 20,071 17,430 16,877
Upstream
Upstream
1 Purchased Goods & Services 2,739 2,478 2,533
2 Capital Goods 3,914 2,175 1,746
3 Fuel & Energy Related (not incl. Scope 1 & 2) 3,426 3,312 3,226
Jet A (well to pump) 2,149 2,016 1,926
Diesel (well to pump) 681 693 760
Gasoline (well to pump) 343 298 271
CNG (well to pump) 72 52 12
Propane/LPG (well to pump) 11 10 9
LNG (well to pump) 54 63 72
Biomass (well to pump) 25 70 63
Natural Gas, Heating Oil, Propane (stationary) 49 50 55
Electricity (T&D losses/generation of) 42 60 59
4 Transportation & Distribution 7,903 7,468 7,417
Subcontracted Air 3,823 3,436 3,805
Subcontracted Ground 3,214 3,216 2,784
Subcontracted Rail 439 369 368
Subcontracted Ocean 427 446 461
5 Waste Generated in Operations 25 22 19
Landfilled, Incinerated, Recovery, Recycled 25 22 19
6 Business Travel 89 92 78
Business Travel — Air/Rail/Car 89 92 78
7 Employee Commuting 1,909 1,822 1,798
U.S. Domestic Package 1,452 1,372 1,341
International Package 336 330 332
Global Supply Chain & Freight 121 120 125
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 10 9 9
Landfilled/Recycled 10 9 9
13 Leased Assets Not Relevant Not Relevant Not Relevant
14 Franchises 56 51 51
The UPS Store® — Electricity/Natural Gas 56 51 51
15 Investments Not Relevant Not Relevant Not Relevant

(1) We previously reported in the FY15 and FY16 published CSR and GHG Emissions Statements unrounded sub-total figures. The relevant figures have been rounded and restated to ensure that all totals and sub-totals appropriately foot and cross-foot. There have been no changes to actual GHG emissions previously reported.

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) 2017 2016 Base Year (2015)(1) 2017 2016(1) Base Year (2015)(1) 2017 2016 Base Year (2015)(1) 2017 2016 Base Year (2015)
Scope 1 U.S. Domestic Package 7,857 7,446 7,186 International Package 4,459 4,254 4,150 Global Supply Chain & Freight 731 732 861 Totals 13,047 12,432 12,432
Scope 2 U.S. Domestic Package 567 627 602 International Package 67 63 71 Global Supply Chain & Freight 111 141 141 Totals 745 831 814
Total Scope 1 & 2 U.S. Domestic Package 8,424 8,073 7,788 International Package 4,526 4,317 4,221 Global Supply Chain & Freight 841 873 1,001 Totals 13,792 13,263 13,011
Scope 3 U.S. Domestic Package 10,987 8,811 8,287 International Package 2,790 2,692 2,552 Global Supply Chain & Freight 6,294 5,926 6,038 Totals 20,071 17,430 16,877
Total Scope 1, 2 & 3 U.S. Domestic Package 19,411 16,884 16,075 International Package 7,316 7,010 6,773 Global Supply Chain & Freight 7,136 6,799 7,040 Totals 33,863 30,693 29,888

CO2e Intensity by Business Unit

U.S. Domestic Package International Package Global Supply Chain & Freight Totals
Global CO2e Emissions ('000 tonnes) 2017 2016 Base Year (2015) 2017 2016(1) Base Year (2015) 2017 2016 Base Year (2015) 2017 2016 Base Year (2015)
Revenue in Millions U.S. Domestic Package $40,764 $38,301 $36,747 International Package $13,338 $12,350 $12,149 Global Supply Chain & Freight $11,770 $10,255 $9,467 Totals $65,872 $60,906 $58,363
Scope 1 U.S. Domestic Package 0.193 0.194 0.196 International Package 0.334 0.344 0.341 Global Supply Chain & Freight 0.062 0.071 0.091 Totals 0.198 0.204 0.209
Scope 2 U.S. Domestic Package 0.014 0.017 0.016 International Package 0.005 0.005 0.006 Global Supply Chain & Freight 0.009 0.014 0.015 Totals 0.011 0.014 0.014
Total Scope 1 & 2 U.S. Domestic Package 0.207 0.211 0.212 International Package 0.339 0.349 0.347 Global Supply Chain & Freight 0.071 0.085 0.106 Totals 0.209 0.218 0.223
Scope 3 U.S. Domestic Package 0.270 0.230 0.225 International Package 0.209 0.218 0.210 Global Supply Chain & Freight 0.535 0.578 0.638 Totals 0.305 0.286 0.289
Total Scope 1, 2 & 3 U.S. Domestic Package 0.477 0.441 0.437 International Package 0.548 0.567 0.557 Global Supply Chain & Freight 0.606 0.663 0.744 Totals 0.514 0.504 0.512

(1) We previously reported in the FY15 and FY16 published CSR and GHG Emissions Statements unrounded sub-total figures. The relevant figures have been rounded and restated to ensure that all totals and sub-totals appropriately foot and cross-foot. There have been no changes to actual GHG emissions previously reported.

Scope 1 and Scope 2 Emissions by Source

Global CO2e Emissions ('000 Tonnes) 2017 2017 Percent to Total 2016 Base Year (2015)
Airline Fuel 8,190 59.4% 7,720 7,375
Ground Vehicle Fuel 4,361 33.6% 4,496 4,587
Diesel 2,998 21.7% 3,050 3,345
Gasoline 1,044 7.6% 905 823
CNG 269 1.9% 197 43
Propane/LPG 80 0.6% 75 70
LNG 223 1.6% 262 299
Biomass (CH4 and N2O only) 10 0.1% 0 0
HFCs (fugitive) 7 0.1% 7 7
Facility Fuel 226 1.6% 216 235
Natural Gas 212 1.5% 202 221
Heating Oil 4 0.0% 4 5
Propane 10 0.1% 10 9
Facility Electricity 745 5.4% 831 814
Grand Total 13,792 13,263 13,011

Standard Disclosure: 305-5

Reduction of GHG emissions.

2017 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)
2017 CO2e
Intensity
2015 CO2e
Intensity
Comments
U.S. Domestic Package: Absolute CO2e Avoided (Ground Operations Only) 385,000(1) 2.23 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 2017 # of packages) – (2017 CO2e Intensity x 2017 # of packages)
Global UPS Airlines: Absolute CO2e Avoided (88,000)(1) 1.41 1.40
  • CO2e Intensity factor expressed in lbs CO2e per Package
  • Scope is UPS Airlines — Global Operations
  • Avoided Absolute CO2e = (2015 CO2e Intensity x 2017 ATM) – (2017 CO2e Intensity x 2017 ATM)
U.S. Supply Chain & Freight: Absolute CO2e Avoided 202,000(1) 0.17 0.19
  • CO2e Intensity factor expressed in lbs CO2e per lb of freight
  • Scope is UPS Freight® LTL ground movements
  • Avoided Absolute CO2e = (2015 CO2e Intensity x 2017 lbs.of freight) – (2017 CO2e Intensity x 2017 lbs of freight)
Total Water Consumption 499,000 metric tonnes

(1) Cumulative CO2e emissions avoided since 2015 are estimated from the Transportation Intensity Index improvements from 2015 to 2017.

2017 Intermodal Shift Emissions Avoidance

Emissions Reduction Description Absolute CO2e Emissions Avoided in 2017 (Metric Tonnes) Total Absolute CO2e Emissions Avoided Since 2015 (Metric Tonnes)
Air to Ground Mode Shift (U.S. Package Operations) 2,787,000(2) 5,236,000
Ground to Rail Mode Shift (U.S. Package Operations) 1,004,000(2) 1,940,000
Total 3,791,000 7,176,000

(2) Absolute CO2e emissions avoided in 2017, 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 2017 2016 2015 Base Year (2012) 2020 Goal
PM2.5 Emissions per Ground Vehicle (kg PM2.5/vehicle) 8 (58% reduction) 9 10 18 75% reduction from 2012 baseline
NOx Emissions per Ground Vehicle (kg NOx/vehicle) 216 (57% reduction) 251 280 503 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 at more than 1,200 U.S. facilities have led to an increase in reported tonnage of solid waste recycled. By expanding our recycling programs and fully utilizing national recycling vendors, UPS is better equipped to manage recycling efforts and report data more comprehensively. Following are some of our achievements to date:

  • 2013—Increased solid waste management through a national vendor (solid waste recycling)
  • 2014—First year reporting on scrap metal recycling from vehicle retirements (nonhazardous waste)
  • 2015 and 2016—Increased pallet recycling program (solid waste recycling)

Hazardous and Nonhazardous Waste Management

The hazardous and nonhazardous wastes we manage come from aircraft, vehicles, and facility operations. These wastes typically include spent antifreeze, used oil, spent solvents, spill residues, paint wastes, used filters, batteries, e-waste, scrap metal, and leaking packages. We work with national vendors to recycle or dispose of hazardous and nonhazardous waste, and local vendors to recycle or dispose of nonhazardous waste.

Hazardous waste vendors are well-established, observe industry standard safety procedures, and are regularly audited by UPS and/or an external auditor to ensure compliance with laws and regulations. Our contracts with national and local vendors specify that we receive a “cradle to grave” certification letter that details responsible waste and disposal methods.

Standard Disclosure: 306-2

Waste by type and disposal method.

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

Waste Type 2017 2016 2015 2014
Solid Waste Disposal Total 98,290 76,635 80,919 77,102
Solid Waste Recycling Total 256,077 242,325 210,908 138,166
Hazardous Waste Total 1,760 1,575 1,524 1,394
Nonhazardous Waste Total 62,071 44,534 50,856 54,875
Total Waste 418,198 365,069 344,207 271,537

2017 U.S. Waste Disposal & Recycling (U.S. Tons)

U.S. Domestic Package, Supply Chain & Freight Incinerated Landfilled Recovery Recycled Total
Solid Waste Disposal Total 15 98,275 0 0 98,290
National Vendors 15 93,544 0 0
Local Vendors 0 4,731 0 0
Solid Waste Recycling Total 0 0 0 256,077 256,077
Corrugated Containers — National Vendors 0 0 0 23,609
Pallets & Wood Waste — National Vendors 0 0 0 208,829
Metals — National Vendors 0 0 0 8,125
Mixed Recycling — National Vendors 0 0 0 15,033
Office Paper — National Vendors 0 0 0 400
Plastics — National Vendors 0 0 0 81
Hazardous Waste Total 618 26 651 465 1,760
Auto, Aircraft, Facility Maintenance, Damaged Packages, Etc. — National Vendors(1) 618 26 651 465
Auto, Aircraft, Facility Maintenance, Damaged Packages, Etc. — Local Vendors 0 0 0 0
Nonhazardous Waste Total 867 151 2,609 58,444 62,071
Auto, Aircraft, Facility Maintenance, Damaged Packages, Etc. — National Vendors 612 90 1,565 7,362
Electronic Waste — National Vendors 0 0 0 1,076
Batteries — National Vendors(2) 0 0 0 13
Scrap Metal From Vehicle Retirement 0 0 0 43,731
Auto, Aircraft, Facility Maintenance, Damaged Packages, Etc. — Local Vendors 255 61 1,044 6,262
Total Waste By Disposal Method 1,500 98,452 3,260 314,986 418,198

(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.

Number of Reportable Spills

Type 2017 2016 2015 2014
U.S. Domestic Package 62 58 69 73
U.S. Supply Chain & Freight 21 12 27 14

Volume of Reportable Spills (gallons)

Type 2017 2016 2015 2014
U.S. Domestic Package 2,721 2,346 1,656 2,106
U.S. Supply Chain & Freight 4,241 862 1,362 721

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., waste data is not available at this time.

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.

Penalties as a Percent of Total Environmental Inspections

Type 2017 2016 2015 2014
U.S. Domestic Package 0.13 0.46 0.77 0.13
U.S. Supply Chain & Freight 0 0 1.35 1.29

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 2017, 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 2017, we were not aware of any significant environmental, social, or labor concerns related to our suppliers.