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FedEx Details Its $2 Billion Carbon Neutral Operations Plan

This spring, FedEx Corp. announced an ambitious goal to achieve carbon–neutral operations globally by 2040.  

We welcome Dermot Murray, Sustainability Manager at FedEx, to tell us more about the plan and what business opportunities is might create. To help reach this goal, FedEx is designating more than $2 billion of initial investment in three key areas: vehicle electrification, sustainable energy and carbon sequestration. 

With 20-plus years of multi-disciplinary management experience, including sustainability program management, product development (marketing), financial systems analysis and IT networking technical support, Dermot is responsible for implementing strategic long-range planning and reporting on the progress and effectiveness of FedEx’s CSR/sustainability strategy to senior management and external stakeholders.







Good afternoon, everyone. Happy Thursday, right before a long Memorial Day weekend, I am pretty thrilled about today's interactive conversations. We have special guests from FedEx, and we're going to talk about their targets for carbon neutral operations. So we're pretty excited because bold, they've been working on it for a long time. And before we get started, I want to bring them to the forefront a couple of things. First of all, Jonathan Kersting, is with us each and every day. And he's he is the storyteller, and the Vice President of Marketing of all things around tech. And he is going to be monitoring chat and making sure that we can facilitate some engagement to time allow us. And thanks to Huntington bank for believing in us and joining, you know, the experiments that we run over the over time, particularly over these last 1617 months, they've been with us, you know, through the whole journey, making sure that we try to keep the community tethered, and that relevant topics stay at the forefront of each and every one of us as we work in terms of tech and innovation. So thank you Huntington bank 40 by 80 is longitude and latitude Pittsburgh, and it is a wholly owned subsidiary of the Pittsburgh tech Council. And that's where we work on all things entrepreneurship, and pathways to new opportunities. And you'll hear more about that in a few weeks. So we've muted your microphones. And as I mentioned earlier, I would love to have a chat and have discussion. So we're excited about offering the opportunity, and it's also being recorded. So we are very excited to be hosting several of our friends. FedEx has been friends of the tech Council for a long time. Before I introduce Dermot Murray, who's sustainability manager at FedEx and Lani Madison, who is the manager of sustainability at FedEx Ground. I just want to bring to the forefront, Ken Spangler, he serves on the council's board of directors. He's been active, he's a pittsburgher. But even though he has a global job, he has deep roots and passion for all things. Pittsburgh, and he spent a lot of his career here on the ground. But he's now Chief Information Officer for FedEx. So Ken, before I introduce these two, gentlemen, how are you?

Well, Audrey, and this is awesome. It's awesome. You are hosting these. And so thanks for having us.

Absolutely. So anything you want to say, just to set the stage before I bring up Lonnie, and Dermot?

Well, you know, I just I just mentioned that. You know, this is something that's been important to FedEx for a long time. It's not just something that's recent, you know, our, our chairman is still our founder, Fred Smith. And, you know, obviously, he's one of the great innovators and, and a brilliant man. But this has been important for decades. And this is just taking it to the next level. It's been a continuous progression. So I'm excited. And I appreciate Derman Lonnie being here today, because the key thing I would mention is, you know, this isn't just assignments for them. This is jobs. These are this is how important it is for FedEx. They do this for a living. And so we're really glad to have them here today. And thanks for having us.

Thank you can stay safe, we hope to see you soon in real time. So, Dermot and Lonnie, I mentioned, your jobs and the roles that you have. And we have a lot of content to try to pack in today. So I'd like to start by having you both briefly. just introduce yourself and just talk a little bit about your background. You know what you do be as as you know, take it wherever you want. And just give us a quick overview of your responsibility. So I'll start with Dermot. Thank you German just let everyone know he's sustainability manager at FedEx.

Yes. Good afternoon, everyone. So as the old you said, my name is Dermot Murray and I've been with FedEx coming on almost a decade now. It'll be it'll be a decade this November. And as you mentioned, I'm a sustainability manager with FedEx Corporation. And in that particular role, I'm responsible for implementing our strategic Long Range Planning and reporting on the progress and effectiveness of FedEx as sustainability strategy to our senior leadership, as well as to external stakeholders. So I oversee our annual ESG or environmental social governance reporting process. And I also I also manage our engagement x activities with a variety of different external ESG stakeholders such as, you know, ESG, rating agencies, institutional investors, etc. And I also co chair an internal sourcing sustainability impact team that we have a FedEx to, to drive sustainability throughout our own supply chains as well. And in addition to that, I also, I also sort of oversee our periodic ESG materiality assessment processes to make sure that you know that we're you know, that we're prioritizing the key ESG related topics and issues for FedEx as a business. So with that, I'll

hand it back. That's great. That's a lot. And that's great. Thank you and Lonnie. And like I mentioned, Lonnie, he is the manager of sustainability at FedEx Ground. And he's based in Pittsburgh. So Lonnie, tell us a little bit about what you do, and your journey. Hey, Sam,

how do you really appreciate the time today, I thanks for the invitation and for hosting us as well, during during this event, I like I said, my my position, I'm the manager of sustainability at FedEx Ground, you know, really manage the, the all aspects of sustainability might have a small team that manages pretty much all aspects of sustainability within FedEx, brown runs the gamut of you know, renewable energy projects, energy efficiency, alternative fuel vehicles, waste and recycling and sustainability, engagement. I mean, everything. And, you know, such an important topic like this, you know, we were definitely dedicated to making sure that we now with the new announcement of 2040 goals that, you know, we're following through with that. And we have strategies in place to, to continue to pursue it. You know, I also part of the I lead it team and sustainability impact team, for our facilities, initiatives within Express Brown, pretty much all the outflows within our enterprise. And we're focused on a lot of these a lot of these initiatives as well. And, you know, and now with, with my small team, you know, we're definitely dedicated to making sure that we have strategies in place to continue moving forward.

Well, you know, as Ken said earlier that, you know, FedEx has been committed to this for a very long time, in early March, FedEx made a historic pledge low to achieve carbon neutral operations on a global basis by 2040. That's not that far away. So we get excited about this here at the Council. But, you know, not only the benefits that it can bring to the planet, but also because of the complexity of the challenges that FedEx will face, you know, sort of along the way, and the many breakthrough technologies that you can help bring to the market. Do you want to either of you want to talk about that? Dermot? Yeah.

Yeah, I'll I'll give that sort of, you know, to to use a transportation industry metaphor, I'll give the 50,000 foot view. And then Lani can certainly get into a more specific, that's great. How that how that how that's going to get implemented at FedEx, especially, it's through the FedEx Ground operating company. Yeah. So as Ken mentioned, at the beginning, you know, our roots and sustainability run deep. And, you know, we know that the future of our business, you know, is tied to the future of our planet. And, and that's why we, you know, we innovate every day, you know, in order to connect the world responsibly and resourcefully? You know? So, you're right back in March of this year, we announced the goal to achieve carbon neutrality for our global operations by 2040. And, you know, that basically covers you know, three what, you know, three scopes if you like, and other missions, we for those of you are familiar with the the the jargon of our industry, so, you know, scope one scope, one emissions refer to the direct emissions that are generated by by virtue of a company like FedEx, you know, basically, you know, burning fossil fuels, right. So, that's obviously the the emissions generated by our company owned aircraft, vehicles, as well as our, you know, any sort of, you know, fossil fuels because it consumed at our facility, so, you know, natural gas, etc. The second scope, the scope, so scope to basically includes all of our purchased electricity that we use to empower those facilities, right to find our 5000 plus operating facilities around the world. And then the third piece of it is scope three emissions, which is sort of that, you know, it kind of sometimes referred to as value chain emission, so emissions that are generated by other entities, you know, that that support the business, in this particular case, it includes the contract of transportation, emissions, so those would be emissions, for instance, that are generated by contract or vehicles at FedEx Ground and other operating companies. So those are the three sort of scopes, if you like, that are covered, that will be covered by that 2040 goal. You know, so as a company with more than 200,000 motorized vehicles, 680 aircraft, and as I mentioned, more than 5000 operating facilities around the world, you know, transforming, you know, our operations to carbon neutral by 2040 is going to have a it's going to be a significant endeavor that's going to have a far reaching impact, you know, on the planet. And, you know, we've we've created essentially over roadmap to help us really, you know, achieve those achieve that goal, you know, that includes sort of high tech, low carbon, and zero emission technology upgrades, as well as new carbon and new climate friendly solutions for our customers, and industry wide research and innovation to really help move our entire our entire sector towards a more sustainable carbon neutral funding. And, you know, we, as part of the announcement that we made in March, we said that we were going to, we're committing $2 billion of investment to support initiatives designed to make, you know, to make our company operations more sustainable across the across those different areas I just mentioned, you know, you know, motorized vehicle aircraft and facilities, and, you know, so they use initiative, this, these investments will be kind of focused across three key areas. So, you know, the first is really as vehicle electrification, which again, is is part of the goal that we announced that we will be committing to having, our plan will be to have 100% pickup and delivery vehicles will be electric, fully electric by 2040. So, you know, obviously, a big investment will be made, it will be required in order to transition our fleet over to fully our pickup and delivery for fleet over to falling electric by that period. The second part is, is sustainable energy investments. So, you know, so obviously, it's, it's, you know, it's one thing to have fully electric, pickup and delivery fleet vehicle fleets, but you also need to make sure that the energy used to charge those vehicles will be fully zero emission as well. And not to mention, of course, the other energy that's required within our facilities, just to operate hubs and sorting facilities, etc. So that's going to be the second second part. And then the last part is carbon sequestration. And, you know, all of these three components together will help will help us to reach our carbon neutral 2040 goals.

You know, so I'm reason why I bring up carbon sequestration is so unlike the other transportation modes that we operate, right, it's, that can be powered by electric vehicle technologies, batteries, you know, hydrogen, other types of clean technologies, you know, achieving true sustainability within aviation has really proven to be a major obstacle. And that's why, you know, because there really isn't a clear path forward, if you like, for aviation around to achieve zero emissions, right. So that's why we pledged that 100 million dollars to Yale University to establish the Yale Center for carbon for natural carbon capture, which will accelerate research and into methods of carbon sequestration, both natural and industrial, carbon sequestration, at scale, and actually, the focus for that investment, and that is that that center will be to offset greenhouse gas emissions equivalent to the entire the entire footprint of the aviation aviation sector. So it's not just our piece of it, it's all on its own aviation that will ultimately benefit from from this investment.

Just from my, from my view, Dermot, that that's probably the toughest. That's the toughest piece right now, of achieving achieving any of this, if I could just, if I could just jump to Wani really quickly. What about innovation and technology? Anything that you want to add to that, in terms of, you know, how to achieve this and what some strategies might be? Because you can't I'm sure that you, you know, you have a great team in house, but there are a lot of people who are working on lots of solutions. Can you talk to that morning?

Yeah, yeah, no, absolutely. And I think derma is correct, as we move forward, you know, here, especially, you know, especially with with ground FedEx Ground, focused on, you know, so significant focus on Eb charging, you know, and providing the infrastructure that will make that possible within our facilities, because we don't own or operate, you know, our, the the vehicles, you know, those are owned and operated by service providers. We need, we do need to be able to provide charging infrastructure and making a, you know, make our facilities capable of charging those vehicles as they operate within our within our facilities. So, you know, there's a lot a large investment that we're making, to, to put it on Eb charging infrastructure, those locations, make sure that they have access to it. But as well as trying to implement software within our facilities that will, that will manage the power demand that these vehicles are going to require. Because moving forward, you know, we're not only going to have to think about power in our facilities to sort those sorts of packages, but also how we're going to power these vehicles. And as well as thinking about contingencies for you know, when there is power outages are rolling out, just like we see in California, how are we going to how are we going to make sure that these vehicles get Charge, and we're looking at, you know, possibilities of, you know, and implementing micro grid technology and some of our locations, to make sure that we have that resiliency within our facilities to to continue to, to provide power for, for the vehicles, and that way they can operate the next day, as well as looking at we know how to manage that power within the within the facility. So we don't have to, you know, put additional services when a utility service within our building when it's not really needed. So there's just a lot of, you know, technology and a lot of innovation, that, that that's leading us in this direction, this direction, and then just a lot of unknowns, because at this point, you the AV technology for delivery vehicles is very early on in the process. And as we move forward, I think we're being you know, we're taking steps that are that are very forward looking, as far as when when we see facilities that are 100%, Evie, and operating that many vehicles out of out of these locations that are strictly, you know, electric. So there's a lot of things to consider, right? As well as what Derman mentioned, you know, the power that we're providing to those buildings, is it clean? Is it renewable? Right. And that's, you know, that goes in parallel with our strategy to make sure that we're implementing not only the infrastructure, charge the vehicles, but also to make sure that the power that we're providing is clean as well. Right.

So all of that's critical to your success, and particularly, on the ground level. So what about sustainable fuels, so we can move to electricity. You know, with most of the fleet, as we just talked about, there are a couple of areas that face some challenges, we just talked about that in terms of aircraft, you know, in long haul tractor trailers, they struggle with weight and cargo restrictions associated with very heavy batteries that also take up a lot of space. So it's not just the heaviness of it, in those cases would be great to have carbon friendly, liquid, you know, fuels to play into your plan. What is the state of that? How, how do you interface with that piece of the strategy? Yeah, if I could, you know,

like a step, perhaps, with the, you know, in terms of the sustainable aviation fuels, and we actually have had a long standing goal at FedEx, which actually, our Chairman, Mr. Smith himself, you know, set and announced back in, I think it was 2008. But, you know, we've had a long standing goal to, to have basically, by by 2030, that 30% of our aviation fuel will be sourced from alternative sources with our preferences for towards sustainable sources. And, you know, so we've been working towards that goal. For the last number of years, we've got a special team within our FedEx Express, air Operations Division that's just been solely focused on on how we can, you know, in working with different partners in the in the, in the, in the supply chain, and the sustainable fuels supply chain to come up with a strategy if you like, towards, towards meeting that goal. And, you know, a few years ago, we announced a, we announced a deal with Red Rock biofuels, which is a sustainable fuels startup based in Colorado, but they've, they're in the process of completing a bio refinery for free jet fuel in Eastern Oregon, which is basically take the, the, you know, if you like the byproduct of the of the the lumber industry out there to convert, you know, convert that sort of waste product, if you like, into sustainable jet fuel, so, so that that deal has been, has been in the works for a while, and, you know, we'll we'll, we're, we, you know, because of COVID, there was some delays and getting the the expected first delivery of that field, which was supposed to happen this year, but last year, but it will now looking at, I think, sometime, hopefully next year, by the time we get that in place, but that's, you know, it has been a challenge, obviously, because, you know, to really scale up the, you know, the procurement of the supply of sustainable jet fuels, you know, given everything that's been going on with low oil prices, and of course, now with with more recently, with, with the pandemic, etc, it's been definitely been a challenge to to be able to, you know, to obtain that type of fuel at a cost competitive level, you know, and we will continue, we will continue investing in those types of opportunities and exploring those types of opportunities to to meet, you know, to hopefully, you know, to towards that goal of 30% by 2030. But I think, as I mentioned earlier, you know, I think we've been We've also come to the realization that, you know, SAF alone will not get us there, you know, we will also continue investing in more fuel efficient aircraft. So for instance, we've, you know, through our aircraft fleet modernization program, we actually recently acquired our 100th, Boeing 767 aircraft, which is a 30% more efficient model than the MT 10 aircraft that it's going to replace. And we've, you know, we're very close to basically completing that particular that sort of replacement cycle. And, you know, since 2014, for instance, the the introduction of the 767 into our fleet to save more than 500 million gallons of fuel. So, you know, we continue to invest in these types of technologies, you know, more fuel efficient techniques, aircraft, as well as our fuels conservation program, which is called fuel sense. And actually, since 2007, our aircraft emissions intensity has actually been reduced by 27% as of fyh, of fiscal year 20. So we're, you know, we will continue to make those investments to, to make that up. So putting aside that part of the operations more efficient. But again, you know, it, I think, ultimately we are, that's why we are making that 100 million dollar investment in Yale, because we do know that we're going to have to, we're going to have to be looking at offsets, you know, in the future in order to be able to achieve that 2040 objective. And, yeah, so,

yeah, I appreciate your candor on that, before we get to two questions that we have out there a few questions. I want to go back to Lonnie for one moment, and then Jonathan, you can bring up these questions. Let, can we talk about packaging a little bit? Are you able to talk a little bit about where innovation is occurring in reducing waste from packaging? Or how that fits into your strategy?

Yeah, I mean, we are looking at obviously, you know, a lot of a lot of areas within packaging for for for FedEx Ground, I mean, we have a robust recycling program in place at our facilities. I mean, obviously, we don't, we don't manufacture anything but we shipment there is the there is a lot of externalities associated with, you know, with with the shipping material. But yeah, we've we've had for for going on close to nine to 10 years now a robust recycling program for cardboard, plastic, as well, as well as pallets, which is a significant amount at FedEx Ground. And moving forward, we're also looking at, you know, trying to minimize as much of that as possible, we do have a program in place for our uniform recycling. Because these are, because the type of material that we use, and our uniforms, it's a certain building, you know, cannot be easily recyclable. we've, we've, we've partnered with, with vendors that are able to provide services to recycle those uniforms. And we're able to replicate that throughout our network throughout the enterprise as well. And reusing that material that not only, you know, you know, repurpose is the material, the uniform, but also provides a level of security for us to make sure that, you know, our, our logoed uniforms are not being used for other purposes. So, you know, we're able to, you know, recycle that material, and we use it for, you know, insulation for for facilities or possibly, you know, packing materials as well. So, yeah, there's just a lot of advantages there.

Yeah. So that's great. So Jonathan, thank you for that morning. I know. I know, we're trying to pack a lot in and there's so much I'm not trying to simplify your efforts at all. Jonathan, can you bring up a couple of these questions, please? Absolutely.

I have one in the private chat from Griffin Schultz that we'll get to. It's a really good one. We'll start with Sam Brower wants to know, is FedEx looking at alternative aircraft designed to use electrification of aircraft? For short haul routes? That's kind of interesting. German? Yeah.

Yeah, I'm not sure we have. We can say much on that front. It's obviously very, that's very sort of cutting edge type of technology that's currently being developed. You know, and I think, you know, there's obviously a lot of, you know, there's a lot of uncertainty about how that type of technology will ultimately evolve. So, you know, it's not the saucer we didn't, we didn't include that as part of our, our 2040 Gold announcement because it's gonna sit very, very far out. So at this stage, I don't think we can say much on that front, but it's a great question.

Excellent. So here's a question from Griffin Schultz wants to know, he says there's a lot of tech innovation in Pittsburgh that directly or indirectly support sustainability initiatives was no further Dermot, Lonnie, or anyone you know, FedEx, with any local or you work with any local Pittsburgh tech companies on sustainability issues. If not, how can a company get in touch with FedEx? If they think they have a solution that could be helpful with their sustainability efforts?

He um, yeah, I'm not familiar with any, any local companies that we're currently working with. But I obviously we have some some some partners, you know, that have, you know, national coverage as well as international coverage? So none that I can mention on this call. But yeah,

that's fine. And really, where that question emanates from, is part of the work that we do. You're working in lots of innovators, people, building companies, and ideas that they think will be able to help solve some of your problems. So that's really what the ask, it's about, are there ways to get connected?

Yeah, and we are a part of this sustainable Pittsburgh initiative as well. So I mean, we participate in so it was just terrible Pittsburgh challenges. So you know, we're part of that community as well. Okay. Great.

So question here from Marc Emery. Are you looking at any nanotechnologies to improve the efficiency of your trucks and planes? Either anything? Yeah, not that I'm aware of. But

again, I'm the I'm the fifth, back to my area calm. I'm the 50,000 foot view, guys. So that's fine. With me that could well be going on within our within our vehicle operations. At the very south coast, for sure.

Let's keep them going. So Cindy, and Curtis would like to know, where does the technology stand where things are getting to be delivered by drones? Or is this not scale?

Well, we've actually, we actually been under undertaking a pilot with with wing aviation, which is a subsidiary of alphabet. Basically piloting the sort of drone deliveries, I believe, somewhere in Virginia is where they're, they're, they're carrying out those trials. So I'm not exactly sure where that sort of netting out. But what I will say is, you know, one of the one of the big sort of bets that FedEx is making is on are within in the area of, you know, autonomous technologies, of course, is our roxo. Same Day bot, which is a, you know, fully sort of automated and zero emission solution for for last mile delivery, and, you know, hopefully coming coming soon to a to a street near you. But you know, that that's an initiative that kind of started a couple of years ago, it's a partnership with Decca labs, which is the, the developer of the Segway. product. Yeah. So, you know, I'd say, I think we're, I think we're now into the second or third generation, maybe the second generation of the of the rock. So Bob, so there's been a lot of development going on testing and prototyping, etc. And I believe we'll, you know, I think we're getting very close to when that particular product will be, you know, sort of market ready, and it will be a solution that we'll be delivering, you know, we'll be doing last mile delivery solutions within within, hopefully the not too distant future. So So what's the space? Very cool.

Okay. So as we wrap up, let me ask both of you, gentlemen, are either of you hiring? Absolutely. What does that mean, we're what kinds of jobs are you looking for? To fill?

You know, I mean, I, I won't speak for everybody. But you know, I think that, you know, we were all and we're all, we're a growing company. And as you know, as we continue to grow, you know, we're going to need people to staff positions, and definitely within, you know, with sustainability, I know, there's a lot of roles, but then, you know, not directly with, you know, necessarily my group, but, but that support the sustainability effort moving forward. So, yeah, I definitely would say that, you know, there's plenty of positions out there and play and people that, that we would be looking to fill those positions.

Yeah, if I could add, I mean, obviously, in addition to just pure play sort of sustainability type opportunities, you know, the fact that we've got this sort of very ambitious, you know, strategic goal out there now, and that we're going to be as a company pulling together to, for to achieve that goal that there will be, there'll be a lot of sort of opportunities that have a sustainability impact, if you like, throughout throughout the business and various different aspects of operations and marketing and communications and, and etc. So yeah, somebody posted a link to our career site on the chat window there. So definitely keep keep an eye out on that. And then there's, well, anytime there's a new opportunity that's related to this. It'll be it'll be posted there. So

well, I can't thank you both enough. I know that your worlds are hectic. You're taking on really big hairy stuff. And I know that we are going to be very proud of the work that you're all doing. And we'll stay connected. I want to thank FedEx for being so transparent and bold in terms of their commitment for however long they've been doing it maybe from the onset, but I can tell you, they've really stepped up. And, you know, these are the issues that matter to each and every one of us. So I want to thank you, German for joining us. Thank you, Lonnie. Really appreciate your time. Thank you, Ken Spangler. cIose on our board who made a little Cameo appearance early on. And, Jonathan, what's ahead, what's the scoop? ahead, lots

of scoop going on here. So we'll see everybody back here again on Tuesday. As we welcome federated investors. We also have a couple of announcements we'll be making about future business as usual, and some new guests that are gonna be pretty exciting. We're very pumped.

That's great. So thank you, everyone. Thanks, again, Dermot. Thank you, Lonnie. Everyone. Stay safe. Have an amazing weekend.

Thank you. Thanks. Thanks for having us. Connect one shameless, shameless plug forward slash sustainability. That's where you'll find all the great information about our sustainability goals, our journey and, and other resources as well. So I encourage all the folks on the line to check that out.

Thank you, and we put the link in we'll put it next to the recording. So thanks, everyone. Stay ready. Thank you.

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