Sustainability Executive Summary 2012

7/31/2019 Sustainability Executive Summary 2012

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2012

SUSTAINABILITY

REPORT

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Five years ago, we launched our formal sustainability program at Norfolk Southern with the goal

of achieving industry leadership in fuel conservation, emissions reduction, efficient energy

use, recycling, use of renewable materials, and environmental partnerships.

This fifth edition of our corporate sustainability report documents satisfying progress

toward achievement of our mission. While a five-year anniversary represents a

snapshot of our continuous journey, I am pleased with the progress we have made

and the plans we have for strengthening connections with our people, communities,

customers, investors, and all those who have a stake in Nor folk Southerns success.

Over the past year, we co-sponsored the f irst-ever railroad industry sustainability

symposium with partner General Electric, a major supplier of energy-efficient

locomotives for the rail industry. The sym posium brought together environmental and

industry experts from aroun d the world and was so successful we decided to host the

second annual symposium at our Brosnan Forest facility this year. We always welcome the

opportunity to showcase our joint efforts with conservationists to preserve one of the nations

largest stands of longleaf pine and to preserve the area ecosystem.

Supported for the first time by third-party a ssurance in this report, we track significant advancement

toward our five-year goal for reducing greenhouse gas emissions. We value your trust in our number s, and we strive to be as

transparent as possible in our reporting. To that end, this report conforms to established sustainability reporting guidelines of the

Global Reporting I nitiative.

In five years, weve made a good start. We pledge our long-term commitment to corporate responsibility in sustainability practices and to

the principle that environmental stewardship is essential to Norfolk Southerns business success.

Wick Moorman

Vs www.nsssnby.cm

cm ssnby .


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Norfolk Southerns sustainability program a t age 5 ca n be likened to one of the 6 million trees weve committed to plant in the Mississippi

Alluvial Valley. Its in the ground, its well rooted, and its growing strong, supported by nurturing par tners.

Thats what our sustainability program is all abou t connecting with partners who share our vision for responsible corporate

environmental stewardship.

I am pleased to report that in the past year leading up to this 2012 sustainability report, we have made significant progress toward

fulfillment of several major initiatives as part of our overall sustainability mission.

Even as increased demand for our freight transportation services has led to higher fuel consumption, we constantly are workingto improve our greenhouse gas intensity. We have achieved substantial further gains in our five-year greenhouse gas emissions

reduction goal. After two years, we are at 60 percent of the goal, which you can read a bout in this report.

We have completed about 25 percent of our project with GreenTrees, a privately managed reforestation and carbon capture provider,

to reforest 10,000 acres in th e Mississippi Delta. We have planted some 1.5 million native cottonwoods and hardwoods in the area.

This undertaking produces meaningful environmental, economic, and social benefits in an important

ecosystem long served by the railroad.

In a continuing effort to strengthen our environmental connections, we have committed

funding to support research by the Longleaf Alliance, whose mission is to ensure a

sustainable future for the longleaf pine ecosystem. Data produced thus far demonstrates

the potential value of longleaf pines for lon g-term carbon capture, thereby improving

the ecosystems attractiveness as an investment for carbon reforestation programs.

We have a big stake in the health of longleaf pines. One of the largest privately owned

longleaf pine forests thrives within Norfolk Southerns Brosnan Forest in South Carolina.

There, we are working with conservationists to preserve the forest and the endangered

red-cockaded woodpecker, dependent on longleaf pines for its ha bitat.

These are but a few of the ways we connect our sustainability efforts to the planets

environmental health. As we engage in future oppor tunities, we will continue to seek out

real-world applications that enable us to make a difference beyond what just impacts us directly.

Blair Wimbush

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2011 SuSTaINabIlITy hIghlIghTS

EnvironmEntal

Completed about 25 percent of our $5.6 million Trees and Trains initiative to reforest

10,000 acres in the Mississippi Delta

Reduced our greenhouse gas emissions by 2 percent per revenue ton-mile of freight,

bringing us closer to our goal to reduce CO2 emissions by 10 percent per revenue ton-milebetween 2009 and 2014

Supported research by the Longleaf Alliance to restore and preserve longleaf pine forests

Contracted with auditing firm KPMG LLP to provide, for the first time, third-party review

of our greenhouse gas emissions data

Finished construction of an indoor locomotive emissions-testing facility at our Juniata

Locomotive Shop, enabling us to develop more cost-effective, fuel-efficient, cleaner-

burning engines

Began using 100 percent renewable diesel fuel at our rail terminal in Meridian, Miss.,

becoming the first railroad to deploy the alternative fuel

Launched a capital project to replace aging heating and cooling systems with new

high-efficiency systems at smaller of fice facilities and operating locations

Economic

Achieved record highs for revenues, operating income, net income, and

earnings per share

Invested $2.16 billion in capital projects, focusing on upgrading our locomotive fleet,

facilities, and track

Helped locate new industries along our railroad representing $9.5 billion in customer

investment with the potential to create 6,800 jobs and generate more than 152,000

carloads of rail business

Introduced a Web-based ethanol distribution system at our Thoroughbred Bulk Terminal

facilities, significantly enhancing customer service

Social

Achieved the best safety ratio in company history, with 0.75 reportable injuries per

200,000 employee-hours worked, and earned the Harriman Gold Medal Award as the

nations safest Class 1 railroad for the 23rd consecutive year

Promoted national conversations on sustainability, including partnering with The

Washington Post to host a transportation summit and with GE Transportation to sponsor

the first railroad sustainability symposium

Introduced Virgin HealthMiles to our company wellness program, promoting employee

health through walking and other ac tivities

Launched Power Train, a wellness initiative the company supports by donating $1,000 to

qualifying disease-based charitable organizations selected by employees who form

sports teams to benefit the charities

Hired approximately 4,000 new employees across our network

Donated through our Norfolk Southern Foundation more than $6.19 million to nonprofit

organizations to meet the needs of local communities


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MakINg prOgrESS: Our gOal TO CuT EMISSIONS

In 2011, we continued to make strides toward

meeting our five-year carbon reduction goal,

lowering greenhouse gas emissions by another

2 percent per revenue ton-mile of freight moved.

Added to the 3.9 percent reduction in 2010, we have

reduced emissions by 5.9 percent per revenue

ton-mile. As a result, two years after announ cing a

goal to reduce emissions by 10 percent per revenue

ton-mile between 2009 and 2014, we have achieved

nearly 60 percent of the target.

Measuring emissions by the standard revenue

ton-mile allows us to evaluate how well we are

controlling our carbon footprint even as business

activity grows from year to year.

our carbon footprint*

In 2011, Norfolk Southern Corporations business

activities generated 5.4 million metric tons of

carbon dioxide equivalent emissions while

delivering more than 191 billion revenue

ton-miles of freight for customers.

The railroads diesel-burning locomotive fleet,

which operates in road, local, and yard service,

generated roughly 89 percent of the railroads CO2

equivalent emissions, or 4.8 million metric tons.

Our second largest emissions source, at 5.1

percent, derived from electricity usage at office

buildings we own or lease and at railroad

facilities, including terminals, yards, and shops.

Our use of electricity generated 277,068 metric

tons of CO2

equivalents.

Shifting more goods from the highway to rail

makes environmental sense. While locomotive

emissions may increase as railroads run more

trains to accommodate business growth, total

carbon emissions will decrease on a regional,

national, and global basis because trains are on

average four times more fuel efficient an d emit

significantly lower levels of greenhouse gases

than trucks.

By doing what we do besttransportingcustomers freight safely, cost efficiently, and on

timeNorfolk Southern is keeping the economy

moving and offering a greener transportation

solution. Because our railroad operates the

most extensive intermodal rail network on the

East Coast, we are well positioned to contribute

to the nations economic growth and

environmental health.

*See chart on next page


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Our ENVIrONMENTal pErFOrMaNCE

conSErvE and rEStorENorfolk Southern has adopted a broad a pproach to reduce our business impacts on the environment, going beyond operational efficiencies to generate value.

We are working with private and public partners on reforestation and other projects to conserve and restore natural resources.

trEES and trainS

Our Trees and Trains collaboration to reforest 10,000 acres in the Mississippi Alluvial Valley is a m odel for our carbon mitigation strategy. While restoring former

woodlands, were generating long-term economic benefits for multiple stakeholders alon g a commercial corridor long served by our railroad, including residents

of the communities we serve, customers, employees, wildlife, and the environment. Eventually, the restored woodlands will generate 1.12 million metric tons of

carbon-offset credits that Norfolk Southern can sell to companies or individuals seeking to offset their emissions.

ExtEnding thE rEach of thE longlEaf

Longleaf pines, one of North Americas most threatened forest ecosystems, are part of Norfolk Southerns heritage. The 6 ,000 acres of longleaf pine at our

Brosnan Forest near Charleston, S.C., provide habitat for the largest U.S. population of endangered red-cockaded woodpeckers on private lands.

To help restore this important ecological habitat to its southeastern U.S. range, the Norfolk Southern Foun dation provided $25,000 in 2011 and committed the same

amount in 2012 to The Longleaf Alliance to develop a longleaf growth and yield model. The tool will help landowners and foresters project forest growth rates and

mortality and the a mount of carbon the trees store annually.

chEStnut trEES hElp rEcovEr coal minES

Norfolk Southern has par tnered with The American Chestnut Foun dation in its mission to restore American chestnut trees to native forests in the eastern

United States. In 2011, the Nor folk Southern Foundation awarded $15,000 to the organization to reforest abandoned coal mine lands in communities we serve.

EnvironmEntal StEwardShip

In 2012, the American Carbon Registry presented Norfolk Southern with a corporate excellence award for our public commitment to reduce greenhouse

gas emissions.

clEan capitaliSm

Norfolk Southern earned the top ranking among railroads in the 2012 S&P 500 Clean Capitalism Ranking published by Corporate Knights, a media, research,

and financial products company that focuses on clean capitalism. Among S&P 500 companies overall, Norfolk Southern ranked 66.

a grEEn Supply partnEr

Inbound Logistics magazine named Norfolk Southern to its 2011 list of top 75 Green Supply Chain Partners in recognition of our corporate sustainability efforts.

StratEgy to rEducE EmiSSionS

Norfolk Southern has developed a strategic approach to reduce the environmental impact of our business operations. Mu ch of our focus is on technologies and

techniques to improve fuel economy and reduce emissions of the locomotive fleet.

We are working on a range of initiatives to achieve our carbon-reduction goal. They include:

adopting technologies to increase operating efficiencies of our rail network

implementing computer-based systems to improve handling of locomotives to save fuel and reduce emissions reducing unnecessary locomotive engine idling

rebuilding locomotives to extend their useful life while equipping them with like-new engines that are more fuel-efficient and cleaner running

pursuing alternative power, including development of a battery-powered electric locomotive


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Our ECONOMIC pErFOrMaNCE

2011 a rEcord yEar

Norfolk Southern in 2011 experienced its best-ever year in economic performance. For the first time, we topped $11 billion in revenue, supported by a 27 percent

increase in coal revenues, a 19 percent rise in intermodal revenues, and a 12 percent improvement in merchandise revenues. Our net income of $1.9 billion and

earnings per share of $5.45 both set new records.

We maintained effective cost controls, posting an operating ratio of 71.2 percent, just shy of our all-time record of 71.1 percent, achieved in 2008 .

Our railroad also remained at the forefront of job creation and economic development. We helped to locate new industries along our railroad representing

$9.5 billion in customer investment with the potential to create 6,800 jobs and generate more than 152,000 carloads of r ail business.

addrESSing national frEight nEEdS

Norfolk Southern has established itself as an industry leader in innovative transportation solutions. We worked with state and federal officials to forge the rail

industrys first multistate public-private partnership in the mid-2000s to expand the nations freight rail network. Through public-private partnerships, federal an d

state governments contribute a share of the costs of rail corridor projects based on public benefits generated. These benefits include job creation, reduced highway

congestion, reduced costs on maintenance and new construction of roads and bridges, a nd an overall decline in fuel use and greenhouse gas emissions.

OUR KE Y PUBLIC-PRIVATE PARTNERSHIPS INCLUDE:

Heartland CorridorDesigned for double-stack trains, the Hear tland Corridor connects Virginias ports and Midwestern markets with international commerce, providing an efficient,

cost-effective way for businesses to transport imported and exported goods to consumers.

More than 95 percent of Norfolk Southerns intermodal network is cleared for double-stack service, serving all major East Coast por ts. With its shorter route and

faster delivery time, the Heartland Corridor is producing ben efits for customers, the public, an d our company. In the first 12 months of operation, traffic volume on

the corridor nearly doubled.

Crescent CorridorOur 2,500-mile Crescent Corridor is significantly

increasing the capacity for domestic intermodal

freight. The Crescent Corridor provides the shor test

intermodal double-stack route between the Southand the Northeast, forming a national rail network

that spans 11 states from New Orleans, La., and

Memphis, Tenn., to northern New Jersey.

The $2.5 billion project includes upgrades to rail and

track infrastructure as well as the construction or

expansion of five intermodal terminals, creating jobs

and economic development in Tennessee, Alabama,

North Carolina, and Pennsylvania. Independent

studies estimate that the corridor, when fully

operational, has the potential to divert 1.3 million

tractor-trailer trucks from interstate highways

along the route, save 169 m illion gallons of fuelannually, reduce greenhouse gas emissions by

1.9 million tons, create or preserve 73,000 jobs by

2030, and save $575 million in costs associated

with traffic congestion.

To read more about our public-private partnerships,

visitwww.nss.cm
http://www.thefutureneedsus.com/http://www.thefutureneedsus.com/


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Our SOCIal pErFOrMaNCE

a culturE of SafEty

Safety is ingrained in Norfolk Southerns operating culture. Our safety efforts a re driven by some 145 local safety and service committees across the system, led by

operations employees in our mechanical, transportation, and engineering departments. This bottom-up approach heightens participation and enables employees

to share responsibility for the safety programs success.

In 2011, we hired a consultant specializing in behavior-based work performance to evaluate our safety program. As a result of the review, which included a surveyof employees, we are implementing chan ge to create a more positive atmosphere in our workplaces. The effort involves recognizing employees on a daily basis

for working safely. The goal is to create an environment where managers and employees work hand in h and to enhance workplace safety and improve the service

we provide customers.

Norfolk Southerns commitment to safety extends to our communities. A priority is working with localities to eliminate collisions between motor vehicles and trains

and to prevent injuries and deaths resulting from trespassing on railroad property. We are strong supporters of Operation Lifesaver, the national safety program.

We also have created a novel campaign, Train Your Brain, that features a giant pink public s afety ambassador, Brainy, who appears at community events.

For more information, visit www.brainysworld.com and facebook.com/BrainysWorld.

our bESt SafEty rEcord

Norfolk Southern employees led the r ail industry in workplace safety in 2011 by achieving the best safety ratio in company history, with 0.75 reportable injuries per

200,000 employee-hours worked. Out of a workforce of around 30,000, there were 225 employees with a reportable injury in 2011, a 10 percent drop from 2010.

We also saw a nearly 16 percent decline in the numb er of employees who lost work time because of an injury.

achiEvEmEnt award

In 2011, for the 12th time and 10th consecutive year, Norfolk Southern received the TRANSCAER (Transportation Community Awareness and Emergency Response)

National Achievement Award. The award recognizes extraordinary achievement in support of voluntary efforts to prepare communities to respond to a possible

transportation incident involving hazardous materials.

a hElping hand to communitiES

In 2011, the Norfolk Southern Foun dation, our charitable giving arm, donated more than $6.19 million to organizations falling within its four priority areas: basic

needs, including food, shelter, and medical care; helping conserve the environment; expanding educational opportunities for children; and promoting the arts an d

culture. That represents a nearly 11 percent increase over 2010 donations.

Our Thoroughbred Volunteers, employees who participate in the railroads formal volunteer program, gave approximately

3,200 hour s of service in events sponsored by Thoroughbred Volunteer councils for more than 30 organizations in

2011, including Special Olympics, the FoodBank of Southeastern Virginia, REACH ( Reading Enriches All Children),

the Central Pennsylvania Food Bank, the Appalachian Trail, Feeding America, Roanoke Clean Valley Day,

MedShare, Trees Atlanta, and Hands On Atlanta.

military friEndly

CivilianJob.com, an organization that helps job seekers with military experience identify top

employers for private-sector careers, named our railroad to its 2012 list of Most Valuable Employers

for Military. G.I. J obs magazine ranked us No. 19 on its list of Americas Top 100 Military Friendly

Employers for 2011.

committEd to divErSity

Black Enterprise magazine named Norfolk Southern to its 2011 list of 40 Best Companies forDiversity, citing diversity of our senior management.

fundraiSing for community

Norfolk Southern earned a Gold Trailblazer Award from the United Way of South Hampton

Roads for our 2011 fundraising campaign, which exceeded $833,000, a nearly 21 percent

increase over 2010.


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A community is only as strong as the people

who live in it. A part of the reason Norfolk

Southern is seen as a leader in

transportation is because of the multitude ofservant leaders who may never sit in the

board room and make a strategic plan, but,

as volunteers, serving others, we make an

impact in the communities we serve.

Cassandra Crute, manager accounting customer support

and a member of Nor folk Southerns Thoroughbred Volunteer

Council in Atlanta.

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2012 Norfolk SoutherN CorporatioN - all rightS reSerVed 17.0912.3324.80

www.nssustainability.com

2012 SuSTaINabIlITy

At Norfolk Southern, everything we do is connected. The tracks we lay down are

connected to the towns that surround them. Our business is connected to jobs,

economics, environmental benefits, and more efficient delivery of goods.

These connections create lasting, mutually beneficial relationships with our

communities, our employees, our customers, our environment, and our

economy. We at Norfolk Southern are looking to strengthen connections with our

communities and forge new connections. In acknowledgement of this shared

future, we will do all we can to ensure that the impacts we leave social,

economic, and environmentalare positive for generations to come.

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Sustainability Executive Summary 2012

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