UPS’ Fossil Fuel Reliance Heightens Climate-Related Financial Risks

United Parcel Service (“UPS”) faces heightened climate-related risks due to dependence on diesel and jet fuel across its global fleet. In its 2025 10-K, the Company acknowledges that climate change poses “financial and operational risks,” including weather-related disruptions.[1] These risks are no longer hypothetical: extreme weather in 2024 caused an estimated $100 billion in global supply chain losses;[2] by 2060, analysts project that climate-driven supply chain disruptions could cost up to $24 trillion.[3] Scientists project global climate damages in the range of $19-59 trillion annually by 2050—five times the cost of limiting warming to 2°C.[4] Continued emissions from UPS’ operations risk locking in further economic losses.

For a logistics company like UPS, whose value proposition rests on operational reliability and resilient supply chains, these operational, financial, and systemic risks could threaten asset performance and increase the cost of capital.[5]

UPS Risks Falling Behind on Climate Targets Amid Misaligned Capital Spending

UPS’ emissions per package have increased since its baseline year, despite targets to cut intensity 50% by 2035 and reach carbon neutrality by 2050.[6] In 2024, only one-third of UPS’ capital expenditures supported environmental sustainability goals, while its continued investment in natural gas vehicles risks locking in higher emissions and lifecycle costs for decades.[7] These trends indicate a misalignment between UPS’ capital allocation and its stated climate commitments.

UPS Lags Competitors

Peers such as DHL and FedEx demonstrate stronger governance and execution of climate strategy.[8] Both have committed to value chain emission reduction targets through the Science Based Targets initiative, conduct scenario analyses, apply a double materiality approach, and link executive pay to sustainability outcomes. They also define clear vehicle electrification milestones that align capital allocation with emissions reductions and long-term competitiveness. UPS lags peers across each of these dimensions.

Investors seek greater visibility into how UPS is integrating climate-related risks and opportunities into its financial and strategic decision-making. A comprehensive climate transition plan aligned with investor expectations and frameworks such as the TCFD and CA100+ would provide that transparency. Developing and disclosing such a plan would strengthen UPS’ credibility with investors while positioning the Company to capture efficiency gains, policy incentives, and market share in a rapidly transforming logistics sector.

[1] https://www.sec.gov/ix?doc=/Archives/edgar/data/1090727/000109072725000019/ups-20241231.htm, p.12

[2] https://www.freightwaves.com/news/weathers-wrath-supply-chains-reel-from-2024s-extreme-events

[3] https://www.sciencedaily.com/releases/2024/03/240313135634.htm

[4] Historical emissions already commit the global economy to approximately 17% Gross Domestic Product (GDP) reduction by 2050. https://www.pik-potsdam.de/en/news/latest-news/38-trillion-dollars-in-damages-each-year-world-economy-already-committed-to-income-reduction-of-19-due-to-climate-change, as revised by https://www.pik-potsdam.de/en/news/latest-news/nature-study-on-economic-damages-from-climate-change-revised

[5] https://www.unepfi.org/wordpress/wp-content/uploads/2024/05/Climate-Risks-in-the-Transportation-Sector-1.pdf

[6] https://about.ups.com/content/dam/upsstories/images/our-impact/reporting/2024-UPS-GRI-Report.pdf, p.27, 29

[7] https://www.sec.gov/ix?doc=/Archives/edgar/data/1090727/000109072725000019/ups-20241231.htm, p.49

[8] https://group.dhl.com/content/dam/deutschepostdhl/en/media-center/investors/documents/annual-reports/DHL-Group-2024-Annual-Report.pdf, p.73, 74; https://www.fedex.com/content/dam/fedex/us-united-states/sustainability/gcrs/FedEx_2025_CR_Report.pdf, p.19, 22;