UP Issues 2022 ESG Report

Union Pacific (UP) on May 11 released the 2022 Building America Report, an update on its Environment, Sustainability and Governance (ESG) initiatives.

The 43-page report (download below) covers health, safety and well-being; business ethics and conduct; cybersecurity; risk management; human and labor rights; employment practices and development; diversity, equity and inclusion; emissions and energy use; climate change; waste management and recycling; responsible sourcing; socio-economic impact; infrastructure investment and protection; stakeholder engagement; community engagement; and land rights and management.

Following are highlights of the 2022 report:

• Total derailments in 2022 declined by 21% compared with 2019, and in the last 10 years track-caused derailments have seen a 55% reduction, according to UP. Additionally, as of Jan. 10, 2023, the railroad’s team of 1,183 people from Rail South, Tie South, Southern Region Track Construction and Southern Region Work Equipment worked more than 2.4 million employee-hours, or 417 days reportable injury-free.

• UP reported that it works on physical and cybersecurity initiatives with government agencies, including the U.S. Department of Transportation (DOT); the Department of Homeland Security (DHS), the Cybersecurity & Infrastructure Security Agency (CISA) and Transportation Security Administration (TSA); and local police departments, fire departments, and other first responders. “In connection with new guidance from the TSA, effective January 1, 2022, we were required to report cyber incidents to CISA, perform a cyber vulnerability self-assessment and submit results to the TSA by March 31, 2022, assemble and adopt a cyber incident response plan by June 29, 2022, and appoint cybersecurity coordinators,” the railroad said. “We have fully met the requirements of the first directive and have submitted our cybersecurity plan for approval by TSA. We anticipate a few rounds of refinement over the next few months.”

• UP in 2020 set aggressive diversity goals to increase its people of color population from 29.4% to 40% and to double it female population to 11% by 2030. “We made steady progress in 2022 to increase our people of color representation by 1.5 percentage points,” the railroad reported. “Progress toward our female representation goal remains more challenging—we gained 0.2 percentage points, driven primarily by increased hiring along with improved retention.”

• In 2021, UP set its science-based target to reduce absolute Scope 1 and 2 greenhouse gas (GHG) emissions and GHG emissions on a well-to-wheel basis from locomotive operations 26% by 2030 from a 2018 base year. “In 2022, we formally committed with the Science Based Target Initiative (SBTi) to revise our near-term emissions reduction target to support a 1.5ºC climate ambition, as well as set and validate a net-zero emissions target,” UP said.

• UP said that for more than 20 years it has identified repairable parts from its locomotive, freight car, and maintenance of way equipment, and worked with suppliers to repair the parts and return them to service via its repair shops. In 2022, it repaired more than 132,800 individual parts on more than 1,500 unique components, avoiding more than $400 million in purchasing costs for new parts and helping suppliers to avoid the use of more than 22,500 tons of new steel.

• UP in 2022 purchased approximately $813 million in goods and services from 363 diverse suppliers in 37 states. Its spending with diverse suppliers grew 56% from 2021 to 2022, and has more than tripled since 2017, from $239 million. “We are working to increase our year-over-year spend on diverse suppliers by 5% to $850 million by the end of 2023,” UP said. Of the $813 million spent in 2022, nearly $589 million (72%) was with women-owned businesses and $42 million (5.2%) with Native American suppliers. Spend with African American suppliers increased more than four times to $85 million, thanks to Hightowers Petroleum, a Black-owned business based in Ohio that was awarded the management of our vehicle fleet fuel purchasing card program, according to UP. UP said it began capturing in 2022 its Disability Owned Business Enterprises (DOBEs) annual spend, which accounted for $1.6 million. “All our strategic suppliers reported purchasing goods and services from diverse suppliers, demonstrating their support for our diversity initiative,” UP said.

• UP said in 2022 it accelerated its recruitment efforts and exceeded its goal of hiring nearly 4,000 employees “despite post-pandemic labor market challenges.”

• UP invested $1.9 billion in infrastructure: installing 3.7 million new ties, and replacing, resurfacing or expanding more than 20,000 track miles.

• UP’s DigiCrew app moves TEY crew reporting from a paper-based, end-of-shift process to a digital, real-time process, it said. Employees use a mobile device for real-time information and reporting. According to the railroad, DigiCrew is deployed across 7,300 devices across seven service units; nearly 14,000 devices have been assembled and distributed through 2022.

• UP said it “leverages our cutting-edge microservices architecture to deliver APIs (application programming interface) for seamless customer and supply chain integration. Our daily API volume of 5.4 billion calls (tasks performed) has increased by 233% in the last 2 years and will grow even more as we connect with more customers and partners across our ecosystem.”

•UP reported taking two “major actions” in 2022 to demonstrate the importance of protecting biodiversity: First, it published a Biodiversity Statement “outlining our commitment to preserve the land our operations touch,” and second, it partnered with The Nature Conservancy to support three separate nature-based solutions projects based in Nebraska, California and Texas. Project goals include grassland and wetland restoration, groundwater recharge, threatened species habitat conservation, and community education.

• UP’s $24.1 million in community investment reached 2,500 nonprofit organizations in 2022, which it said helped to “build and enhance community spaces, develop the workforce, bolster safety and advance the health of our environment.”

“The Building America Report tracks our progress across our most important sustainability categories, and we are proud of our achievements,” said Beth Whited, Executive Vice President-Sustainability and Strategy, and Chief Human Resources Officer. “At Union Pacific, sustainability is integrated into our company processes, goals and culture, and the actions we are taking now will help build a more sustainable world for our workforce, customers and communities.”

In a related development, UP on March 7 published the second edition of its “We Are One” report, announcing the receipt of “third-party validation of pay equity for women and people of color, and that its board of directors is now majority-diverse.”