2015 CORPORATE SUSTAINABILITY REPORT Table of Contents 01 04 Introduction Economic Enhancement 1.1 CEO Statement 2 4.1 Economic Performance 50 1.2 2015 Headlines & Highlights 4 4.2 Global Trade & Emerging Markets 53 1.3 Recognition for Responsibility & Reporting 7 4.3 Supply Chain Management 55 1.4 Corporate Profile 8 4.4 Customer Privacy 59 1.5 Goals & Progress 10 4.5 Digital & Physical Asset Security 60 4.6 Humanitarian Relief & Resilience 61 02 4.7 Sustainable Shipping & Supply Chain Offerings 66 Approach & Engagement 2.1 Corporate Materiality 14 05 2.2 Stakeholder Engagement 18 Environmental Responsibility 2.3 Sustainability Governance 20 5.1 Material Aspects 73 5.2 Shared Management Approach 74 03 5.3 Energy & Emissions 77 Empowered People 5.4 Urban Mobility 85 5.5 Fuel Supply 88 3.1 The People of UPS 24 3.2 Shared Management Approach 25 3.3 Diversity & Inclusion 31 06 3.4 Employee Health, Safety & Well-Being 36 Appendix 3.5 Recruitment, Training & Development 40 A About this Report 95 3.6 Labor Relations 44 B Statement of Greenhouse Gas Emissions 97 3.7 Ethical Conduct 46 C Initiatives to Reduce Greenhouse Gas Emissions 112 D Energy Performance 113 E GRI G4 Content Index 117 In every aspect of our business, we are Committed to More™ — helping customers pioneer more sustainable solutions, delivering packages more efficiently, creating more connections around the world, and finding more ways to take action and give back. UPS is a global leader in logistics, offering a broad range of supply chain solutions including transporting packages and freight, facilitating international trade, and deploying advanced technology to more efficiently manage the world of business.. G4-3 1 Introduction 1.1 CEO Statement The Power of Commitment & Collaboration David Abney CHAIRMAN AND CHIEF EXECUTIVE OFFICER “ Every day, we connect millions of people and businesses across 220 countries and territories; the issues and challenges affecting local communities naturally become our issues too.” 2 Introduction 1.1 CEO Statement G4-1 From shifting demographics and technology advancements, around the world are fleeing civil unrest and seeking refuge in to a changing climate and constrained natural resources, our the wake of natural disasters. UPS’s transportation resources and world is facing challenges that will impact the well-being of logistics expertise, combined with our partners’ organizations, al- generations to come. low us to respond swiftly when and where relief is needed most. In 2015, we worked together to orchestrate 350 shipments to and But who should — and will — step up to create solutions to from 50 countries, including help to Syrian refugees in Europe and these challenges? to devastated communities following the earthquake in Nepal. Perhaps more than at any other time in our history, global Of course, we must match collaboration with commitment — businesses are in the best position to step up and take the establishing clear goals and pragmatic planning. As we work reins. Big business has the scale, resources, talent, and oper- to reduce the climate impact of our fleet, we continue toward ational muscle to drive meaningful change. a goal to drive 1 billion miles in our alternative fuel and ad- vanced technology vehicles by the end of 2017. I’m proud to I am confident UPS understands and welcomes this responsibility. report that we are on track to achieve that goal one year early. Our core competency, logistics, is about more than just moving goods. Every day, we connect millions of people “We have committed to contribute 20 million and businesses across 220 countries and territories; the issues and challenges affecting local communities nat- hours of volunteer service by the end of the urally become our issues too. We have the vision and decade, extending the talent and passion of commitment to create more sustainable connections around the globe; the needs of our communities and our UPSers to solve problems in our communities.” planet spur us to act. We have committed to contribute 20 million hours of volunteer None of the problems before us will be solved by UPS alone. service by the end of the decade, extending the talent and pas- Effective solutions require both collaboration and commitment. sion of UPSers to solve problems in our communities. As of the end of 2015, UPSers have volunteered over 10 million hours, Climate change and greenhouse gas emissions pose serious surpassing the halfway point to our goal. risk to the environment and global economy. They are threats intensified by a tide of people moving into urban areas and In 2015, we also amplified our commitment to our environmen- giving rise to e-commerce and the on-demand economy. tal partners, increasing support to fund the planting of 15 million trees across the globe by the end of 2020. These environmental, economic, and demographic shifts generate pollution, congestion, and transportation challeng- More than 444,000 UPSers around the world step up every day es that singularly and collectively diminish quality of life and not only to solve problems for our customers, but also to ad- constrain commerce. Through our work with partners such vance our sustainability commitments. Throughout this report, as the World Business Council for Sustainable Development you’ll read about UPSers who are on the front lines, working and BSR, we’re combining our experience and resources to hard to make the world a better, more sustainable place. These develop lower-emission solutions that will be adopted not stories make me proud to be a UPSer. only by our company, but others in the logistics industry. The achievements of the past year, which have strengthened Trade can be a powerful force to lift people and communities local communities, supported children and youth, assisted out of poverty, driving growth and creating access to new mar- those in need, and protected the environment, convince me kets. We collaborate with policymakers to advocate for trade that UPSers’ minds, hands, and hearts are making a difference. reform and strongly support policies that stimulate opportuni- ties for underserved regions. Among our most meaningful collaborations are those with our David Abney humanitarian aid partners. Nearly 60 million displaced people CHAIRMAN AND CHIEF EXECUTIVE OFFICER 3 Introduction 1.2 2015 Headlines 2015 Headlines & Highlights & Highlights 70% of all U.S. routes are now equipped with ORION — On-Road Integrated Optimization and Navigation — our proprietary route- optimization software. When it is fully Committing to more renewable fuels deployed to all U.S. routes by the end of As an industry leader in seeking alternative fuel opportunities for our worldwide fleet, we 2016, we expect to reduce the distance increased our commitment to renewable fuels in 2015, with plans to purchase up to an addi- driven by our drivers by 100 million tional 60 million gallons of renewable diesel and renewable natural gas (RNG) over the next miles annually. several years. This commitment will result in cleaner emissions and help to commercialize the market for these promising alternative fuels. These purchases are part of our global GHG strategy to reduce the carbon intensity of our operations by 20 percent by 2020. In 2015, we achieved a 14.5 percent reduction in our carbon intensity versus a 2007 baseline. Read more about our carbon reduction initiatives starting on page 74. 1,225 entrepreneurs in 12 countries participated in workshops to learn about best practices in business expansion and global market access. These were held by UPS and its partners in the US-Association of Southeast Asian Nations Business Alliance for Competitive Small- and Medium-Sized Enterprises. Improving supply chain efficiency with Coyote Logistics In 2015, UPS acquired Coyote Logistics, a leading third-party logistics service provider 4,690 in North America, creating the opportunity to fill empty trailer movements that are needed UPS-employed students received more to balance our network. These empty backhaul miles generate emissions, but are required to than US$11 million in tuition support through our Earn & Learn program. This make sure our vehicles are positioned to meet customer needs. We are leveraging Coyote’s helps us attract college students to fill network to fill millions of empty trailer miles, which not only improves our fleet efficiency, many of our part-time positions and but also reduces miles driven in other supply chains. Read more about how Coyote Logistics opens doors to higher education for is positively impacting our ground fleet efficiencies on page 78. current employees. 4 Introduction 1.2 2015 Headlines & Highlights Planting 15 million trees: a growing commitment Increasing the number of trees on the planet is an effective way to decrease the amount of carbon dioxide in the atmosphere — all while providing other positive benefits to com- munities and ecosystems. In 2015, The UPS Foundation committed to fund the planting of 15 million trees by the end of 2020. This commitment includes the more than 5 million $2.3 billion+ trees that The UPS Foundation and its environmental partners have already planted in in GDP contributions from the 46 countries since 2012. Read more about The UPS Foundation and its commitments to direct and indirect economic and community impact of our supplier benefiting communities on pages 52 & 61. diversity program. 24,000+ UPS Access Point™ locations that provide centralized locations for customers to pick up and drop off packages. This increases customer convenience, and reduces wasted miles and associated emissions from unnecessary delivery attempts. Developing a global view of materiality Our business spans the globe, so it makes sense to understand which sustainability issues are most important to stakeholders in our regions around the world. That’s the ratio- 49% nale behind a series of materiality assessments increase we conducted in partnership with BSR during in the number of Business Resource 2015 in key countries, districts, and business Group chapters, reflecting the areas: Canada; Europe; Asia Pacific; and the passion and commitment of UPSers to build a diverse and inclusive work Indian Subcontinent, Middle East & Africa.