What can brown do for you? UPS makes the business case for going green
Atlanta-based UPS says it will be carbon neutral by the year 2050. It’s just one piece of the shipping giant's ESG transformation. ESG, which stands for "environmental, social and governance," are criteria for how potential investors screen how well a company is treating the environment, their employees, their suppliers, the communities where they operate and more.
UPS Chief Corporate Affairs Officer Laura Lane joined All Things Considered host Rickey Bevington to discuss the company’s climate change goals and ESG efforts.
Rickey Bevington: I will tell my audience that while I have a UPS executive with me, I do promise to ask her whether or not your holiday gifts will arrive on time. This won't be the first time you're answering that question, right, Laura?
Laura Lane: I know to ship early and I've gotten mine out so that they're delivered on time for Christmas Eve. I'm urging everyone else to follow that lead because that way there's no disappointment and there's no extra costs — because if you ship early, we’ll definitely deliver it in time.
Rickey Bevington: That’s fantastic to hear. Very reassuring. Let's start with the "E" of ESG. What is the business case for UPS going carbon neutral?
Laura Lane: I mean, the fact of the matter is that, for UPS, it's all about efficiency and how to take costs and extra effort out of the deliveries so that we can provide great service to our customers. And so if you look at this in those terms, sustainability just makes good business sense because you're finding ways to deliver in more productive and efficient ways and you're doing it in a values-based way. Because for UPS being good stewards of the environment has always been an important priority for us. And we've also been a company that has believed in the power of innovation. And innovation is going to be the way in which we are going to solve a lot of the challenges right now in terms of making supply chains greener. And so innovation is part of our secret sauce and how we are better able to deliver for our customers in green ways.
Rickey Bevington: Can you give us some examples of those innovations?
Laura Lane: Yeah, and I have to share with you, Rickey. I just got back from COP26. It was so exciting to be there to showcase all of the new innovations that UPS has out there including our arrival vehicle which is an electric vehicle that is made of 100% composite materials that can be completely recycled. It's ergonomically designed because we love our drivers and we want them to be comfortable while they're delivering packages for our customers. And it's one of the ways in which we're going to deliver 100% green, especially in urban city centers.
But we also have this cool Fernhay e-bike. And so talk about fun delivering packages: It's pedal-powered but it's got the electric assist and it allows our drivers to be able to deliver in compact city settings and do it with a smile.
And then one of the last technologies that we showcased at COP26 is a smart grid technology. We actually launched the first fleet scale smart technology grid that basically allows us to be more efficient whenever we're recharging our electric vehicles. So we're not taking extra load off of communities. We're efficiently using the power when we need it to be able to recharge our electric package cars and keep delivering.
Rickey Bevington: These are amazing innovations. And when a company the size of UPS makes a change, it's got to ripple through the industry, right? Vendors. Customers. The supply chain. Labor. What influence is UPS having on other companies or in other areas simply as a domino effect of what you're doing right now?
Laura Lane: Our strategy is to be customer first, people-led, and innovation-driven. And you just said it. Our customers are what drive us to do this. We want to be the best service provider to them with the greatest efficiency and doing it in green ways because we're seeing that our customers, our suppliers and, by the way, our people — our employees — all want to be part of the solution in terms of how to address the climate challenges. And so a lot of the innovations that we introduce, we do it in partnership with our customers asking them how we can deliver better for them because their own customers are asking for those green solutions.
I think that when UPS is able to lead like it does, we then inspire other companies to try to partner with us on some of the similar solutions that are needed to address the climate situation. One really good example is in the air. We’ve got a great partner in Delta Air Lines — another great Georgia company that's working with us to develop sustainable aviation fuel. Because the fact of the matter is this climate challenge is one that all of us need to come together on and work together to find the right solutions. So those are just two examples.
Rickey Bevington: We should point out that the climate conversation — and the ESG conversation more broadly — it's not about moralizing or doing the right thing because it's nice to be nice to the environment. We're talking about what your customers are demanding and what your shareholders are demanding. What are, specifically, shareholders — since we already talked about customers — what are they telling you that they want to see in terms of ESG?
Laura Lane: You know, I love that you reinforce the fact that we do this because we want to have that social impact. Our people, our employees, our communities that we serve in the 220 countries and territories around the globe, they matter to us. And that's why we do it. Because we're in the business to serve people.
From the investor side of it, though, our investors want to see that we're being responsible stewards of the environment. And they also want to see that we're managing risks well.
A lot of the climate challenge issues affect your ability to operate. They want to see that we have good plans in place for managing those risks. Because when you think about it, some of the extreme climate challenges that we've seen here across the United States — from fires to flooding — those affect our ability to serve. And so as a company, we want to make sure we keep delivering no matter the environmental challenges. You have to have good planning in place to plan for those risks.
Rickey Bevington: In terms of social and governance, can you give us some examples of some changes that UPS has made in the last couple of years? And goals that you're reaching toward in terms of diversity on boards, how you're treating your employees, other examples of social and governance?
Laura Lane: UPS is, I think, in the vanguard in terms of showing the power of diversity, equity and inclusion. We now have the first woman CEO of UPS and one of the few in the Fortune 50. Our board equally is representative of that diversity of thinkers and leaders. We have 40% women on our board and over 30% ethnically diverse representatives, really giving us good perspectives about how to lead and run the business better. And within our organization we have made some bold targets to increase the representation of women within our ranks, as well as ensuring that the already strong numbers we have in terms of minority representation — well over 35% across our company — is continued, because we see a lot of power in that diversity in terms of our decision making and the way in which we show up in communities.
Rickey Bevington: Does aligning your business with ESG help in recruiting talent here in the U.S. and the hundreds of countries that you work in?
Laura Lane: I absolutely believe so. I think when people see that everyone is welcome to be a partner with us at UPS — that we want them to bring their authentic selves to the workplace, all the creativity and ideas they have — I think we're a stronger business for it. I really do think it's helping us in our recruitment efforts. And by the way — I have to say it — that UPS is hiring another 150,000 this holiday season. We want everyone who wants to be part of a great organization like UPS that delivers what matters for communities.
Rickey Bevington: Many companies, though, are saying that they simply can't get the staff that they need, whether it be coffee shops or manufacturers. How is UPS able to recruit enough people for the holidays?
Laura Lane: I think we have a unique message to deliver when we are putting on our hiring notices. One we're making it simple for people to apply and be recruited into UPS. If you fill out an application, for example, for the holiday season, you'll get a job offer in 30 minutes or less. It's that fast.
But our commitment is that if you join our team and indicate an interest in being able to do more in our organization, we want to make it a career for you. And in fact, when we hire, a third of our seasonal hires end up staying and having careers with UPS. I don't know that there's a lot of organizations that can say that. Because when people walk through our doors we want them to know that they belong with our company and we've got a lot of opportunities. I'd say a world of opportunities given the fact that we operate in so many countries around the world.
Rickey Bevington: Well, the mental image of being able to deliver packages by e-bike, it just sounds like a fun job.
Laura Lane: I have to tell you, when I got to ride the Fernhay e-bike in Glasgow — there is a, there's a little video that we put up on LinkedIn that says it all — I didn't want to let go of those handlebars because it was so much fun. Having the feeling of pedaling the bike but then having all that power in your hands. And I thought, wow, that'll put a smile on every driver's face above and beyond just delivering the packages to happy people that are happy to get their stuff in time for the holidays.
Rickey Bevington: So anyone who's paying attention to the media right now is suddenly seeing all these stories about the supply chain. And I'll say, I'm a journalist, and I've never really thought about the supply chain. To me, the supply chain is me clicking “purchase” on my phone or my laptop, and then it shows up on my front porch. That's the supply chain to me. How does the current supply chain problem — and I should say it's not a problem, it's an entire disruption — what are the key pain points for UPS right now?
Laura Lane: So I was going to say, Rickey, you just said it all. That's exactly what we want every customer to see or not see. We want to have our network make it seem like magic when it ends up at your doorstep. We have a multimodal network that spans the globe with the most sophisticated technology built into it so we can move packages from anywhere from one part of the world to another.
And what's great about our network is we can shift within modes. So while those supply chain challenges are out there — and a lot of them are on containers on ships outside of the ports, particularly in Long Beach in L.A. — UPS has the ability to shift modes. So when we can't move what our customers may need because of some of those challenges, we find alternatives for them. Taking things from the ground to the air or from the air back to the ground and onto rail. Whatever it takes to deliver just in time. From that perspective, UPS has had industry-leading service levels, well over 99.6% delivery on time for all packages. By the way, I have to say it too, for vaccines, we've been delivering that 99.9% of the time with only a few hiccups along the way, often not of our doing but because of weather issues along the way.
But in terms of the supply chain challenges that are out there, the minute we get those packages off the containers and they're handed to us, we deliver them. So a lot of the choke points that are occurring are upstream from us and our commitment to our customers and the communities we're serving is: The minute we get it, we're going to deliver it on time and hopefully make up for some of that lost time.
Rickey Bevington: A lot of things are getting stuck in these shipping containers before they even reach the UPS transportation network. Will UPS be a beneficiary of the new infrastructure bill in any way? Even if it's just a couple of dominoes down the line because things are going to be working better?
Laura Lane: We are such big champions and we just celebrate the passage of the infrastructure bill. It is the biggest investment in our nation's infrastructure since back in the Eisenhower days. We've been dealing with a lot of choke points and a lot of unnecessary congestion on our country's highways and in some of these multi-modal transportation hand-off points. Bridges that needed to be improved. Rail connections that needed to be improved. And UPS uses all of those.
So the fact that more funding is going to go into improving our nation's infrastructure is going to be fantastic for UPS because it's going to mean that we're not going to be idling in traffic. We're going to be moving at the speed of business, delivering packages once those projects come online.
And I'll share with you. We worked with Republicans and Democrats as well as the administration to share with them where those choke points exist so that the first investments could go in those places that needed the most funding for improvements. And we're really excited about those improvements, specifically.
Another equally important part of the infrastructure bill is money is going to go into the green future. There is going to be funding for improving the power grid across the United States, so that we'll be able to plug in more of our electric fleet as we grow it across the United States. You need power to run these electric vehicles. So there's got to be an investment in the country's power grid. And we're excited about those investments as well as the infrastructure to support those kinds of green fleet technologies along America's highways. That's exciting stuff for us.
Rickey Bevington: UPS is obviously a huge global company, but you're also an Atlanta company and you have a responsibility to the state of Georgia. And I just wanted to ask you: What is UPS's role in terms of being a leader and an innovator? Just for Georgia's economy and Georgia's businesses.
Laura Lane: I have to tell you, I love the fact that we are headquartered here in Atlanta. I just moved here a year ago. It's a beautiful city and we have 20,000 amazing UPSers that are part of over 300 facilities across the state. It's a great place to be headquartered and we feel a responsibility to be a part of the communities here, especially given that it's our headquarters operation.
We do a lot of community work with organizations based here. Think of organizations like Points of Light or Care. We've donated over $11 million in partnership with organizations here to improve communities to advance green solutions. Partnered with some of the great universities we've got here.
One example comes to mind — and it's linked to our sustainability agenda — is the partnership we have with Georgia Tech and the University of Georgia and Emory [University] on this Drawdown Georgia Business Compact. We're bringing together some of the biggest companies and some of the best thinkers about ways we can work to be better stewards of the environment by drawing down our emissions through innovations that we would develop together. And that's just one example of our being a leading company here in Georgia because it's our home and we want to make our home a better place.
Similarly, UPSers volunteer on a daily basis and they volunteer in communities across Georgia. And one of the projects that I'm really proudest of is the partnership that we've got with the Student Conservation Association. We launched our inaugural Atlanta Community Crew. It's this great partnership with students in the communities, inspiring them to come up with projects to beautify local communities, to improve the environment here in this state and really work together on those solutions.
And what's so powerful about it is these students, they're going to be the next generation of environmental leaders. And hopefully we'll offer them a job at UPS if they want to join us and think about the sustainable solutions that we're going to need to be carbon neutral by 2050.
Rickey Bevington: And it's certain that younger generations are — this isn't optional. This is really important to them, for sure.
Laura Lane: So true, and we're tapping into that passion with our community partners, with our people and with our customers to not see this climate crisis as a challenge, but a real opportunity to bring all these stakeholders together to find the solutions.
And I guess that's what I came away with from my visit to COP 26. Going in I was thinking, "Wow, the challenge is so great. How are we going to find a way forward?" And it was just inspiring being with all these wide variety of groups and leaders and thinkers and activists and protesters all coming together, saying, "How can we be the change we want to see in the world?" And it was wonderful to have UPS in the center of that discussion.