You may know FedEx for their speedy delivery and the secret arrow in their logo. But did you know the company also prides itself on its commitment to ethics, integrity, and reliability?
This is how Aaron Nicodemus, a journalist interested in corporate regulatory policy and compliance trends at Compliance Week, portrayed FedEx. Delivering on ESG: an inside look at FedEx’s corporate transparency is Nicodemus’s report on FedEx’s sustainability journey. Much is debated about whether ESG initiatives can deliver concrete results. Since FedEx started its sustainability journey in 2008, Nicodemus argues this makes FedEx a valuable case study for other companies examining the challenges and benefits of advancing ESG.
With a fleet of 87,000 vehicles traversing through the neighborhoods in the US, FedEx delivers an average of over 12 million packages each day. Above the neighborhoods, there are 650 planes with 6 million packages flying to 400 destinations across the globe everyday.
Nicodemus wanted to know how a delivery company this big can deliver on ESG goals.
Mitch Jackson, Chief Sustainability Officer at FedEx, explained to Nicodemus that FedEx didn’t want to “fall in the trap of simply reporting, without knowing why we were reporting and what we were trying to achieve.” FedEx aimed to be transparent with their strategy, success and failures.
In his report, Nicodemus heavily emphasized the efforts FedEx put into ESG over the years. Nicodemus framed FedEx that they are trying really hard almost as a way that their effort can make up for a lack of concrete result.
E is for environment: can Fedex balance growth and emission?
Nicodemus explains how FedEx constantly struggled to strike a balance between the company’s growth and its goal to reduce total emissions.
FedEx prefers to measure its accomplishments another way. Instead of reporting total emissions, it focuses on total emissions intensity. This is a calculation of total metric tons of greenhouse gas emissions divided by FedEx’s total revenue. FedEx’s emissions intensity has decreased over the years, but its total emission increased.
82% percent of FedEx’s GHG emissions come from its fleets of 677 aircraft. In the first sustainable report from 2008, FedEx set a goal of reducing its aircraft emission intensity by 20% by 2020. FedEx met its goal. The company upgraded fleets to be more efficient and reduced ground idling. The result is that it drove down its aviation carbon emissions intensity by 30% in 2020.
Image source: FedEx 2021 ESG report
But the same caveat applies. FedEx didn’t decrease the total emissions. It decreased total emission per aircraft. It is a strategy that implies reductions, when total emissions have continued to rise. Greenhouse gas intensity does not help to ultimately achieve carbon neutrality. It can be interpreted as a way for companies to portray they are working to decrease emissions but in fact they are not.
Additionally, Nicodemus’s report omits some other important strategies FedEx has tried but failed.
In 2000, FedEx teamed up with the Environmental Defense Fund to develop a hybrid truck for reducing its greenhouse gas emission by 30%. FedEx planned to start replacing its diesel trucks in 2003.
But the revolution never happened. FedEx is now pursuing vehicle electrification. It plans to purchase 50% zero emission electric vehicles in 2025 and 100% in 2030.
FedEx, in 2021, announced the goal to achieve carbon-neutral globally by 2040. How exactly does FedEx plan to achieve this? How will it track its progress and hold itself accountable? Nicodemus answers FedEx wants to focus on 3 things to achieve carbon neutrality: vehicle electrification, sustainable energy, and carbon sequestration.
These plans are hardly unique.
The first two goals are a natural extension of FedEx’s current sustainability initiatives. Carbon sequestration is a new investment for FedEx. Carbon sequestration is a process in which CO2 is removed from the atmosphere and held in solid or liquid form. It faces the criticism that corporations can buy their way to carbon neutrality instead of making change.
In general, this report seems to be written with the complete trust of FedEx. It omits third-party data. Explanations of how Nicodemus got certain knowledge would make the report more convincing.
Packaging and delivery can be viewed as a wasteful business. But there is a need for delivery, especially after Covid. Reducing total emissions at the same time FedEx has expanded to meet demand has been challenging. But using misleading metrics and phrasing contradicts FedEx’s emphasis on transparency. Transparency is not just about releasing data, it’s also presenting unbiased analysis of data.
Now, whenever I see the van with the iconic orange and blue logo, I no longer just think about a worker delivering packages to me. Now I see an organization’s struggle with sustainability. And just as Fed Ex’s Chief Sustainability Officer explained to Nicodemus, “this is a marathon, not a sprint.”