UPS has a global footprint in more than 220 countries and territories, and you have seen how climate change, air quality, and other socioeconomic challenges intersect. What are the company's ESG targets?
We care about sustainability. Since 2016, UPS has set clear sustainability goals to reduce carbon emissions and environmental impact and use more renewable energy in our daily operations. And that's why we're focused on hitting our major goal, which is to become carbon neutral by 2050. About 60% of our direct emissions come from air activity and 40% from ground operations. Of that, most are from the fleet, while 10% comes from warehouses. Roadmap to 2050 is based on sound engineering principles and a fiscally responsible approach. That is why we have also set interim goals. One closer to us is set for 2025, which is to use 40% alternative fuels in our ground operations and 25% renewable electricity powering our facilities. By 2035, the goal is to have 30% sustainable aviation fuel (SAF) in our air network, a 50% improvement in carbon intensity per package moved and 100% renewable electricity powering our facilities (we're 100% renewable in the majority of European markets).
In addition, we announced our goal to invest in communities and positively impact the lives of 1 billion people by 2040. UPS will deliver social impact through our commitment to diversity, equity, and inclusion (DEI), employee engagement through volunteerism, and charitable giving through the UPS Foundation. UPS Foundation and community engagement social sustainability targets include investing at least 25% of The UPS Foundation funding toward addressing systemic education and economic barriers and creating opportunities for underserved women, youth, and marginalized communities; to mobilize 30 million volunteer hours by 2030 to deliver systemic impact through local community engagement; to plant 50 million trees by 2030 to advance environmental justice and a more sustainable world.
We are reimagining our network with innovation-driven investments that include electric ground and air vehicles, cleaner-burning fuel, and climate-conscious facilities. Our tangible progress shows how we're tracking against our goals and our commitment to our targets. A goal met annually - 25% charitable donations from The UPS Foundation targeted toward underserved women, youth, and marginalized communities – achieved 34% in 2022. 6,1M trees were planted in 2022, totaling 28M since 2012, which brings us even closer to our established goal of 50 million trees planted by 2030, with a focus on urban communities.
UPS is making strong progress toward our environmental and social impact commitments and being recognized for our work globally. In 2022, UPS was inducted into the Climate Leadership Hall of Fame at the Climate Leadership Awards for our work over the past decade.
UPS has a long history of deploying and promoting the use of alternative fuels and advanced technology to operate more sustainably. How green is your fleet and what are your plans for purchasing more alternative fuel vehicles?
We are proud that UPS is halfway to meeting its 2025 alternative fuel targets. Last year, UPS announced that it will purchase more than 3,700 alternative fuel vehicles for use in the US and Europe. UPS has one of the largest and most diverse fleets in the transportation industry, with more than 15,600 vehicles that use alternative fuels and advanced technologies, driving more than 1,6M km per day. Currently, in Europe alone, UPS operates more than 300 alternative fuel vehicles. More than 600M liters of alternative fuels were purchased in 2022, increasing our annual alternative fuel usage for ground operations to 26.5%. In Europe, we're using compressed natural gas (in Germany and the Netherlands), biomethane (in the UK), hybrid electric vehicles (in the UK), and fully electric vehicles (in France, Germany, the Netherlands, and the UK). UPS has invested more than $750 million in alternative fuel and advanced technology vehicles and fueling stations globally since 2009.
Last but not least, UPS has studied and tested other alternative fuel sources, such as hydrogen. We used hydrogen in some tests in the US in April 2021 on package cars, and in Los Angeles, we tested with heavy vehicles. We've learned a lot from that experience. There are some pros and cons to hydrogen. For a ground fleet, there is an advantage in terms of fuelling time and range – with a higher energy density compared to electric batteries – but there is also a big disadvantage as hydrogen fuel cells are less efficient than battery electric vehicles. From a pickup and delivery point of view, electric is leading now and hydrogen is still a long way off, but we remain open-minded. Hydrogen has great potential when it comes to parts of our global operations that cannot reasonably be electrified, such as aviation and shipping. That's where hydrogen can step in.
How else is UPS leveraging technology to deliver a more sustainable future?
Technology powers virtually every service we offer and every operation we perform. UPS is a global leader in developing technology, and we invest $1 billion a year to help our customers optimize their shipping and logistics business processes to lower costs, improve service, and increase efficiency. Through a mixture of innovation, technology excellence, and partnerships, UPS has developed one of the most sustainable delivery fleets in the world. For more than three decades, we've been exploring the use of alternative fuel and advanced technology vehicles to conserve fuel and reduce emissions. UPS also joined the Sustainable Aviation Buyers Alliance (SABA) to help decarbonize the future of flight. SABA aims to accelerate the path to net zero aviation by driving investment in and adoption of sustainable aviation fuel (SAF), which could substantially reduce emissions from air travel.
The world-class healthcare network used today for the movement of vaccines is the network that will be used tomorrow to service the growing biopharmaceutical market. The need for technology-driven and temperature-controlled supply chains will only grow and we have shown how quickly we scale to accommodate special needs in this growing sector. Continuing to accelerate the digitalization of businesses, building resilience in global supply chains, and creating a truly low-carbon economy sit at the core of helping our customers not only recover but prosper.
UPS operates within city centers as part of your daily operations. How do you ensure efficient and sustainable service for your customers in Europe?
According to estimates by the Hellenic Transport Institute in Thessaloniki, between 20% and 30% of a city's CO2 emissions come from last-mile deliveries from the warehouse to the customer's home. At the same time, a recent study by the consulting company McKinsey reveals that, without greening the logistics sector, carbon dioxide emissions could increase by 25% in some city centers by 2030, as a result of the explosive growth of e-commerce during the pandemic.
We operate at a very high level of efficiency within city centers as part of our daily operations. This is how we achieve our industry-leading margins and ensure the most efficient service for our customers around the world. The UPS Access Point network (approximately 30,000 locations across Europe) also addresses the challenge of urban logistics by making deliveries more efficient and reducing the need for a driver to make return visits when customers are not at home. By consolidating several packages and delivering them to one convenient UPS Access Point location, drivers reduce the number of return deliveries and the number of stops they make during their rounds.
Additionally, UPS is successfully combining human and electric power by deploying tricycles (conventional and electrically assisted Cargo Cruisers and Cyclo Cargos) in the cities of Hamburg, Dublin, and Munich and testing this concept in other European cities. These tricycles are ideal for navigating dense, highly trafficked areas and deliver from container depots, which are placed at pre-agreed locations in the middle of the delivery area in the city. As such, they replace delivery trucks, reduce congestion and carbon emissions, and they can even operate in pedestrianized zones.
We have deployed some 30 e-cycle projects of different sizes across Europe, including sites in Dublin, Paris, Copenhagen Stockholm, Amsterdam, and Rotterdam, as well as in multiple cities across Germany like Heidelberg, Mannheim, and Hamburg.
With many large cities in Europe and around the world beginning to limit access to their central commercial and residential zones, where only zero-emission or compact-sized vehicles are allowed, developing and deploying these concepts and technologies helps us be prepared to best serve the communities where we work and live.
UPS also has healthcare and logistics facilities across Europe. What investments have you made to reduce emissions from their operations?
We are ideally positioned to serve customers in Healthcare and Life Sciences with our vast delivery network. New cell and gene therapies are among the most complex and sensitive in our industry and we are planning on a best-in-class level of performance. With major dedicated healthcare facilities in Roermond, the Netherlands, and Budapest, Hungary, UPS, and UPS Healthcare are investing heavily in infrastructure and capabilities to serve the healthcare sector.
This year, UPS Healthcare has more than doubled the size of its dedicated healthcare logistics facility in Blonie, Poland. Designed to BREEAM standard, a leading certification for sustainable buildings, the state-of-the-art logistics facility has added over 17,000 sqm of space and houses up to 23,000 pallet positions for the handling and storage temperature-sensitive treatments from 2 to 8 degrees Celsius to 15 to 25 degrees Celsius. The facility is also supported by more than 300 specialized temperature-controlled vehicles that serve customers domestically as well as internationally to more than 30 markets including all Central and Eastern Europe, Turkey, and the CIS Free Trade Area. The facility is powered by 100% renewable electricity and has an array of solar panels providing 50,000 kWh per year.
This year, also, UPS Healthcare has also opened its first dedicated healthcare logistics facility in Giessen, Germany. The roof of the facility features a solar system that produces more than 850,000 kWh of electricity annually - more than the facility consumes. Strategically located, the new facility offers access to the fast-growing European healthcare markets, supporting pharmaceutical, medical device, and biologics producers that increasingly need time-critical and temperature-sensitive logistics for their products. The global market for biologic therapeutic drugs is set to increase from $285.5 billion in 2020 to $421.8 billion by 2025. Last year, UPS more than doubled the size of its Healthcare logistics hub in Ostrava, Czech Republic, UPS's first dedicated healthcare logistics facility in the country, which opened in October 2021.
UPS Healthcare has 217 facilities with a total of over 1.5 million sqm of cGMP and GDP-compliant healthcare distribution space in 37 countries and territories. Through these investments, UPS Healthcare will have more than doubled its presence in dedicated healthcare facilities in 2023 compared to 2020.
Customers in Romania can also benefit from the new investments and get quick access to the UPS global network. In early 2017, UPS announced a series of improvements to its network and infrastructure which reduce transit times between more than 350 cities in 26 countries across Europe. Customers in certain areas of Romania benefit from faster shipping to the Baltic states, Finland, Germany, Italy, the Netherlands, Poland, the Czech Republic, Spain, and Sweden. For example, shipments from Bucharest to Prague, Czech Republic, using UPS's most affordable ground service, now have a delivery time of three days instead of four. Thanks to the reduction in transit times, customers in Romania can continue to increase their customers' satisfaction.
What are your actions regarding the circular economy?
In the traditional economy goods are made, used, and then discarded. But in a circular economy products and packaging get a second (or third or fourth) chance at usefulness. UPS offers solutions specifically designed to advance the circular economy by making goods as easy to return as they are to order. For example, UPS Returns Manager® is an online tool that makes it easy for customers to print return labels, and it gives merchants online management and visibility of returns.
Circular solutions have long been a priority at UPS. At the 2019 World Economic Forum, UPS joined TerraCycle, a global waste management and recycling company, and some of the world's leading consumer goods companies to introduce a revolutionary zero-waste platform. Known as Loop™, this breakthrough system eliminates the dependence on disposable packaging for consumer goods and provides consumers with direct delivery of a variety of products that arrive not in a cardboard box — but in a customized, reusable durable tote. Once used, product packaging is collected, cleaned, and refilled for delivery. UPS and TerraCycle have collaborated to design packaging that can support liquid, dry products, and personal care products. These packages have internal protection compartments and are made of easy to clean for reuse materials. UPS Package Design and Test Lab helped design and test custom packaging to meet two very important criteria: to be attractive to consumers and durable enough to be used innumerable times. As a global reuse ecosystem, Loop provides customers with the brands and products they love most — all with less environmental impact.
Corporate social responsibility seems to play a major role at UPS. What are the programs or local actions your company has been involved in?
For UPS, corporate social responsibility is personal. All our activities are based on the belief that our success depends on the balance between the social, economic, and environmental aspects of our business, and time has shown that our efforts in these areas help us to be more efficient, better and to innovate more. In 2022, The UPS Foundation supported nonprofit organizations in 76 countries around the world.
We are committed to delivering what matters in the countries where support is needed most. In Romania, we have a long-term partnership with the "Ana si Copiii Association", which began in 2010. Our project was born as a response to the worrying reality faced by children in Romania. According to statistics, in Romania 1 out of 5 children drop out of school, the main cause being poverty. Moreover, 1 out of 2 children in Romania live on the verge of poverty and in extraordinarily difficult conditions (parents with a low level of education, children raised by grandparents, and social scourges such as alcoholism and domestic violence). We understand the profound impact that collective action can have in transforming the lives of these children, which is why we strongly believe that every helping hand can make a difference, and if we want to make a difference in the world, we have to start with ourselves. Our campaign aims to stop the cycle of education deprivation perpetuated by poverty and create a fairer future for these children by helping them continue their education. Every year, UPS Romania volunteers make donations to support the children in the Association's centers. In the period 2010-2022, the UPS Foundation invested the amount of $100,500 in the projects of the Ana si Copiii Association. In 2022 alone, we gave the community, through the association, approx. 400 hours of volunteering. The "Every Hand Makes a Difference" project has had a profound impact on the community it serves. Children from poor families now have a haven where they receive food and academic and emotional support from the dedicated staff at the centers. Here, they are not just beneficiaries but are treated with respect and empathy, which gives them a sense of belonging. We will continue the collaboration with the "Ana si Copiii Association" and we have proposed to diversify volunteering actions so that we can help as many children as possible. We want to send them the message that "they are not forgotten by the world" and that they can smile every day. This commitment aligns with UPS's global mission to positively impact the communities we serve by ensuring that the most vulnerable among us receive the support and opportunities they deserve.
What actions has UPS taken regarding social sustainability targets like diversity, equity, and inclusion?
We deliver social impact through our commitment to diversity, equity, and inclusion (DEI), employee engagement through volunteerism, and charitable giving via the UPS Foundation. We are committed to our social sustainability goals, to reach 30% women in full-time management globally and 40% ethnically diverse company management by 2025. We are very close to achieving this goal, as in 2022, we reached 27% women in full-time management and 37% ethnically diverse management.
We collaborate with customers, suppliers, and public-private partners to deliver innovative solutions and social impact. Together we're creating a more sustainable, equitable, and inclusive world.
Back in 2018, UPS and The UPS Foundation launched the Women Exporters Program (WEP) to help address the disparity in education and workforce participation between men and women by providing targeted assistance to women-owned small and medium-sized businesses (SMBs) worldwide. Through educational training and mentorship programs, we're helping these women-owned businesses grow. We know that when women thrive, communities thrive. As of June 2023, the program has trained over 110,000 women and small business owners around the world. We equip women business owners with access to financing, and digital tools to compete in a global marketplace and help them gain new market access that was previously closed off. In short, we're ensuring women and diverse entrepreneurs have a seat at the table and contribute to the global economy.
The UPS Foundation is also committed to bolstering public health systems and enhancing quality healthcare access globally. We're using our scale, relationships, and reach to move goods where they are needed most. From delivering medicine and health supplies to the most remote communities in Africa to providing tools and training on how to handle complex ultra-cold chain vaccines, The UPS Foundation is equipping healthcare workers who treat the most vulnerable with access, skills, and infrastructure to expand healthcare coverage. Through the use of drone technology deliveries and state-of-the-art training, we continued our work to close accessibility gaps for communities, regardless of geography. For example, in 2022, we collaborated with VillageReach and Swoop Aero, to provide 20 health districts in Malawi access to on-demand medical supplies and vaccines. Drone technology can reduce vaccine transit times in hard-to-reach areas from six to seven hours to as little as 15 to 20 minutes.
All of our activities build on the long-held belief that our success is dependent on the balance of social, economic, and environmental aspects of our business, and time has proven that our efforts in these areas give us improved efficiencies and innovation, employee pride, customer loyalty, and brand equity.
What about commitment to furthering transparency and responsiveness in your governance structure?
We have committed to furthering transparency and responsiveness in our governance structure. Our directors include six women and four ethnically diverse directors. Appointed a chief diversity, equity, and inclusion officer, a new position on the Executive Leadership Team, and elevated the chief sustainability officer to report directly to the CEO. We have promoted an inclusive governance structure with 31% ethnically diverse members and 46% women on our Board of Directors.
