Providing Transparency

We calculate our CO2 emissions according to the internationally recognized GHG Protocol Corporate Standard and in accordance with the requirements of the European Emissions Trading System (EU ETS) and the ISO 14064 standards. We collect the following data:

• Direct emissions (scope 1) from fuel combustion in owned or controlled sources
• Indirect emissions (scope 2) generated by the production of the energy we purchase, such as electricity
• Other indirect emissions, such as those generated by emissions from third-party transportation (scope 3).

Advancements made in both our Carbon Accounting System and KPI structure over the course of 2012 have made the process of attributing emissions to their proper sources more transparent. This in turn has made it possible to direct our measures more effectively for a more sustainable contribution to reducing carbon emissions. This also applies to the carbon emissions of our subcontractors.

The Group's own emissions (scopes 1 and 2) are calculated in our internal financial system using monthly energy and fuel consumption data as well as data from flight logs. Since we are unable to access direct consumption data for our scope 3 emissions, we rely on model calculations that are based on our own operational data and allow for adequate emissions factors for the various modes of transport.

Our efforts to improve our carbon efficiency hinge on our ability to manage scope 3 data effectively. This is a challenge in the road transport segment due to its high number of subcontractors and complex ownership structure. During 2012, we worked with GFE to develop and pilot a system for capturing and measuring scope 3 data. A number of GFE partners including ourselves have been using this tool since the start of 2013 to share data.

The new GHG Protocol standards for the structured calculation of corporate value chains and product life cycles and the introduction of EN 16258 both expand the scope of carbon accounting to include upstream emissions of fuels. In addition, the GHG Protocol Corporate Value Chain Standard also accounts for other indirect emissions from sources such as capital goods and waste disposal. These extensions were successfully tested via manual calculation during 2012:

• Inclusion of CO2 equivalents: Both the GHG Protocol and EN 16258 standards expand the carbon accounting scope to include CO2 equivalents (CO2e). We therefore collect data on other greenhouse gases as well, such as methane and nitrous oxide (laughing gas). Expanding the scope from CO2 to CO2 equivalents adds about 2 % (0.5 million tonnes CO2e) to our greenhouse gas inventory.
• Accounting for the upstream fuel supply chain: In addition to the emissions resulting from our own fuel combustion, we will now be accounting for upstream emissions of fuels, i.e. those produced by our suppliers during fuel extraction, production and transport. According to a study conducted within the Group, our current reporting of scopes 1, 2 and the scope 3 reporting categories "subcontracted transport services" and "business travel" account for 75 % of our total greenhouse gas emissions. Including the upstream fuel supply chain, our reporting covers 90 % of our total emissions.

The calculation of these aspects will be automated within our Carbon Accounting System in 2013.

In 2012, our scopes 1 and 2 emissions totaled 5.37 million tonnes of CO2 (previous year: 5.30 million tonnes of CO2). Despite the fact that less energy was used in our buildings and less fuel was used in road transport, there was still a slight increase in our direct CO2 emissions.

This was primarily because of significantly increased customer demand for EXPRESS air shipments, which we handle largely ourselves, as well as our new Standard Forwarding service in the US, which operates a large vehicle fleet. For a look at the development of our fuel consumption data, please refer to the section on our fleet efficiency measures; data on our energy use can be found in the section on our buildings and facilities.

Scope 3 emissions amounted to 22.67 million tonnes of CO2 in 2012 (previous year: 22.61 million tonnes of CO2; this figure was adjusted due to a more precise calculation method). Business travel was responsible for 0.05 million tonnes of these scope 3 emissions (previous year: 0.05 million tonnes of CO2).

Despite strong business growth, our carbon emissions across all three scopes increased a mere 0.5 % in 2012 as compared to 2011. While emissions in the MAIL and EXPRESS divisions increased, they decreased in the GLOBAL FORWARDING, FREIGHT and SUPPLY CHAIN divisions. Reasons for this slight increase are addressed in the section on our Carbon Efficiency Index.

Our total emissions therefore increased by 0.13 million tonnes of CO2 to 28.04 million tonnes of CO2 (previous year: 27.91 million tonnes of CO2). The 2011 figure was adjusted due to a more precise calculation method. Our total carbon emissions are generated primarily from fuel consumption in our fleets and by our subcontractors, and energy consumption in our buildings and facilities.

In 2012, we managed to improve our overall Carbon Efficiency Index by 2 points, achieving an index value of 84 (previous year: 86). This means that compared to the 2007 baseline, we have improved our carbon efficiency by 16 %, putting us well on track to achieving our 2020 target of 30 %.

One of the main drivers was the efficiency improvements in the EXPRESS network, which were the result of aircraft modernization measures in both our own fleets and in those of our partners.

SUPPLY CHAIN was also successful in implementing various efficiency-improving abatement measures. In addition, efficiency gains were also realized from the disposal of transportation business in North America, which transpired in the second quarter of 2011.

Our MAIL division also saw slight carbon efficiency improvements due to efficiency increases in road and air transport.

GLOBAL FORWARDING, FREIGHT managed to keep its index value at a stable level despite general efficiency losses in the airfreight industry. These losses where fully compensated by strong efficiency gains in the ocean freight business as well as improvements in road freight. Ocean freight efficiency gains were driven by slow steaming and newer vessels.