Why UPS Takes Its Role as a Green Supply Chain Seriously

Why UPS Takes Its Role as a Green Supply Chain Seriously

Late last week, United Parcel Service published its ninth annual sustainability report. As has been the case with UPS for some time, each successive report finds the company digging in deeper and broader in terms of measuring its impacts.

This year is no different: In addition to continuing to report detailed data on its carbon footprint and energy use, UPS has stepped it up another level to report its water impacts for the first time, using the WBCSD's water footprinting tool to assess how much of its global operations are at risk from water scarcity.

"We've always had a thought process that said that at the foundation of our sustainability program we've got to understand our numbers," Scott Wickers, UPS's first Chief Sustainability Officer, said in an interview.

Expanding on the mindset that drives UPS's CSR reporting, Lynnette McIntire, the company's director of corporate reputation management, said: "We are the supply chain [for our customers], and often the scope 3 emissions for our supply chain. It's our philosophy that if any company wants to improve their impact, they have to know the numbers."

The numbers in this year's report show a company that continues to improve the efficiency of its operations -- even though emissions are still on the rise.

The chart below shows how emissions in all three scopes of UPS's operations have changed since 2009's report. Scope 1 emissions are direct emissions from UPS's operations, Scope 2 emissions comes from the company's purchase of electricity, and Scope 3 emissions are from the company's own supply chain.

Figure 1

As you can see, Scope 1 emissions are slightly higher, Scope 2 are slightly lower, and Scope 3 emissions are up significantly -- a change, the report notes, that's due to UPS gathering data on five of 15 categories included in the Greenhouse Gas Protocol's Scope 3 reporting standard. The areas of UPS's supply chain that added the most carbon to its footprint in 2010 were:

• “upstream” emissions associated with extraction, production, and transportation of fuels consumed by UPS (1.18 million metric tonnes of CO2e emissions);
• emissions associated with employee commuting (1.65 million metric tonnes); and
• emissions resulting from electricity and natural gas use by franchisees of The UPS Store (0.05 million metric tonnes).

Another set of data shows how UPS is improving the efficiency of its operations; even if emissions are inching slightly higher, the intensity -- as measured by the number of gallons needed to deliver each package -- is steadily shrinking, from .127 gallons per package in 2007 to .117 in 2010.

figure 2

Among the other notable inclusions in this year's CSR report, UPS is reporting for the first time its global water consumption and the water intensity of its operations.

The data was developed using the World Business Council on Sustainable Development's (WBCSD) Global Water Tool, which was launched in 2007 to help companies identify where they're most at risk from water scarcity.

Scott Wicker said that, even though UPS is not what most people would think of as a water-intensive company, water is a big environmental issue that the world has to address as soon as possible.

"Everyone has an obligation to be cognizant of their impacts," Wicker said. "We've used the [WBCSD] tool to see in what locations we have facilities where water is a bigger issue, and then we're taking action in those areas."

Wicker said that UPS operations in water-scarce areas, like at company headquarters in Atlanta, can do things like wash cars without water and recycle greywater to flush toilets as ways to reduce their water footprint.

Beyond the data contained in the report, UPS's report itself is worth noting. The company is one of a small number that has gotten third-party assurance -- from Deloitte & Touche -- for the data contained in the report. And UPS also took an extra step on this point and had their carbon footprint separately assured by the Société Générale de Surveillance (SGS), which verified that the company's carbon footprint is what UPS calculated.

In addition to third-party assurance, UPS is reporting to the Global Reporting Initiative's new 3.1 guidelines; Lynnette McIntire said UPS was the first company to follow those new guidelines.

The third-party assurance and GRI compliance make UPS's report a rarity in the CSR world -- though likely not for long.

"Anyone who's not doing [these things] today will be doing them soon," Wicker said. "It's all about being transparent, having a good, accurate rendering of your impacts to the environment -- it makes you more credible."

McIntire, who was the editor of this year's report, added: "One of the things we've been trying to do is in terms of providing context around the actions we do, and talking about the ultimate impact of that, not just within the walls of our own operation, how we're impacting the planet, our customers."

Both Wicker and McIntire repeatedly stressed UPS's role as the supply chain for their customers; and with green supply chains being a hot-button topic for companies in all industries, UPS is in a way just getting out ahead of what more and more of their customers will be asking for in the coming years.

"We're a part of their business model," Wicker said, "and we want to help them be more sustainable."

"At the end of the day," he added later, "this book is for them, and we want to make sure that we're meeting their expectations."

As we see in almost every company's progression of sustainability reporting, each year's report brings a deeper dive as well as a broader reach. For UPS, that will hold true. Wicker, who started in this role just five months ago, said that a big part of his job will be taking UPS to the next level of managing and communicating sustainability.

For next year's report, Wicker predicts that it will be focused more on how UPS is spreading sustainability throughout the organization. The company has recently identified key functions in the organization -- including sales, marketing, procurement, HR, communications and engineering -- and assigned directors of sustainability for each of those functions.

The results of the first efforts from those new sustainability directors will no doubt be front-and-center in next year's report.

"We know that we're going to get better," Wicker said. "We want to make sure that this is a great place to showcase what we're doing."

Photo courtesy of UPS.