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Union Pacific's mission of service defines us and drives our commitment to safely transport products across the country, provide good jobs, operate ethically and invest in our country by investing in our communities.
Union Pacific's mission of service defines us and drives our commitment to safely transport products across the country, provide good jobs, operate ethically and invest in our country by investing in our communities.
This report details our progress in key areas that together support social, economic and environmental sustainability pillars: operating safely, strengthening communities, engaging employees and working to preserve the environment. We also summarize our 2015 financial performance.
We used the Global Reporting Initiative's G4 Guidelines to inform reporting on our most material social responsibility issues. This publication focuses on initiatives and accomplishments from the 2015 calendar year and includes 2015 data, unless otherwise noted.
As a company that has operated for more than a century and a half, sustainability is built into the fabric of Union Pacific's performance. We recognize our responsibilities as a corporate citizen and are proud to move the goods Americans use every day in a safe, efficient and environmentally responsible manner.
Sustainable business practices are fundamental to Union Pacific's success. They are inherent to our evolved strategy that challenges us to rise above daily tasks and take a 10,000-foot view of where we need to go and what it takes to get there. We call it, "Creating Value the UP Way," and it requires aligning our six value tracks: world-class safety, excellent customer experience, innovation, resource productivity, maximized franchise and an engaged team. We introduced these interrelated tracks in late 2015 as our foundation for success that provides competitive advantages for customers, job stability for employees, returns for shareholders and economic strength in our communities.
Overall economic conditions, uncertainty in the energy markets and the strength of the U.S. dollar contributed to a challenging 2015. Volume declines in coal, international intermodal, frac sand, metals, crude oil and grain shipments more than offset volume growth in domestic intermodal, finished vehicles, automotive parts, industrial chemicals and plastics shipments. We will continue responding to market uncertainties with resiliency to support customers and pursue new business development opportunities.
While we adapt to changing markets, Union Pacific's commitment to Building America and investing in a strong, healthy railroad remains constant. Last year's record $4.3 billion capital program strengthened U.S. transportation infrastructure through private investment, not taxpayer dollars. Investing in a safe, efficient railroad helps communities attract new business, clears trucks off congested highways and reduces wear and tear on publicly funded roads.
Our Building America Report provides a macro view of how we performed in key areas. Each section in this report provides insight on our progress, challenges and commitments.
We are proud of the work we do and understand there is always more to learn and improve upon. That is why we value continuous conversation with our stakeholders and view this report as a piece of that broader discussion. I invite you to use this report to learn more about Union Pacific and what we hope to achieve.
Lance Fritz
Chairman, President and CEO
Union Pacific's vision of Building America aligns with social, environmental and economic sustainability pillars. Our goals include:
No injury is acceptable. That's why our ultimate goal is achieving annual safety records toward zero:
We adjusted our goal to reduce locomotive fuel consumption based on the well-documented reduction in heavier weight commodity shipments. Our revised goal is to reduce Union Pacific's fuel consumption rate by 0.5 percent each year from 2015 to 2017. Measured on a gross ton basis, this will result in a greenhouse gas emissions reduction rate of 0.5 annually. We will continue to evaluate our fuel consumption goal as we adjust to changing market conditions.
More information about the steps we are taking to improve fuel efficiency is located in the Preserving the Environment section.
Our enterprise risk management process is dynamic and continually monitored so we can identify and address with agility any potential risks that arise in the ever-changing economic, political and legal environment in which Union Pacific operates.
Management identifies and prioritizes enterprise risks and regularly presents them to our board of directors for review and consideration. Senior executives responsible for implementing mitigation strategies for each of the company's enterprise risks, along with the chief compliance officer, provide reports directly to the board during the year. We also report risk factors in our Annual Report on Form 10-K.
The board Audit Committee oversees the company's internal audit of enterprise risks. Internal auditors present to the Audit Committee their findings regarding mitigating controls and processes for enterprise risks. The Audit Committee, in turn, reports those findings to the entire board.
Union Pacific interacts with many different groups in the course of our operations, and we take into account their range of perspectives in setting social, environmental and economic sustainability priorities.
Communities
Customers
Employees and Retirees
Shareholders
Regulatory Officials
Suppliers
44,500Employees
32,100Route Miles
8,500Locomotives
23States
7,300Communities served
Union Pacific Railroad is the principal operating company of Union Pacific Corporation (NYSE: UNP). One of America's most recognized companies, Union Pacific Railroad connects 23 states in the western two-thirds of the country by rail, providing a critical link in the global supply chain. From 2006 to 2015, Union Pacific invested approximately $33 billion in its network and operations to support America's transportation infrastructure.
The railroad's diversified business mix includes Agricultural Products, Automotive, Chemicals, Coal, Industrial Products and Intermodal. Union Pacific serves many of the fastest-growing U.S. population centers, operates from all major West Coast and Gulf Coast ports to eastern gateways, connects with Canada's rail systems and is the only railroad serving all six major Mexico gateways. Union Pacific provides value to its roughly 10,000 customers by delivering products in a safe, reliable, fuel-efficient and environmentally responsible manner.
Union Pacific is a member of many national industry and business organizations, including:
Union Pacific moves the goods American families and businesses use every day. Just about everything in homes, offices, manufacturing facilities, construction sites and stores moves by train at some point.
Agricultural Products | Revenue: $3.6 billion
We haul the products that feed the nation and many parts of the world, efficiently delivering whole grains and other agricultural goods.
Automotive | Revenue: $2.2 billion
Union Pacific provides transportation and logistics for automotive parts, finished vehicles and aftermarket vehicles. We directly serve five vehicle assembly plants, distribute imported vehicles from the West Coast and Gulf of Mexico, and operate or access distribution centers for all major automotive manufacturers.
Chemicals | Revenue: $3.5 billion
Union Pacific carries the chemicals used to clean drinking water, produce plastics and fertilize our crops. We also transport petrochemicals, crude oil extracted from U.S. shale locations and soda ash.
Coal | Revenue: $3.2 billion
Coal generated about 30 percent of America’s electricity in 2015. Union Pacific ships coal from mines in the Southern Powder River Basin, Utah, Colorado, southern Wyoming and southern Illinois. Our geographic reach and connections allow us to deliver coal to electric plants across the nation, West Coast and Gulf Coast ports, and facilities on the Mississippi and Ohio Rivers and Great Lakes.
Industrial Products | Revenue: $3.8 billion
Union Pacific ships a variety of raw materials and finished goods, including steel, pipe, frac sand, cement, military equipment, wind turbine components and lumber.
Intermodal | Revenue: $4.1 billion
Intermodal involves transporting freight in an intermodal container or vehicle using multiple modes of transportation (rail, ship and truck). This method reduces cargo handling and improves security and efficiency. One Union Pacific intermodal train can take several hundred trucks off America’s congested highways. We deliver a wide range of multimodal solutions for domestic and international freight shippers moving products such as electronics, toys, furniture, clothing and auto parts.
Union Pacific is the leading freight transportation services provider to and from the United States-Mexico border and is the only railroad to serve all six major Mexico gateways. Revenue from our six business units includes $2.2 billion from Mexico in 2015.
Our commitment to ethics begins with our board of directors and is maintained through every level of our organization. We work diligently to uphold the highest standards, and to provide quality service and value to our customers, investors and employees.
We believe that how we do things is as important as what we do. All Union Pacific employees are trained on our Policy on Ethics and Business Conduct, "The How Matters.” The policy conveys the basic principles of ethical business conduct expected of all employees. As a foundation, the principles are grounded in compliance with applicable laws and rules, and observe the highest ethical standards, including honesty, fairness, integrity and respect.
See Corporate Governance for other relevant policies and procedures, as well as information on our board of directors.
Union Pacific's Policy on Ethics and Business Conduct, "The How Matters," was updated in 2015 and introduced to employees during our second annual Ethics Awareness Week.
The policy has a new, easy-to-read format that provides real-world examples of ethical obligations. Its rollout included computer-based training with question-and- answer segments to help employees check their understanding of topics, and an online article series that addressed workplace concerns and the importance of ethics to Union Pacific's reputation.
The How Matters is at the heart of how our dedicated employees carry out our mission and values. Our continuous conversation about ethical behavior and how we treat each other ensures The How Matters is part of everything we do at Union Pacific.
For questions on this report or to provide feedback, contact Union Pacific via email at sustainability@up.com.
Since our founding more than 150 years ago, Union Pacific has driven economic growth in America. Our mission, strategy and workforce all are focused on completing tasks better tomorrow than we do today, enabling Union Pacific to remain critical to the American economy in the centuries to come. We will continue to strive to be the best in the business in our safety initiatives, on our tracks, in our communities, across our workforce and for our environment. The 2015 Union Pacific Building America Report shares our initiatives and progress thus far. We are proud of our accomplishments and our work to improve our operations. In the years ahead, we will continue to invest in our employees, communities and infrastructure because they shape our growth and success.
For ongoing updates on our citizenship and sustainability efforts, visit the following.
Our 2015 Building America Report provides additional explanatory information regarding Union Pacific that may not be available, included or directly derived from information in the company's Annual Report. This report includes statements and information regarding future expectations or results of the company that are not historical facts. These statements and information are, or will be, forward looking as defined by the federal securities laws. Forward-looking statements and information can be identified by use of forward-looking terminology (and derivations thereof), such as "believes," "expects," "may," "should," "will," "would," "intends," "plans," "estimates," "anticipates," "projects" and other words or phrases of similar intent. Forward-looking statements and information generally include the following: the company's expectations or forecasts with respect to general economic conditions in the United States and the world; the company's financial and operational performance; increases of the company's earnings; demand for the company's rail service; improving customer service; enhancing profitability; volume and revenue growth; efficiency improvements and increasing returns; and improving asset utilization. Statements also include the effectiveness or growth of new and newer services; management of network volumes; increasing shareholder value; total amount of capital investments; completion and effectiveness of capacity expansion and other capital investments, and other investments in infrastructure improvements; returns on capital investments; improvements regarding safety of our operations and equipment; improving efficiencies in fuel consumption; preserving the environment and communities where the company operates; and effectiveness of plans, programs and initiatives to reduce costs and other efficiency improvements. Forward-looking statements and information should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times that, or by which, such performance or results will be achieved. Forward-looking statements and information are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements. Forward-looking statements and information reflect the good faith consideration by management of currently available information and may be based on underlying assumptions believed to be reasonable under the circumstances. However, such information and assumptions (and, therefore, such forward-looking statements and information) are or may be subject to variables or unknown or unforeseeable events or circumstances over which management has little or no influence or control.
The risk factors in Item 1A of the company's Annual Report on Form 10-K, filed Feb. 5, 2016, could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements and information. This report should be read in consideration of these risk factors. To the extent circumstances require or the company deems it otherwise necessary, the company will update or amend these risk factors in subsequent Annual Reports, periodic reports on Form 10-Q or current reports on Form 8-K. Forward-looking statements speak only as of the date the statement was made. We assume no obligation to update forward-looking information to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect thereto or with respect to other forward-looking statements.