New Terminology, Same Priority: Sustainability Engrained at UPS

Speaking at Fortune Brainstorm Green 2012, UPS COO David Abney described the maturation of sustainability at UPS as a priority for customers, employees, the Board of Directors and other stakeholders in the organization.  

“The terminology [of sustainability] has changed, but it’s changed for very sound business reasons,” Abney said, adding that customers have become a powerful catalyst for sustainability in recent years.  

“What really has changed is the number of customers looking at us to manage their supply chains from an environmental perspective. Customers were demanding we pay attention (to sustainability),” he said in response to questions from Fortune reporter Geoff Colvin.

By listening to customers, UPS has introduced new sustainable logistics products. For instance, with carbon neutral shipping, UPS offsets the environmental impact of the shipment. Last year, the company introduced UPS My Choice, which is a free service that saves fuel by providing receivers with more control to reduce missed deliveries.

UPS for many years has emphasized reduced fuel consumption, optimized transportation networks and smart routing as practical ways to lower costs and help the environment, Abney said. Senior executives tracked sustainability and discussed measures of performance with an eye toward improving efficiency.

For the past decade, sustainability has become an even more concerted effort, Abney said. The company has dedicated more resources and attention to engraining sustainability throughout the organization—not just in operations but also in the company culture. Sustainability is now prominent in the UPS Policy Book. This approach ensures that sustainability isn’t just a “topic of the month,” Abney said.

UPS seeks to engage all 400,000 employees in the effort to make the company more sustainable, he said. And sustainability performance is accounted for up to the level of Chairman and CEO Scott Davis. Also, the UPS Board of Directors takes an active interest in sustainability with frequent conversations on the topic in board meetings, he said.

UPS in 2011 named longtime engineer Scott Wicker as Chief Sustainability Officer and he regularly reports to the UPS Board of Directors on sustainability progress. Under Wicker’s leadership, the company recently assigned a team of executives to integrate all aspects of sustainability throughout the organization.

At Fortune Brainstorm Green, Abney also discussed fuel volatility and the growing call for fossil fuel independence. He cited natural gas as a clean fuel and a promising short-term opportunity. Liquefied natural gas (LNG) is highly effective for long-haul transportation, he said. Compressed natural gas (CNG) is also widely used in the UPS transportation fleet for mediumroutes. But more natural gas infrastructure is needed to make natural gas more widely available and cost effective. And the company is looking to other sources of fuel for the long term.  UPS already has more than 1,000 natural gas vehicles in its alternative fuel fleet ranging frompropane to CNG and most recently, Liquefied Natural Gas (LNG) for tractor trailers.

UPS tests a wide range of fuels with its rolling laboratory, which is up to more than 2,600 vehicles and also includes propane, electric, biomethane and hybrid electric fuel technologies. 

Abney at Fortune Brainstorm Green emphasized that UPS has a broad view of sustainability, which extends to social issues. For instance, he cited UPS support for healthy communities. He noted UPS employees have given more than $1 billion to the United Way over the years—the only company to reach that milestone. And he said sustainability also includes the company’s growing commitment to humanitarian logistics as a way to help people in need using the company’s unique expertise and capabilities. In 2011, UPS gave nearly $7 million to humanitarian relief.

“Sustainability is a way of life” at UPS, he said. “It’s always high on our radar screen.”