Preaching Sustainability Transparency with FedEx’s Mitch Jackson

September 30, 2011

JOHN SHEGERIAN: Welcome back to Green is Good, and we are so honored to have Mitch Jackson on with us right now. He’s the Vice President of Environmental Affairs and Sustainability at FedEx. Welcome to Green is Good, Mitch Jackson. MITCH JACKSON: John, Mike, it’s great to be here. Thanks for having me. JOHN SHEGERIAN: You know, Mitch, you are amazing. I could take the whole 23-minute segment here and talk all about the awards you’ve won over the years and your journey. What I like to typically do with our great esteemed guests when we start is ask you to share your journey. You’ve been at FedEx 20 years now, and now you’ve ended up in a really great spot. You’re doing amazing things in that spot as the Vice President of Environmental Affairs and Sustainability. Can you share please your journey, 20 years at FedEx, and how you came to this position? MITCH JACKSON: Sure, John. I’d be glad to. I think one of the things that’s helped me is I’ve done a number of different things with FedEx. I’ve been out in the operation and seen how the movement of our customers’ goods occurs. I’ve been in our properties department and helped in the design of the facilities and the like, and then I’ve been doing environmental management issues for quite a few years now, sometimes more years than I’d care to imagine, but I think that broad base has given me a good understanding of what the company does and how to try to integrate sustainability into that core structure. JOHN SHEGERIAN: You know, this summer, you released the FedEx global citizenship report. Can you share with our listeners a little bit what that means and why you’ve released that, and what you want our listeners and the people who read that great report to take away from it? MITCH JACKSON: Well, I think transparency is a big part of what companies need to do with respect to sustainability. I mean, they need to be providing information to their stakeholders about how they’re performing. I think in this particular case, what the report does for us is it gives us the ability to share how we’re progressing on environmental sustainability with our external stakeholders, and also to show that the input and the value that it brings from our team members, our internal stakeholders. I think that that is probably a very big piece of this, which is to show this is what we’re doing, this is why we’re doing it, and this is how we’re performing in undertaking those initiatives that we have underway. JOHN SHEGERIAN: For our listeners out there, Mitch and his colleagues have created an amazing website. If you’ve got your laptop or iPad close by, Mike and I are on it right now. It’s www.environment.fedex.com. You talk about transparency. This sets the mark. This sets the bar in terms of your videos, in terms of your articles, in terms of how it’s organized. It’s truly so well done, Mitch. Mike and I have been on it the last couple days prior to the show, getting ready for the show, and we just wanted to tell you our hats are off to you. This website is just one of the best we’ve ever seen. MITCH JACKSON: Thank you for that. It’s a balance. You’re always trying to present information that is needed by stakeholders, but you don’t want to overwhelm them with information to where the narrative is lost by just simply reams of information. The way you convey it, I think, is as important as what you’re actually conveying. JOHN SHEGERIAN: Right. It’s so well put. One thing we’ve learned while prepping for this segment with you is that FedEx serves over 220 countries and territories around the world, and when you start adding up the planes and the trucks that support those facilities, talk a little bit about sustainability and just your fleet of planes and trucks, and how they interrelate, and you can make such a huge impact. MITCH JACKSON: Yes. Think about it for a second. We move the goods for our customers, but in essence what we’re doing is we’re helping to connect a world. So, when you’re serving 220 countries and territories, ultimately, that’s what you’re doing each and every day. And, so we realize that what that does is not only does that have an environmental impact that we have to address, but it also has a social good that it provides, and that’s providing access to the developing world to be able to reach markets so that they can improve their standards of living and improve their GDPs as well. But with respect to that environmental impact, when you’re operating and moving over 8 million packages a day, you’re going to be operating a number of global sources. In our case, it’s primarily aircraft vehicles. So, what we’ve looked to do is we’ve looked to focus initially, and what we did back in 2008 when we set our goals, is we set goals to reduce emissions in both of those and to improve the vehicle fuel efficiency of our vehicle fleet as well because we had to do that in order to be responsible. If you think about it, our role is to connect the world in responsible and resourceful ways, so we had to approach it from that angle to begin with. JOHN SHEGERIAN: You are sitting at such a fascinating position, given the times we’re in, and as the sustainability revolution is just picking up velocity. Now you have the huge opportunity working with FedEx, in terms of environmental affairs and sustainability. How do you not let it overwhelm you, Mitch? How do you pick the right investment priorities with regards to environment and sustainability? MITCH JACKSON: Well, I think two words come to mind right off the bat, and that’s materiality matters. If you’re focusing on the issues that you use each and every day in your operations, that’s a great place to start. For us, again, we started with aircraft and we moved to vehicles, and now we’re focusing on issues around renewable energy in our facilities. We’re focused on the sourcing of the paper that we have, and then even how we build our facilities. So, we’re building in our FedEx Express operations, we’re building to LEED, leadership, environment, energy and design. Those things, if you focus on what your impacts are and where you can have the major influence, which is what we do, then you can start to really get at the issue. I talk about something called practical environmentalism, and I define that as strategic and transformational environmental stewardship that adds value to the organization. It’s comprised of four different building blocks. It starts with performance. You have to be performing. It’s the foundation. Transparency, to be reporting and explaining what you’re doing and why you’re doing it and how you’re doing. Third is leadership. Figure out how to lead in the areas that you are having influence in, and take action in that respect. And then innovation. You have to be able to innovate and find new ways of doing things. I wrote a piece recently, and I said sustainability is not answering the question, “What have you done for me today?” It’s “What have you done for me for tomorrow?” And, so that innovation is a key part of that. JOHN SHEGERIAN: That is just great. One of the great things in your report and also the culture at FedEx is the people who work there, the FedEx team members, and their relationship to the environment and your sustainability and social programs. I read somewhere a great quote by you, where you said, “Sustainability is really a team sport.” Can you elaborate on that, with regards to your team member engagement and citizenship, and the evolution that you’ve fostered at FedEx? MITCH JACKSON: If you think about FedEx, we’re a service-oriented organization, so our team members are central and core to what we do each and every day. The couriers out interfacing with our customers, the pilots and the drivers who move the goods, as well as all of the support staff behind the scenes, make it an integrated approach that helps move those more than 8 million packages a day. Sustainability is no different, and if you’re actually trying to integrate sustainability into the organization, it has to be a team sport. What we tried to do with this report is we tried to show how the different work groups out there are actually helping us achieve our goals. We used case studies to show that, to be able to highlight the efforts that they were performing on. The key issue is we want team members engaging in discretionary effort that helps make the company better, better in our service that we provide our customers, better in the returns that we give to our share owners, and also the environmental benefit and environmental performance that we can give back to the communities that we operate in. Without that teamwork, without team members being a part of that, then you really don’t have an integrated program, and it’s not going to reach the full potential that it would have if you had done so. So, for us, what we’re trying to show in this report and also trying to illustrate to the team members is you’re critical to success of sustainability at FedEx. Keep doing what you’re doing. JOHN SHEGERIAN: That’s just great. A lot of big companies like yours have taken the 2020 approach, where they’ve created big goals for their company and have empowered their employees and team members to work towards those goals. Can you share a little bit about what are your goals for 2020 at FedEx, and where are you going to be focusing the next two or three years to help you get to those goals? MITCH JACKSON: I’d be glad to. It’s a good question because there’s a lot about goals as you set out in business and in the space. Back in 2008, we were the first to set goals in U.S. transportation logistics around reducing global aviation emissions and improving vehicle fuel efficiency. By the way, that actually followed our push in 2007, where we testified to the U.S. Congress, calling for fuel economy or fuel efficiency and greenhouse gas standards for commercial vehicles because they didn’t exist at the time. What we did is we set these 20 by ’20 goals, and the reason we did it is because we had to give a goal or a direction that we needed the operations groups to head, to meet. For us on both of those goals, for aircraft and for vehicles, it requires two different things. It requires asset replacement, so replacement of existing vehicles and existing aircraft, and it also requires changes in our operations, how we actually operate and perform each and every day. I think what I’ve been very pleased at is we set these goals in 2020 because they did involve asset replacement, but because of the early and rapid improvement in our operations, we are well on our way to achieving those goals and to achieving them early. JOHN SHEGERIAN: That is just great. Mike here with me is more of the aviation expert, but I read some of the facts and figures in your report with regards to the replacement of 727s with 757s and also your new use of the 777s and the fuel consumption reduction that this has brought. Can you just share with our listeners some of these wow numbers, what you’re really accomplishing? I’ll tell you what. I almost fell off my chair when I was reading it. I want you to share because I’m sure your version will even be more full of great statistics than what I was reading. I’ll tell you what. Just from this, it’s just so tremendous how much FedEx is moving the needle with regards to the environment and sustainability revolution. MITCH JACKSON: I’m glad to, but Mike, John just said you were the aviation guy. He did pretty well talking about the different models of aircraft. MIKE BRADY: Yeah, he sure did. It’s like, come on, John. Who’s zooming who here? MITCH JACKSON: So, I’ll use both of those examples. I’ll start with the 757s replacing the 727s, which are part of our domestic narrow body fleet. The replacement of that 727 with a 757 results in a 47% reduction in fuel consumption per ton carried because what we’re doing is we’re actually operating more efficiently with that 757 aircraft, and we can carry more freight as well. So, we actually get a big bump in fuel economy, but we actually have more payload capacity as well. What that really means is not only do we have a 47% reduction in fuel consumption, we have a 47% reduction in emission as well per ton carried. On the 777 freighter, the beautiful part of that aircraft is that it’s used mainly in our international operations. Because of the increase in payload and range, it results in an approximately 18% improvement in fuel economy, so therefore reduction in emissions as well. The beautiful part of that aircraft is that because of that extended range, it allows us to have a two hour later window or drop-off time in Asia in order to meet the same delivery commitments back home, so customers in Asia have now two more hours in order to drop off packages out of cities served by the 777 in order to get it back to the States or Europe or the like. I’ve talked about that being like the Holy Grail of sustainability because you’re improving your business capabilities, improving the choices for the customer, and reducing your emissions and being a better steward for the environment all at the same time. MIKE BRADY: Mitch, that’s just amazing because any time that anybody can give anyone else two hours extra in a day, that is the Holy Grail. That’s amazing. MITCH JACKSON: Right. That comes into that issue I was talking about with respect to innovation. It does get at leadership too because we were fortunate to be the first to be able to use that 777 freighter, but without that innovation by the manufacturer, you wouldn’t have that ability. So, innovation is often a critical component of a good sustainability program. JOHN SHEGERIAN: The aviation examples were just tremendous, and thank you for sharing those, Mitch. Can you share a couple other business benefits that FedEx has experienced with regards to the deeper integration of your CSR program into the company? MITCH JACKSON: Sure. I’ll use the vehicles. We talked about the vehicles just a couple minutes ago. On the vehicles, we really kind of follow what we call a reduce, replace, and revolutionize strategy. What that really comes down to simplistically is that through routing efficiencies, making more stops per mile to deliver packages, we’re able to use less vehicles for the volume that we have, so we reduce the number of vehicles that we have to use. The second piece is to replace, and that is actually to use the right vehicle for the right application or route. So, dense urban delivery areas would have larger vehicles with more cargo capacity, but therefore would have lower fuel economy, but they’re not really driving that many miles. Rural routes, which have more miles driven and less packages delivered, use the most fuel efficient vehicles that we can put into operation to meet the needs there. The revolutionize piece is to find new technologies that can bridge the gap between both of those urban and rural routes. For instance, we started working in 2000 with Environmental Defense Fund to bring hybrid electric vehicles to the marketplace because they didn’t exist in the commercial vehicle sector. That’s been a work in progress. We’ve now been working with respect to bringing full electrics into the delivery fleet. Hybrid electrics can work in some of that medium-range distance area. The electric vehicles tend to work very well in the urban environments, and so those efforts have been part of our leadership and innovation aspects of what we do. Our Chairman and founder, Fred Smith, has co-chaired an organization called the Energy Security Leadership Council, that has pushed for electrification of transportation. He’s also a member of a sister organization called the Electrification Coalition. As I’ve said earlier, we were also the first company to actually call for commercial vehicle standards around fuel economy and greenhouse gases because we realized that that approach would help drive the technical innovation and integration of these new technologies in the vehicle fleets. JOHN SHEGERIAN: Wow. Your Chairman and CEO’s great work outside of the company has even come back and benefitted the company with regards to energy policy. MITCH JACKSON: Absolutely. Not only benefitted the company, but is helping to benefit the country. JOHN SHEGERIAN: That is great. That is just amazing. Mitch, there are so many things to talk about. For our listeners who just joined us, we’re so honored today to have Mitch Jackson on, the Vice President of Environmental Affairs and Sustainability at the great company FedEx. If you have your laptop or your iPad open right now, go to their website, www.environment.fedex.com. Mike and I are on the website right now. It’s beautiful. I see here the EarthSmart program. Talk a little bit about EarthSmart. I know you launched it a couple years ago. What does that really mean, and where do you want to go with that? MITCH JACKSON: I’d be glad to. EarthSmart was our program that was intended to engage our team members in innovating and creating new services or products for the marketplace with sustainability in mind, to engage our team members to operate more responsibly in the workplace itself, and then it was also to be part of our volunteerism and philanthropic efforts around environmental sustainability. So, it’s really comprised of three programs, our EarthSmart Solutions program, which is about looking for new ways to do things. Our electric vehicles, our hybrid electric vehicles, fit into that category. The EarthSmart At Work was about operating more efficiently, recycling, focusing on energy reductions, etc. in the workplace. And then EarthSmart Outreach was that volunteerism and philanthropic area. In that, we’ve been working in several different areas. Probably one of the biggest examples of how that work has come to fruition is we’ve been working with the World Resources Institute’s Embark program. That’s their Center for Sustainable Transport. They and FedEx have been working in Mexico to try to provide some learning around how we move packages to some of the municipal bus systems in the large megacities in Mexico because the idea is if we can provide any learning or education for how we’re moving packages, maybe it will benefit them in moving people, where you’ve got millions and millions of people in the city each and every day. We feel that that actually benefits in several areas, including safety, congestion, environmental issues, and also in competitiveness for those cities to be able to compete in the global marketplace. JOHN SHEGERIAN: Got it. Mitch, we’re down to the last two or three minutes, and I want you to talk a little bit about the CSR reporting. You have a couple years behind you in this, but you have a huge future in front of you. What does the evolution look like the last three years, and where are you going with this in the years ahead? MITCH JACKSON: I think when you first start your reporting, you’re actually just trying to capture data. You’re really looking to put the systems in place to capture data, and that will continue as you add more metrics to the mix. But I think what we’re trying to do now is we’re trying to use that data for these metrics that matter and are material to the company, and we’re trying to use it in a feedback loop, if you will, to basically help us do better in managing those initiatives that we have underway, to do it in an even better manner. So we’re doing well, but there’s always room for improvement, and I think that that’s where we’ll continue to focus. What can we learn from how we’re doing so that we can do it better as we go forward? JOHN SHEGERIAN: A couple last parting thoughts. You’ve done so much so far. When we talk to great leaders like you who are at the apex of huge organizations, we always come away with a message that it’s a process. It’s never over, and it’s an ongoing process. What today are you most proud of at FedEx, of accomplishments you and your team have done already? MITCH JACKSON: I think that I’m most proud of the fact that we’ve been able to engage our team members, to have them understand the value that this brings to the company and to our customers and our share owners, and that they’re actually the ones that are out helping to bring this to fruition, to do this. We’re helping, but they’re the ones that are actually accomplishing this. I think the second thing I could say is we’re not following what I refer to as pinball leadership. What that is is we’re trying not to simply react to what others say is important. We’re actually trying to work on what we know to be important in the company, and to focus on those issues, so that we’re actually making a difference and actually helping to change what’s possible for all of our stakeholders. JOHN SHEGERIAN: That is so well-put. Mitch, I just want to say again Mike and I are so thankful for your time today. We know how busy you are. You are always a welcome guest to come back on the show and talk about the tremendous sustainability evolution at FedEx that you guys are doing, and how you’re moving the needle in such a big way, in such an important way. For our listeners out there again, to see what Mitch and his colleagues are doing at FedEx, please go to www.environment.fedex.com. Mitch Jackson, you are an inspirational sustainability leader and truly living proof that green is good.