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green@work : Magazine : Back Issues : Sept/Oct 2003 : Cover Story

Cover Story

Viewing the World through Brown's Eyes



More Cover Story Articles

Driving Fuel Cell Development
A Tangible Example

As the world’s largest package deliverer, operating in more than 200 countries and territories, UPS has a much broader perspective of the planet than most of us. By virtue of the service “Brown” provides—door-to-door package and document pickup and delivery to cities, villages and neighborhoods, on average 7.9 million times a day—UPS provides a highly visible example of a corporation challenged to think globally and act locally.

At the helm of this $31 billion global corporate citizen, famous for its branded brown delivery trucks and uniformed drivers, is Mike Eskew, a 31-year company veteran. As chairman and CEO since January 2002, Eskew is currently directing efforts to expand beyond the company’s core package operations into new business segments that synchronize commerce through the movement not just of goods, but information and finances as well.

And while the UPS of today is much different than the Seattle, WA, messenger service founded in 1907 by 19-year-old Jim Casey, Eskew is adamant that the values on which Casey grew the company remain the same; values that have historically emphasized social responsibility. “If you are not a socially responsible company, you are not truly a customer-focused company . . . let alone a shareholder-focused company,” Eskew has said.

Included in the UPS realm of social responsibility is a commitment to environmental stewardship, a tenet Eskew champions as not just the right thing to do as a good citizen, but one that brings the added benefit of being good for business as well. How good? Consider a few examples:

* Reusable nylon sort bags in its small package sorting operations reduce plastic bag waste by more than 1,000 tons a year; the use of one reusable bag eliminates the need for more than 600 plastic ones.

* A recently-completed three-month overhaul of the preventative process for its 70,000 delivery vehicles, designed to help reduce their environmental impact, netted the company a reduction of 330,000 quarts of oil, for a estimated savings of $3 million annually.

* Recycled and recyclable paper used for the UPS Next Day Air® Reusable envelopes, the result of an partnership between UPS and the Alliance for Environmental Innovation, saves 12,000-plus trees a year; solid waste is reduced by an estimated 440 tons a year; annual energy savings could light nearly 20,000 light bulbs for an entire year; and by reducing each envelope’s weight by 10 percent, energy costs for manufacture and delivery are substantially decreased.

* It’s hand-held Delivery Information Acquisition Device (DIAD) electronically records all necessary delivery information, and saves 59 million sheets of paper a year in the process.

But don’t just take UPS’ word for it. During recent years, the company has received more than 20 awards for efforts to minimize its environmental impact. And, earlier this year, Fortune magazine rated UPS as the “World’s Most Admired” company, in the process ranking it in the Top 10 among all companies on five of the nine attributes evaluated. The recognition by the magazine—the fifth in a row—follows a similar ranking in which UPS was rated “America’s Most Admired” company in its industry for the 20th consecutive year.

On the “World’s Most Admired” list, UPS received an overall ranking of 8.08, based on an evaluation of nine criteria, including quality of management; quality of products and services; innovativeness; long-term investment value; financial soundness; employee talent; social responsibility; use of corporate assets, and globalness. Beyond its No. 1 ranking in its “delivery” industry category, UPS was also named the top-ranked company in the world on the attribute of social responsibility.

Perhaps it was fitting then that the day immediately following the company’s celebration of its 96th year in business—a business grounded and growing with its socially responsible and environmentally friendly platform—green@work sat down with Eskew to talk more in-depth about the modern-day Brown and how it manages to coalesce its increasingly sophisticated and high-tech business practices with old-fashioned values.

As the world’s leading package delivery company, what are some of the unique environmental challenges inherent to your business?

ESKEW: We have thousands of trucks and hundreds of aircraft, and so we have a big footprint all over the world. We try to do it with the proper stewardship. To put it in perspective: if everybody in your neighborhood drove to stores as opposed to having us come to your street, there would be an awful lot of cars going places. If all the factories and if all the offices were supplied by individual delivery services, there would be a whole lot more trucks on the street. We try to consolidate it, integrate it, maximize how much we can do. We try to minimize that footprint to the largest possible extent.

We have realized, because of our size and because of our scale and scope, we can try new things—things that are not just good for the environment, but good for our business, too. It’s got to make sense for the business; we have to be able to think that, maybe not next week and maybe not next year, but in the long-term, this is the thing that’s going to make us a better company and a better corporate citizen.

Have there been any bumps in the road—programs that UPS has tried that maybe didn’t turn out the way you hoped?
ESKEW: You know, we’ve been trying new things for years. For instance, we ran electric cars in New York in the ’40s. Now, batteries in the 1940s weren’t as high-tech as they are today. So we have had to walk away from some of those earlier experiments. We are now on our second experiment with hybrids. When we flew our 721s, we didn’t want to put a hush kit on those because we knew they didn’t do anything for fuel economy. So, we re-engined them. Besides increasing the fuel efficiency—I think we got about 13 percent better fuel efficiency—the hydrocarbons, the carbon monoxides and the NOx were all terrifically reduced. So it was better for our bottom line.

Sure we’ve had a few bumps, but, you know, we’ve been around 96 years yesterday. So we’re gonna just keep moving.

UPS has been listed on Fortune magazine’s most admired list of companies for 20 consecutive years now. How has your emphasis on corporate and environmental responsibility contributed to this honor?
ESKEW: It’s nice that these factors are part of the rating criteria, that people think about those things and that it’s not just about the bottom line. I believe we’re a very well-run company. We always have been. We try to be prudent and practical about the things we do. We also think not just about tomorrow or next week, but what we are going to do in the long-term. That approach makes us understand that we can make a difference in the environment, which is a big part of sustainability, and that our impact makes a big difference.

You talk about people thinking in the long-term. Is that why turnover at UPS is so low?
ESKEW: Yes. UPS is a great place to work. Employees can really see that they make a difference. For example, a number of us helped out with a school project two days ago. A lot of people just write checks, but when you volunteer, you can see how you’re impacting that school. You realize your efforts make a difference.

Every day our drivers experience this with our customers. It’s that day-to-day feedback that provides an honest purpose to what we do.

Our strategy has changed a lot during the past 96 years, but our values have always been the same. We take our jobs and our families and our communities seriously—we try to do not the easy or the quick or the convenient thing, but the right thing. And when we say we’re going to do something, we do it. We like to under-commit and over-deliver, and I think people appreciate that.

What’s the foundation for this ethic?

ESKEW: It began with a 19-year-old kid who founded the company 96 years ago, a kid who had been working since he was 11. His dad passed away when he was 14. He was the provider for his two younger brothers and his younger sister and his mother. He gave us some strong values.

If you think about what we do, you realize that we see the world unlike anyone else. We see every town and every village and every street and every neighborhood. We knock on the doors and we see the community like few other people do. And the community is where we all come from. It’s where the next generation is coming from, where our customers come from. So it’s important for us to leave a good, lasting impression in those communities. So while our strategies change, our values haven’t.

Has UPS’ inclusion on the Dow Jones Sustainability Index impacted the company?
ESKEW:
I don’t think it’s made us do anything differently. I think that perhaps some customers look at that index and think, “This is a good company to do business with.” Basically, we do things because we think it’s good for our business for the long-term.

For the longest time, Jim gave a lot of money to charity. He didn’t want anyone to know. He would say, “Don’t tell anyone.” That’s quiet philanthropy—doing good for good’s sake. But at some point, we said, “No, we need to start talking about it.” And the reason we wanted to talk about it was not to get credit, but because we knew that others would do something if we did something first. The things that we did to fix up that school two days ago—we had 13 other companies with us. So because we talk about this a little bit more, it’s helped others get involved. I think the same thing applies to the index on sustainability.

So does UPS serve as a role model for other companies?

ESKEW: We do the things that we can do to make our communities, our people, our customers and our share- owners better. Hopefully others do that because they think it’s right for their businesses. I have been invited to come in and talk about what we do; people do want to hear why we think it’s good for us to do these things.

Do they want to know about the business case behind the decisions?

ESKEW:
Yes, to some extent. You really need to know that these things are not separate. Doing the right thing for your community and for the environment, for your shareowners and for your customers—that’s the business case for this whole thing.

It’s got to be good for the bottom line. In my first job at UPS, I worked on routing our trucks to minimize miles. That whole concept of optimizing dispatch has a big impact—if we can burn fewer gallons of fuel, that makes a big difference in the bottom line and it’s also better for the environment. Think about it: our fuel cost is about three percent of our revenue. It’s up to us to keep that cost down.

Do you think the concept of sustainable development is on the radar screen of most contemporary CEOs?
ESKEW:
I think most CEOs are good folks. They really want to do the right thing and they think about the lasting legacy of their companies. About four or five have given us a bit of a black eye, but I think most really do understand that in the long-term we need to do what’s right for our country and our communities and the environment—which is good for our businesses. People need to think about how to challenge themselves to make it all fit, and I think most of them do.

Is transparency becoming more critical?

ESKEW:
I believe it is. People need to know that what they see is what they get from these companies. That’s what they expect. Values and doing what you say you’re going to do is very important.

Is it difficult to reconcile social, cultural and environmental differences among the many countries UPS does business in?
ESKEW:
It’s amazing to me that, as I travel to all parts of the world, I meet all these drivers and wonder, “How do they get ‘it’?” Over the years, there’s been a lot of us expatriates in Europe, but now it’s down to a handful. It’s almost all local management — because local cultures are important. There’s a driver in Turkey who brings cookies that he bakes in his own bakery to his delivery stops. It’s the little things that they do in different parts of the world that we wouldn’t think of. It’s a blend of local and global networks. We are a global network in that when we say we will deliver it in two days, you have to adhere to the standards of the network. But, within each area, each driver has enough autonomy to be able to say, “I need to drive around the street this way, not that way, because of construction or people or schools or that person will be there if I get there early versus late or vice versa.” That autonomy is something that you can’t replace.

How does UPS stay ahead of the curve in terms of environmental advancements?

ESKEW:
We pay attention. We listen. We think about what is coming—and then you try to think about whether there’s a good business reason for doing it.

Because UPS has diversified into so many different areas, is it difficult to communicate social and environmental priorities to new acquisitions?
ESKEW:
We have gone into a lot of different businesses—we made about 25 acquisitions in the last two or three years. With many of the new businesses and with a lot of the acquisitions, we keep them off to the side for a while to make sure that we don’t crush them with our size. We let them build their own identity the way we think they need to before we integrate them too much. But they get the UPS culture, and they get it pretty quick. We spend a lot of time talking about one company, one vision, one brand. And, when you put UPS on your side, you’ve got responsibilities—what we’re doing in the community and what we’re doing in the environment and what our obligations are. They hear that story, and they catch onto it.

You’re slated to give a keynote speech at the BSR conference. Is there a specific message you hope to emphasize?
ESKEW:
I think my main point will be that sustainability is good for our businesses. This company is 96 years old and we’re going to be around another 96 years. We’re thinking about what we want to look like on our hundredth anniversary—and not just bottom line things, but in a whole lot of areas: how we treat our people and what we do with the community and what we offer to customers—and why sustainability is so important in the next hundred years.

Why is that?
ESKEW: Yesterday was the 40th anniversary of Martin Luther King’s speech and our 96th anniversary. It’s amazing to me that they both—our founder Jim Casey and Martin Luther King—talked about creating opportunities for this generation and the next. This was both their dreams. Anybody who works at UPS—and we’re all the same—want to know how we can leave this place better than it was before. What opportunities are we leaving for the next generation? Without a safe, clean environment to work in, we won’t. The term “environment” covers all territories: communities, customers and values.

Can you tell us a little bit about the UPS Foundation and the Annie E. Casey Foundation?
ESKEW:
The Annie E. Casey Foundation is the largest in the country that works with kids at risk. It makes grants of over two hundred million dollars every year. It has done an awful lot of work in foster care, also in system reform and in neighborhood transformation. We work in a number of neighborhoods, in terms of how we can make the neighborhood safer and better. The UPS Foundation is 52 years old and makes grants of about a little over 40 million dollars every year. Adult literacy, hunger and volunteerism are its three major initiatives, although we direct grants to lots of different communities and things around the country, and outside the country.

UPSers are also very generous—generous with volunteering their time and attention. We’re the biggest contributor to the United Way. We’re the first company to ever win the Spirit of America Award twice. During the last two years, we’ve given over 50 million dollars to the United Way. Our people believe in supporting communities.

Does your role as a trustee on these foundations impact any of your thinking as CEO of UPS?
ESKEW:
Absolutely. I think that everything a person does, as a parent, as a child, as a brother, as a volunteer—anything you bring into a job impacts your thinking. We’re all a product of everything we’ve touched.

You know, I’ve been with UPS for 31 years and I’m better because I’ve worked here. I’ve lived in eight places; I’ve met the greatest people in the world; I have seen the world. Not too long ago, we were working in a neighborhood for the Casey Foundation and there were people there that spoke eight or nine different languages. They’d come from all over the world into this community on the West Coast. At the time, I thought these kids are really lucky to be able to live in such a diverse group with people from 10 or 15 different lands—there’s this rich culture that they brought with them. I don’t know if I would have always thought that. But I do now. And, I think it’s because of my experiences at UPS. But, after 31 years, it’s hard for me to separate.

Which of UPS’ achievements are you most proud of?
ESKEW:
The thing I’m most proud of are our people. Three or four times a day someone tells me about something great one of our drivers did, or about one of the helpful people who answered the phone. Those are the things I’m most proud of. When you talk to a customer and they say, “You know, we wouldn’t have done the things that we did if it weren’t for you folks.” Those are the things that I’m proud of. Sure, we do win a lot of awards, but it’s the people that really make it worthwhile.

What’s next for UPS?

ESKEW:
I’m going to keep doing the things that have made us a great company for the last 96 years. We’re more than a package delivery company. But every package and every customer—we need to continue to treat them like it’s the only one we have. We must act like we’re a small company. Technology, I think, can let us do those kinds of things. So, when that customer says we’d like you to do it this way—okay, no problem. We can do it.

What will UPS be working on in the environmental arena?
ESKEW:
That’s a big one—it’s packaging material, it’s alternate fuel vehicles, it’s continuing to look at how we dispatch. We can constantly do better. It’s looking at the way we send what on the ground and what in the air. It’s optimizing the system. It’s what’s on the package car coming to you; it’s what’s on an airplane crossing the sky; it’s what’s on the trailer coming from the West Coast, and it’s what’s on the ship crossing the ocean. It’s also about using technology to optimize the supply chain for our customers—that’s going to be great for the environment because there won’t be so much obsolescence and waste.


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