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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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