CONNECTIONS

N or folk So u t h erN Co rp o rat io N

2012 SUSTAINABILITY REPORT

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 Norfolk Southerns success. Over the past year, we co-sponsored the first-ever railroad industry sustainability symposium with partner General Electric, a major supplier of energy-efficient locomotives for the rail industry. The symposium brought together environmental and industry experts from around 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 assurance in this report, we track significant advancement toward our five-year goal for reducing greenhouse gas emissions. We value your trust in our numbers, 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 Initiative. 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

Visit www.nssustainability.com to read our complete sustainability report.

Norfolk Southerns sustainability program at age 5 can 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 partners. Thats what our sustainability program is all about 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. Evenasincreaseddemandforourfreighttransportationserviceshasledtohigherfuelconsumption,weconstantlyareworking to 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 about in this report. Wehavecompletedabout25percentofourprojectwithGreenTrees,aprivatelymanagedreforestationandcarboncaptureprovider, to reforest 10,000 acres in the 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. Inacontinuingefforttostrengthenourenvironmentalconnections,wehavecommitted 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 long-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 habitat. These are but a few of the ways we connect our sustainability efforts to the planets environmental health. As we engage in future opportunities, we will continue to seek out real-world applications that enable us to make a difference beyond what just impacts us directly.

Blair Wimbush

2011 SuSTaINabIlITy hIghlIghTS

EnvironmEntal
Completedabout25percentofour$5.6millionTreesandTrainsinitiativetoreforest 10,000 acres in the Mississippi Delta Reducedourgreenhousegasemissionsby2percentperrevenueton-mileoffreight, bringing us closer to our goal to reduce CO2 emissions by 10 percent per revenue ton-mile between 2009 and 2014 SupportedresearchbytheLongleafAlliancetorestoreandpreservelongleafpineforests ContractedwithauditingfirmKPMGLLPtoprovide,forthefirsttime,third-partyreview of our greenhouse gas emissions data Finishedconstructionofanindoorlocomotiveemissions-testingfacilityatourJuniata Locomotive Shop, enabling us to develop more cost-effective, fuel-efficient, cleanerburning engines Beganusing100percentrenewabledieselfuelatourrailterminalinMeridian,Miss., becoming the first railroad to deploy the alternative fuel Launchedacapitalprojecttoreplaceagingheatingandcoolingsystemswithnew high-efficiency systems at smaller office facilities and operating locations

Economic
Achievedrecordhighsforrevenues,operatingincome,netincome,and earnings per share Invested$2.16billionincapitalprojects,focusingonupgradingourlocomotivefleet, facilities, and track Helpedlocatenewindustriesalongourrailroadrepresenting$9.5billionincustomer investment with the potential to create 6,800 jobs and generate more than 152,000 carloads of rail business IntroducedaWeb-basedethanoldistributionsystematourThoroughbredBulkTerminal facilities, significantly enhancing customer service

Social
Achievedthebestsafetyratioincompanyhistory,with0.75reportableinjuriesper 200,000employee-hoursworked,andearnedtheHarrimanGoldMedalAwardasthe nations safest Class 1 railroad for the 23rd consecutive year Promotednationalconversationsonsustainability,includingpartneringwithThe WashingtonPosttohostatransportationsummitandwithGETransportationtosponsor the first railroad sustainability symposium IntroducedVirginHealthMilestoourcompanywellnessprogram,promotingemployee health through walking and other activities LaunchedPowerTrain,awellnessinitiativethecompanysupportsbydonating$1,000to qualifying disease-based charitable organizations selected by employees who form sports teams to benefit the charities Hiredapproximately4,000newemployeesacrossournetwork DonatedthroughourNorfolkSouthernFoundationmorethan$6.19milliontononprofit organizations to meet the needs of local communities

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 announcing 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. Ouruseofelectricitygenerated277,068metric 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 and emit significantly lower levels of greenhouse gases than trucks.

By doing what we do besttransporting customers freight safely, cost efficiently, and on time Norfolk 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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StratEgy to rEducE EmiSSionS

Norfolk Southern has developed a strategic approach to reduce the environmental impact of our business operations. Much 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: adoptingtechnologiestoincreaseoperatingefficienciesofourrailnetwork implementingcomputer-basedsystemstoimprovehandlingoflocomotivestosavefuelandreduceemissions reducingunnecessarylocomotiveengineidling rebuildinglocomotivestoextendtheirusefullifewhileequippingthemwithlike-newenginesthataremorefuel-efficientandcleanerrunning pursuingalternativepower,includingdevelopmentofabattery-poweredelectriclocomotive

Our ENVIrONMENTal pErFOrMaNCE

conSErvE and rEStorE
Norfolk Southern has adopted a broad approach 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 model for our carbon mitigation strategy. While restoring former woodlands, were generating long-term economic benefits for multiple stakeholders along 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. TohelprestorethisimportantecologicalhabitattoitssoutheasternU.S.range,theNorfolkSouthernFoundationprovided$25,000in2011andcommittedthesame 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 amount of carbon the trees store annually.

chEStnut trEES hElp rEcovEr coal minES

Norfolk Southern has partnered with The American Chestnut Foundation in its mission to restore American chestnut trees to native forests in the eastern UnitedStates.In2011,theNorfolkSouthernFoundationawarded$15,000totheorganizationtoreforestabandonedcoalminelandsincommunitiesweserve.

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
NorfolkSouthernearnedthetoprankingamongrailroadsinthe2012S&P500CleanCapitalismRankingpublishedbyCorporateKnights,amedia,research, andfinancialproductscompanythatfocusesoncleancapitalism.AmongS&P500companiesoverall,NorfolkSouthernranked66.

a grEEn Supply partnEr

InboundLogisticsmagazinenamedNorfolkSoutherntoits2011listoftop75GreenSupplyChainPartnersinrecognitionofourcorporatesustainabilityefforts.

Our ECONOMIC pErFOrMaNCE

2011 a rEcord yEar
NorfolkSouthernin2011experienceditsbest-everyearineconomicperformance.Forthefirsttime,wetopped$11billioninrevenue,supportedbya27percent increaseincoalrevenues,a19percentriseinintermodalrevenues,anda12percentimprovementinmerchandiserevenues.Ournetincomeof$1.9billionand earningspershareof$5.45bothsetnewrecords. Wemaintainedeffectivecostcontrols,postinganoperatingratioof71.2percent,justshyofourall-timerecordof71.1percent,achievedin2008. Our railroad also remained at the forefront of job creation and economic development. We helped to locate new industries along our railroad representing $9.5billionincustomerinvestmentwiththepotentialtocreate6,800jobsandgeneratemorethan152,000carloadsofrailbusiness.

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 and 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, and an overall decline in fuel use and greenhouse gas emissions. OURKEYPUBLIC-PRIVATEPARTNERSHIPSINCLUDE:

Heartland Corridor
Designedfordouble-stacktrains,theHeartlandCorridorconnectsVirginiasportsandMidwesternmarketswithinternationalcommerce,providinganefficient, 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 ports. With its shorter route and fasterdeliverytime,theHeartlandCorridorisproducingbenefitsforcustomers,thepublic,andourcompany.Inthefirst12monthsofoperation,trafficvolumeon the corridor nearly doubled.

Crescent Corridor
Our 2,500-mile Crescent Corridor is significantly increasing the capacity for domestic intermodal freight. The Crescent Corridor provides the shortest intermodal double-stack route between the South and the Northeast, forming a national rail network that spans 11 states from New Orleans, La., and Memphis,Tenn.,tonorthernNewJersey. The$2.5billionprojectincludesupgradestorailand track infrastructure as well as the construction or expansion of five intermodal terminals, creating jobs and economic development in Tennessee, Alabama, NorthCarolina,andPennsylvania.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 million gallons of fuel annually, reduce greenhouse gas emissions by 1.9milliontons,createorpreserve73,000jobsby 2030,andsave$575millionincostsassociated with traffic congestion. To read more about our public-private partnerships, visit www.thefutureneedsus.com

Our SOCIal pErFOrMaNCE

a culturE of SafEty
Safety is ingrained in Norfolk Southerns operating culture. Our safety efforts are driven by some 145 local safety and service committees across the system, led by operationsemployeesinourmechanical,transportation,andengineeringdepartments.Thisbottom-upapproachheightensparticipationandenablesemployees 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 survey of employees, we are implementing change 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 hand 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. Wealsohavecreatedanovelcampaign,TrainYourBrain,thatfeaturesagiantpinkpublicsafetyambassador,Brainy,whoappearsatcommunityevents. For more information, visit www.brainysworld.com and facebook.com/BrainysWorld.

our bESt SafEty rEcord

NorfolkSouthernemployeesledtherailindustryinworkplacesafetyin2011byachievingthebestsafetyratioincompanyhistory,with0.75reportableinjuriesper 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 number 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

In2011,theNorfolkSouthernFoundation,ourcharitablegivingarm,donatedmorethan$6.19milliontoorganizationsfallingwithinitsfourpriorityareas:basic needs, including food, shelter, and medical care; helping conserve the environment; expanding educational opportunities for children; and promoting the arts and 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 hours of service in events sponsored by Thoroughbred Volunteer councils for more than 30 organizations in 2011,includingSpecialOlympics,theFoodBankofSoutheasternVirginia,REACH(ReadingEnrichesAllChildren), theCentralPennsylvaniaFoodBank,theAppalachianTrail,FeedingAmerica,RoanokeCleanValleyDay, MedShare,TreesAtlanta,andHandsOnAtlanta.

military friEndly
CivilianJob.com,anorganizationthathelpsjobseekerswithmilitaryexperienceidentifytop employers for private-sector careers, named our railroad to its 2012 list of Most Valuable Employers for Military .G.I.JobsmagazinerankedusNo.19onitslistofAmericasTop100MilitaryFriendly Employers for 2011.

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

fundraiSing for community

NorfolkSouthernearnedaGoldTrailblazerAwardfromtheUnitedWayofSouthHampton Roadsforour2011fundraisingcampaign,whichexceeded$833,000,anearly21percent increase over 2010.

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 of servant 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 Norfolk Southerns Thoroughbred Volunteer Council in Atlanta.

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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 leavesocial, economic, and environmentalare positive for generations to come.

www.nssustainability.com

2012 Norfolk SoutherN CorporatioN - all rightS reSerVed

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