US Postal Service—A Leader in Sustainable Performance Reporting

On a January VX2015 panel titled “Sustainable Performance Reporting,” you shared that the USPS is presently considering procurement of a fleet of new, more fuel-efficient, and cleaner vehicles. Elaborate on USPS criteria and the status of the vehicle selection process.

Thomas Day: Right now, we’re in the process of figuring out a replacement strategy for our delivery vehicles. That will be a rather large purchase: 160-180,000 vehicles. We’re not going to purchase that in a single year, but rather over the course of several years.

We’ve been looking at what technology is available for motor vehicles that meet our operational requirements. We’re looking at engine technology, as well as safety and ergonomic enhancements that we can bring to the vehicle.

The basic business that we are in is changing. The last time we did a massive purchase of delivery vehicles was between 1988 and 1993. Back then, our business was focused on traditional mail: letters, cards, envelopes, magazines, newspapers, and advertisements.

Today, while we still handle that type of mail, the volume has been declining. We are now very focused on the package side of our business. As a result, not only do we need a new vehicle because the fleet is aging, but we also need a larger vehicle, in terms of cubic space and head room, to deal with an ever-growing volume of packages.

As the Chief Sustainability Officer of the US Postal Service, share with our readers your responsibilities and current priorities.

Thomas Day.: There are two sides to our group. We make sure that the Postal Service is in compliance with federal, state, and local environmental laws and regulations. The other aspect is to ensure that the Postal Service’s business practices are sustainable and, where possible, to reduce our impact upon the environment.

Vehicles are obviously one of our major sources of greenhouse gas emissions. Working with my colleagues in engineering systems, in delivery programs, and in supply management, we make sure we’re looking at the best available technology to fulfill our operational mission. Whatever vehicle we choose must be financially justified, and at the same time, must reduce our impact on the environment.

Mike, the VerdeXchange panel you moderated included Tom Day. He, like the others on the panel, offered an overview of how major institutions like the post office address sustainability through measurement, management, and disclosure of performance information. Elaborate on how extensive sustainability reporting has become. Is the USPS unique? 

Mike Wallace: The US Postal Service is certainly a leader in this area, due to the size and magnitude of their operations—because of their unique position in the marketplace—and the voluntary reporting they do on the organization’s overall sustainability performance. As a government agency, they have specific disclosure and reporting requirements, but also, as an independently funded entity, they have very specific financial reporting requirements.

Tom and his team have chosen to voluntarily follow Executive Order 13514, which came down through the White House. It’s driving all federal agencies to produce Strategic Sustainability Performance Plans (SSPP). In following it, the USPS has chosen to use a globally recognized approach called the Global Reporting Initiative (GRI) to measure, manage, and report on performance. In addition, they have chosen to weave together and integrate this GRI information with their SSPP reporting in a way that I’ve not seen from any other organization.

During the panel, Tom also discussed how he’s part of a global association of other Postal Services that are working together to help set a sustainability standard for their industry, as well as develop metrics and measures specifically related to their industry, allowing for greater comparability and more credible reporting. These are examples of real leadership in the sustainability field.

In the sense of the broader marketplace, we certainly see a big uptake in sustainability across the country and in all parts of the economy. Publicly traded companies tend to present many of the leading examples of sustainability disclosure—beyond what we see in any other parts of the economy. Because of their fiduciary duty to report and be transparent on a variety of material issues, publicly traded companies are generally more prepared to disclose information and report annually. As pressure to be a good corporate citizen increases, these large public companies decide that they, too, will voluntarily report on sustainability performance—also known as environmental, social, and governance (ESG).

Over the past four to five years, we’ve seen a rapid increase in sustainability reporting across the US market. Roughly 80 percent of the S&P500 are now reporting on their sustainability efforts. This type of performance measurement and reporting is only going to increase in quantity and quality—and will continue to impact suppliers and procurement decisions, as Tom mentioned.

Tom, how has the USPS commitment to measuring, monitoring, and disclosing performance information been embraced? How has it affected the post office’s procurement decisions?

Thomas Day: The employees of the US Postal Service are very competitive and take a great deal of pride in what we accomplish.

We take seriously our mission of collecting, processing, and delivering mail. We also have a real belief in setting targets and goals, publically announcing what they are, and then making sure that we achieve them. That plays quite well in the environmental arena.

We have goals to reduce energy, to reduce water consumption, and to reduce greenhouse-gas emissions. It’s something that, throughout the Postal Service, we fully embrace.

In reality, it is becoming part of the free market. If you want to effectively compete to sell your products and services, there are both companies and consumers that expect and demand you are reporting your performance in the area of environment and sustainability.

We are a quasi-governmental agency—part of the federal government but entirely self-sustaining financially. We get no tax dollars. We have to sell our products and services to generate revenue to pay for our expenses. So, we compete in the private marketplace.

People have choices today on how they want to communicate: The mail is no longer a monopoly. You don’t need to put a letter or billing statement in the mail any longer. The Internet and digital communications in general provide very viable alternatives to hard-copy communication.

We compete in every aspect of what we do. In the package business, UPS and FedEx have taken the environment and sustainability to a high level of importance. We have done the same. We can be proud that we didn’t wait for them to do it. We were out in front doing it from the start.

Tom, could you share what, if anything, you’ve learned at the January VerdeXchange conferences that will affect the USPS’s decision-making regarding its purchase of next-generation vehicles and infrastructure to support a new fleet? 

Thomas Day: One of the reasons I’ve attended VerdeXchange over the past three years is to share the story of what the Postal Service is doing. I think it’s important to get the word out.

But the other thing I truly enjoy about VerdeXchange is what I hear: very practical, real-world implementation of technology. I’ve used VerdeXchange to get the latest on what’s going on with building, energy, and vehicle technology. I heard a great deal about electric vehicles, but also CNG and other aspects of technology.

The USPS is the very definition of ubiquity. Outside during the normal business day, you are hard pressed not to see our vehicles. We’re everywhere, delivering to 153 million delivery points six days a week. That’s one of the broadest examples of scope and scale you will find in the United States.

Anything we consider not only has to be a technology that works under the hood, but also has to have a mature infrastructure that’s fully supported in all 50 states. That is part of our decision-making. 

Mike, returning to your expertise, could you elaborate on how measurement and disclosure affect performance in the supply chain?

Mike Wallace: Consider how a multi-national corporation with multiple sites around the world wants its accounting systems to roll up into one centralized financial report. Sustainability reporting is going through rapid acceleration to this level of annual reporting.

Sustainability Managers, or Chief Sustainability Officers like Tom, need to gather facility-level data from 100, 500, or 2,000 facilities around the world. They also need that information reported consistently and in standardized metrics and units, so that they can roll all this up across the total organization and report on the entire impact, or footprint.

The same thing is happening down entire supply chains: An organization’s footprint is determined in large part by its purchasing decisions. Who you buy energy from influences the greenhouse-gas footprint of your organization. Computers, paper, windows, lights, etc. are all things that influence an organization’s footprint, and where an organization can make a decision. Energy-efficient buildings, light bulbs, computers, and windows cost and save money and reduce greenhouse gas emissions—do you know how much money and emissions for your organization?

We have amazing examples from the likes of Intel, where they are actively training suppliers on sustainability and reporting. Why? Because Intel has already found the risk-management benefits of sustainability, the cost savings, and the connection to regulatory compliance requirements. Intel decided to host a meeting of 80 key suppliers (many of them competing for more of Intel’s business) and put them through very specific sustainability training. These public and private companies were told about Intel’s commitment to sustainability, taught about Intel’s reporting approach, and then challenged to report publicly on their own sustainability performance. The suppliers—not wanting to risk losing a contract with Intel—raced to report, and report better. They even went so far as to have portions of their sustainability information verified and assured. 

We’re seeing this across other industries, as well. The automotive industry is doing a similar thing with the Automotive Industry Action Group (AIAG). It’s happening across the electronics industry, with the Electronics Industry Action Group (EICC), in the food and beverage industry, apparel and retail, and even in the public sector. Cleveland, Ohio is the first city in the country to provide preference to suppliers that report publically on greenhouse-gas emissions and broader sustainability topics. I don’t suspect it’ll be too long before many more mayors and governors across the country do the same. 

Mike, you had IBM, Morgan Stanley, and two representatives from the City of LA on the VX2015 panel you moderated. What input did they offer to complement what you and Tom have been sharing?

Mike Wallace: It goes back to the public-agency connection. An institution like the USPS doesn’t implement sustainability without there being a business case that can be proven. If the USPS can do this, as large as it is, then what about other institutions and companies that state publicly on their commitment to sustainability?

As I learned from my work with David Abel and VerdeXchange, the City of Los Angeles is one of 88 cities in LA County—the largest county in the country with the most cities. The entities themselves—LADWP, the City of LA, and the County—all have very similar sustainability issues and supply chains. These organizations are trying, independently, to figure out their own footprints. Like silos in companies, we have silos right here in LA County—88 of them. As all these cities and their mayors evolve their respective sustainability efforts, they will all begin to measure, manage, and disclose sustainability performance to their constituents. They, too, will start to realize that their sustainability performance is significantly influenced by the goods and services their city purchases. They, too—like so many companies—will realize they need to work with suppliers to find sustainable solutions. Imagine if all 88 cities and the county all worked together on sustainability and sustainable procurement.

Whether you’re large or small, public or private, some large customer is going to ask, “Show me the sustainability performance of your organization and/or your product—can you prove it?” That is starting to shake out right now across the economy.

We’re also starting to see technology firms like IBM develop solutions to easily capture all this data and roll it up to a central system. This parallels what IBM already does for CFOs of companies and public agencies with multiple operations and business units. Financial reporting technology allows an organization to easily collect, manage and disclose sustainability, as well as efficiently collect data from hundreds and thousands of suppliers.

On the finance side, these solutions cost money. Morgan Stanley was on our panel because of their activity and commitment in the green bond space—helping the public sector figure out how to finance new projects and initiatives around sustainability—but are also heavily involved in responsible investment. They’re looking for companies that are more sustainable. Morgan Stanley and the rest of the investment community can’t make such decisions without information. They, too, are asking for and seeking out sustainability performance. The most efficient, accurate, and credible way to get sustainability information out to the market—customers, investors, employees, and your local community—is by actively reporting such information in a credible form. That is why we see the majority of the world that is reporting doing so according to the Global Reporting Initiative, like the US Postal Service is doing, as well as roughly 80 percent of the S&P 500.

Tom, the focus of this year’s VerdeXchange was “going to scale.” The USPS is certainly doing that. When you return (and I hope you will) a year from now, what will you focus on differently, compared to this past January?

Thomas Day: At that point, I think we will have made a decision to go forward with a new fleet of vehicles. Hopefully the manufacturer will be selected, along with a deployment schedule for that fleet. I won’t be talking theory anymore. I’ll be talking about what we’ve decided to do and how we plan to implement.

The market is continuing to get more and more sophisticated. But we are also seeing the change with governmental regulation—whether it’s local government at the municipal or the state level. I’m looking for a level of sophistication where it becomes more and more part of the world of competition, influencing who companies and consumers choose to do business with.

More standardization is necessary. GRI is one example of how we can do that. It’s one of the most commonly applied reporting structures out there. The more standardized we can get, the more we can fulfill the need for comparable data among companies. In this way, both consumers and companies can evaluate this information in a fair and equitable manner.

Industry involvement with sustainability and environmental reporting is getting more sophisticated. If anyone thought this was just a quick flash in the pan, there is no sign that is the case. If anything, it is getting more serious each year. It’s becoming more engrained in business.

I look forward to telling the story of how we’re dealing with that, and hearing how others are dealing with it, as well.