Global Citizenship Report

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Message from the Chairman MIcon
At FedEx, we’re very proud of our ability to move goods and information around the world quickly and reliably. But we’ve learned over the years that what we do has a bigger outcome — our work actually creates new opportunity by removing the barriers between people, goods and ideas.

This is a force we call Access, and we know through research that Access helps bring greater prosperity to people, businesses and nations all over the world.

As we expand Access to build a better future, we take on a great responsibility — both as a steward of the earth’s resources and as a citizen of the world. People trust us to come through for them, whether it’s delivering their shipments, providing online tools, or supporting our communities. To meet the expectations of an increasingly connected world, we must try to be transparent about the actions we take as well.

This Global Citizenship Report is about those actions. It offers information about our progress — and our plans — in the four focus areas of our corporate citizenship.

The first is People and Workplace. This is an area of highest priority because it’s our team members who work every day to meet the expectations of our customers and communities. In this report, you’ll learn how their hard work makes our business more sustainable, improves our environmental performance and helps us become better citizens of every community where we work.

The second is Economics and Access. We work to expand Access, because more Access means stronger connections among the people and ideas that will make the world more sustainable and improve quality of life. In this report, you’ll learn about research we’ve undertaken in collaboration with the Yale Center for Environmental Law & Policy, trying to find more common ground between free trade advocates and environmentalists.

The third is Environment and Efficiency, where every day we tap into our innovative roots to make our business and the world more sustainable and efficient. That spirit of innovation has produced the transportation industry’s largest fleet of hybrid electric package delivery trucks, which you’ll learn more about in this report.

The fourth is Community and Disaster Relief. All over the world, we apply our resources — planes, delivery trucks, facilities and team members — to help communities recover from disasters as well as shape their own sustainable futures. You’ll learn from this report about our investments in organizations that support environmental sustainability at the community level. One example is EMBARQ, which helps cities around the world build transportation networks that are safe, clean, convenient and affordable.

In our last Global Citizenship Report, I wrote that our company understands the critical importance of continuously earning the trust of team members, customers, shareowners and the communities we serve. Companies earn trust by holding themselves to practical, measurable standards by which all stakeholders can judge their actions. Our standards of stewardship are embodied in a program we call EarthSmart. It is designed to help us ensure that when we invest in physical assets, begin programs in our workplace, or form collaborations with philanthropic organizations, these actions will have clear, tangible benefits for our business, team members, customers, the environment, and the communities in which we operate.

We hope these pages will give you a clear picture of the progress we’ve made so far and the standards we will hold ourselves to in the future — all in pursuit of responsibly and resourcefully lowering the barriers to Access.

Frederick W. Smith
Chairman and CEO
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EarthSmart℠
We could have simply made promises. Instead, we are committing our business to high, measurable standards with EarthSmart℠ EarthSmart
At FedEx we have a simple goal: to connect the world in responsible and resourceful ways. We’ve organized our efforts to achieve that goal into a program we call EarthSmart℠ — our commitment to minimize our impact on the environment. It’s designed to encourage innovation and discretionary efforts that makes our business more sustainable, both economically and environmentally.

There are three pillars to the EarthSmart platform – business solutions, work culture and community outreach:
  • EarthSmart Solutions – Covers services and our physical assets and includes our planes, trucks and facilities. Developed in collaboration with Esty Environmental partners, the EarthSmart Solutions designation maintains strict standards of eligibility.
  • EarthSmart @ Work – Engages FedEx team members on sustainability matters and helps them make significant contributions to the environmental sustainability of our business.
  • EarthSmart Outreach – Covers our philanthropic and volunteer efforts that focus on environmental sustainability.
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Economics & Access
FedEx and the Yale Center for Environmental Law & Policy want to find common ground for free trade advocates and environmentalists.
What are the links between environmental sustainability and economic sustainability? What makes nations — and the businesses that help fuel their growth — succeed or fail in their efforts to achieve both?

These are some of the questions that FedEx is helping the Yale Center for Environmental Law & Policy to explore — and, ultimately, to answer — with a study due to be released in the second half of 2010.

Since 2002, the Yale Center has studied the environmental performance and policies of nations all over the world. Now, with the support of FedEx, additional research will dig deeper, searching for common ground between a nation’s environmental performance and the actions it takes to increase its access to other countries and economies.

With greater understanding of the relationships between economic and environmental sustainability, greater collaboration can emerge between free trade advocates and environmentalists. Such collaboration might help to ensure that trade and investment are not only engines of growth, but also of sustainable growth and stewardship. Leaders of nations and industries may also benefit from the study as it will better equip them to navigate the complexity of the 21st century global economy. This study is one of the key investments in our EarthSmart Outreach program.

Ultimately, our work with the Yale Center for Environmental Law & Policy matters for three reasons. It will provide needed quantitative insight into the relationship between trade and the environment. It will identify and analyze significant policy issues. And it will give decision makers around the world fresh analytical insight to promote economic and environmental sustainability.
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Environment & Efficiency
What makes our business more sustainable and efficient? The same spirit of innovation that built it in the first place.
Sustainability is changing the way many corporations do business. Most companies, though, focus primarily on improving environmental performance and reporting their progress and achievements. Greater efficiency is a good thing; so is a willingness to share how you achieved it. But for FedEx, this approach misses two key ingredients: leadership and innovation.

We’ve applied our long-standing spirit of innovation to a decade-long effort to reduce energy usage, increase energy efficiency and put to use technologies that will change the future of our industry.

This year, FedEx became the first U.S.-based company in our industry to add the Boeing 777F to its aircraft fleet. The 777F dramatically enhances our ability to move more freight to more distant markets while simultaneously reducing emissions by 18 percent. Flying direct between Asia and the U.S. also eliminates the extra fuel needed for additional landings and takeoffs. We’re also upgrading our fleet by replacing narrow-body Boeing 727 aircraft with Boeing 757 planes — which will cut greenhouse gas emissions and reduce fuel consumption by 47 percent. We plan to have at least 15 777Fs by 2014, and have ordered another 15 for delivery by 2019. Embracing Boeing’s advancements in aircraft technology allows us to take major steps in meeting both our environmental and economic goals.

Our hybrid electric vehicle fleet offers other examples. Starting in 2000, we began exploring ways to put hybrid electric commercial vehicles on the road. Today, we have our industry’s largest fleet of hybrid electric package delivery trucks. We built the fleet not only by investing in new hybrids, but also by taking the practical, yet groundbreaking step of turning conventional delivery trucks into hybrids. When a conventional truck’s motor reaches the end of its useful life, we’ve found a way to retrofit the same truck with a hybrid electric motor, extending the truck’s life and decreasing the amount of finite resources it will use in the future. Currently, we’re assisting in the development of zero-emission electric/hydrogen fuel cell and hydraulic hybrids. And just this past year, we worked with Modec, a commercial vehicle manufacturer, to develop a new all-electric commercial delivery truck for use in the United Kingdom. Our fleets of hybrid and all-electric Modec trucks are the first assets to earn our EarthSmart Solutions designation.

But as we developed and adopted these innovations, our vision was broader than our own company’s environmental performance. We invested in these technologies with the specific intention that they would spread to other businesses and industries and help set new standards. Today, that’s happening: There is a growing market for commercial hybrid vehicles. We fully expect the same to happen with the 777F — that our competitors will follow our lead and begin using smarter, more efficient plane designs. When that happens, we all win.
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Community & Disaster Relief
FedEx and EMBARQ will help Mexico transform its transportation network.
An important component of our global citizenship is to channel our outreach investments toward organizations that tackle issues FedEx is uniquely capable of helping to solve. Giving is critical to all organizations, and we continue to make significant contributions to many. But we know that when we apply our core logistics capabilities, we can make a meaningful difference in people’s lives.

For example, FedEx is collaborating with EMBARQ, an organization that helps cities build transportation networks that are safe, efficient and convenient, enabling more people to use public transit. This investment is a key focus of our EarthSmart Outreach program.

Starting in 2002, EMBARQ’s Center for Sustainable Transport in Mexico spearheaded the creation of a bus rapid transit (BRT) corridor through the heart of Mexico City. BRT lines essentially enable buses to act like trains, picking up passengers at special stations and moving them along specific corridors. The system achieves the benefits of rail without the huge capital investments that building new rail lines require. Today, the system carries 450,000 riders daily, and is responsible not only for taking cars off the road but also for eliminating 80,000 tons of CO2 per year.

But the benefits of this work are not limited to reducing pollution. EMBARQ also focuses on improving the quality and cost-effectiveness of urban transport so that more people have affordable access to their local economies. EMBARQ’s projects improve public health, traffic safety and the quality of public spaces. When cities become healthier and more accessible, they become more competitive and attractive to businesses. EMBARQ and FedEx share a fundamental understanding: Transportation has a deep impact on people’s lives. As our relationship with EMBARQ progresses, we hope to make that impact more meaningful and lasting by providing consultation, technical advice and project planning with local, state and federal governments. We also hope that our team members, many of whom live in the same communities EMBARQ is helping, will be able to help optimize traffic patterns, minimize energy consumption and reduce emissions.
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People & Workplace
When it became clear that the economic downturn was going to be significant and prolonged, FedEx took necessary steps to cut operating costs by more than $2 billion in order to minimize the loss of jobs.
Despite the sacrifices, the service FedEx team members gave customers consistently lived up to the Purple Promise – to make every FedEx experience outstanding. In 2009, FedEx employee engagement participation rates remained at an exceptionally high level.

Instituting new internal programs such as the volunteer management system and EarthSmart@work are signals of the company’s commitment to support and advance team members’ ability to contribute their skills to increase the sustainability of the FedEx business – and our world.
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