Penny Naas (MPP '93) is President, International Affairs and Sustainability, at UPS. She spoke with Economics professor Betsey Stevenson in a policy talk, Business and government: Diversity, regulation, and sustainability, about a range of issues, from supply chain issues caused by COVID-19, to investing in environmentally-sustainable technologies, trade, women's empowerment, and the value of a public policy degree in the private sector. Here are some highlights of the conversation.
At U.P.S. we have 540,000 employees around the world. We moved 2% of the global GDP every day. During COVID, we have had to navigate some incredible challenges and it is a testament to all of our employees. Our pilots, our folks on the ground who, day in and day out, have been dealing with huge surges of volume as well as very challenging operating conditions out in the world. When I think through some of the things that we have been grappling with and dealing with, I think about a lot of the agility and resilience that you need to have in your global value chains and your global supply chains today. I'm going to talk about our pilots in particular. A pilot that works for U.P.S. in order to get the PPE and some of the other equipment we needed out of China, working in the COVID pandemic conditions, has been extraordinary. But we have pilots who fly around the world, but who once they land go into closed loop systems. When they land, they are picked up by somebody wearing full PPE who takes them to a hotel. They are not allowed out. They remain in that room until it is time for their flight back. There will be a couple of days. They eat all of their meals there. They are not allowed to take a walk; they are not allowed anything. That has been going on for 18 months. That is how our pilots are getting around the world. Same with the folks driving the boats. People are behind all of these logistics. And as we think about some of the challenges that are rising in the global supply chain at the moment, I think you can't take a step away from the people because it is the people who are driving this and it is the people and the conditions in which they have to work that rate at times what are becoming some of the bottlenecks challenges that are creating the bottlenecks. It is about the people and what is happening with them.
I think that as one of my senior officials said the other day, it might be good to order Christmas presents a little early this year. There are potentially some dislocations going on. Going back again to some COVID outbreaks that took place on some major ports around the world. They shut down a few ports. Those ports have come back online, but we are kind of seeing the start and stop of some of the supply chains that are out there and I think that it might be wise not to wait until the last moment this year for your Christmas gifts.
At U.P.S., we have put in place sustainability goals, some that were in effect until 2020, some until 2025. And we have just reissued our 2025 goals, and put in place some for 2035, and are committed to being carbon neutral by 2050. Put alongside those, we have put in place some principles. And some of our principles have to do with always acting with integrity, making sure we are delivering results, not just promises. And this follows on the fact that we have been doing this already for years. At U.P.S., we are all about efficiency. And so the best mile is that mile that is not driven. Because we are efficient with the processes that go into that network business. The next thing that we have been doing is trialing different technologies. Working on new and different things. So we have this thing called a rolling laboratory. We have amazing things that are going on every day. And some of them work. And some of them don't. So right now, in the United States, U.P.S. currently runs about 25% of our network on renewable natural gas. We would like to get it all to run on renewable natural gas. We are not quite there yet because of supply. We see that as an important step forward. It is a transitional technology. But it is one that is making huge impacts. And that is what we are committed to do, is continue to look at those things we can scale up and have meaningful real impacts.
We work in various ways with various governments. There are different government policies around environmental policies. In some cases there are restrictions but in some cases there are penalties. In some cases, there are incentives. So we look at and make assessments around which technologies make the most sense for us from a reliability and service perspective. We do need to serve our customers first and foremost and that is a very important thing for us. Once we test the technologies and we look at them from a service perspective, will this do the things we need it to do to stay in business? Is something that is going to be potentially something that we can work with in terms of our bottom line and in terms of our finances? But also, will it move the needle on the environment? Is this moving us in the right way? As we look at and appraise some of these things that are coming online from a climate change perspective.
How can we work on trade policy to make a trade policy work in a way that helps promote climate change and green technologies? Make sure that the right incentives are in place with regard to some of the technologies and some of the things we are looking at from a climate change perspective. The tax front, I'm going to leave it more for you because I know you are -- you have done a lot of thinking and work on some of the taxes that are out there, whether it be a carbon border tax account whether it be trade. Whether it be some of those. I think that there are incentives there. I think you also need to think about how those incentives or how does have those three genes -- how those regimes are executed some of them above and beyond the financial aspects. Some of the complicated nature of some of those regimes is something else that needs to be considered and looked at when governments are putting them into place.
One of the great things that I think governments do is collect data. And I think some of this is you need to look at the issues around this in a way that really looks at the facts and look at the data. I have seen some examples where there are locally made products that can consume more resources than something that is produced further away but is then put on a boat and brought in via trade into the country.
I think you are seeing things like the carbon border adjustment mechanism being debated and discussed in Europe. A lot of discussion around what that means from a trade perspective. Is it compliant with the gaps with the global agreement on tariffs and trade? And in particular, look at some of the specificities. It is a question that is very, very dependent on how the regimes are structured and then once they are structured, there's a question around, are they going to be effective now that they have been structured in such a way to comply with the trade rules? How are they going to be executed? How are they going to work? Are they going to work? Are they going to send the right signals inputs? I think the jury is out on some of this. But it is something that I know is important from domestic political considerations for countries who want to go further on climate but have domestic constituencies they are worried about.
A lot of what we do is we translate. Business and government don't always speak the same language and so, in our roles, we end up trying to be that translator between the two. Both sides are trying to achieve certain goals. They have missions. They have things that are top of mind. And I think sometimes you need to help each side understand what the other side is trying to accomplish. Because sometimes you might be both trying to accomplish something similar but you are saying or talking about it in different ways. And so that, I think, is something that is really important to speak to and really is something important that folks in roles like mine can do. And so that is why I think that can't you look at there is a role for public-policy majors to go into the corporate world. I also think that it is just got, you know, we at U.P.S. have a foundation. So I worked very closely with my foundation partners and while we do some amazing work in our foundation, a lot of humanitarian work we do a lot of work around women's economic empowerment. Because it is a foundation, it is really about capacity building and so what makes that empowerment work, building resilient communities.
One thing I tried to do on trade policy in particular is I focus very much on trying to help our customers, our female-owned business customers, our small and medium-sized customers. We try to help to articulate some of the issues they are facing that are impeding their ability to grow. But I think there are things that we see out there where government involvement in certain areas, with regards to women in trade, with regards to women's economic empowerment, that we have seen that some government policies develop without necessarily taking into account the perspectives or the views of all businesses.
As you know, women, some have a disproportionate responsibility at home. And so women's ability to contribute to in some of the consultations with the way that it is being done, maybe it means that women's voices are less heard or are less reflected in government policies. So one of the important things we try to do is we are trying to help put some of those voices out on the table to help make sure that the policymaking that is done at least hears from all of the perspectives and is making decisions based on all of that information. I think it is important that we all continue to try to do that in our societies. Because hearing just from a few does not always produce the best results.
We have had a lot of things on my team that I think really require, not just from me but for many, a very empathetic leadership style. We all were going through something. We were all going through it together. We had to become much more understanding about disruptions, interruptions, and what was going on. We had to, I think I have a little bit more grace and understands that we did not always know what everyone was going through and we needed to cut everybody a little bit of slack because he did not know what might really be going on in someone else's space. So I was not trying to present the perfect picture to my people nor was I presenting it to the people above me either because that was not what was going on in my mind. I was struggling with three kids trying to educate them while also trying to do a really hectic job because of what COVID was doing to our network and to all the things that we had going on. I think it was empathetic leadership that became and really was helpful to make sure that balance was somewhat maintained during that period.
At UPS, we are a very large transportation company. We have sectors that are easier to decarbonize like ground transportation and we have sectors that are more challenging like aviation. I don't think we underestimate the importance of it. So I see the work I'm doing today is the one that is the most important. And for those out there that are Michigan students, I will tell you that I did not set out to do sustainability. I just became passionate about it and I walked into my boss's office one day and said, what we are not doing enough on this. She said, okay, you are in charge. So be careful what you ask for.
When I went to Citigroup, they turned to me and they said, “You know, we are looking for someone to work in Brussels. But your name keeps coming up. Would you like to do this?” I was a single mom, I had a five-year-old. I had a boss who asked me, and did not assume because I was a single mom with a kid that I could not, and did not hold back from offering me that opportunity. He came to me and said, “I think you are the best person for this job. Can you make it work?” I went home and I made it work and I went and I have to say that from a wage perspective for me, it worked out well. That goes back to having a good boss. I did not have a boss who made assumptions. I think that is what holds certain people back, when people make assumptions rather than asking and giving you those opportunities and helping you make it work.
One of the things we need to do as shipping companies is provide transparency to our customers when they make choices. And that is something we do have. We probably need to do more of it and we need to work with the e-commerce companies around it so that when you are going and you're making your check out that you are making decisions that align with the service levels you need and that the climate impact that comes with it. We are seeing a move from having warehouses far away and a lot of transportation of goods to having maybe shorter zone movement so there are certain companies that are actually using the inventory on their floor to then ship shorter distances. That is something else that we are seeing as a trend. There are ways to help with faster same-day shipping and to help with the climate discussion. And it requires conversations amongst the broader ecosystem. But at the same time, we do need to help consumers make the right choices with regards to what their environmental goals are and what they should be. And how they want that product to be received as a result.
In Turkey we have got a very specific program after they had their earthquake several years ago. Where we did go in to try to work with them to help with building resilient economies. And going back to our work on women's economic empowerment. Some of the statistics that we have seen and some of the work we have done has said that by empowering women and helping women enterprises in particular, you are helping to build that resilience so that when there are natural disasters, when there are other disasters or crises that may arise, that those communities are more resilient when those that have more women businesses that are operating.
We were one of the 30 companies that agreed to support and to look at the hiring of Afghan refugees and made those commitments. We are going to be a part of that initiative to help out the Afghan refugee population. We have also been working with the humanitarian organizations who are primarily written in the bordering countries around Afghanistan with regards to some of the humanitarian needs that we see. It is a challenging situation.
I think climate resilience is a big question that a lot of companies as well as countries are looking at. So it is looking at your facilities. We operate an air network. Extreme weather can delay our services. That is something, as part of what we look at in terms of our sustainability planning, that we need to keep in mind and it is something that all companies are looking at in terms of their climate resilience. Based on where we are building the things today. And at the same time, I'm having to build in resilience as I'm transitioning to new types of energy and new fleets. So for example, as we move to an all electric fleet, how do I make sure that I always have electricity or how do I have backup batteries? Make sure that I can deliver my packages on a daily basis to folks even if there's a power outage. Even if there is something else going on. Agai, making sure this could not be a brittleness in our own internal supply chain but that we are building resilience and backup plans into our systems is incredibly important.
You can see the entire conversation here.