LOCAL CITIZEN
Making Sustainable Progress Possible
One Community at a Time2014 SUSTAINABILITY REPORTTABLE OF CONTENTS

3

CHAIRMAN’S MESSAGE

Chairman and Chief Executive Officer Doug Oberhelman
provides his thoughts on Caterpillar’s sustainability
commitment and local citizenship.

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LOCAL CITIZEN

Examples of several of our Local Citizens, demonstrating
how they each make sustainable progress possible intheir work and communities.

3+ MILLION

UNITS

20

OUR APPROACH

An overview of Caterpillar’s approach to sustainability,
which is centered on principles and practices that prevent
waste, improve quality and develop better systems.

30

FOCUS AREAS

A discussion of the major focus areas around Caterpillar’ssustainability goals, plus areas impacting our business
which are important to stakeholders.

66

GOALS & PROGRESS

A look at Caterpillar’s goals and progress on improving
safety and reducing the company’s impact on water,energy, materials and GHG emissions.

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LEGAL STATEMENTS

2014 SUSTAINABILITY REPORTCHAIRMAN’S MESSAGE

Local Citizen: Making Sustainable
Progress Possible One Community
at a Time
Caterpillar is the world’s largest manufacturer of heavy equipment, so sometimes it’s hard for people to
make the connection between our business and our commitment to sustainability. For me, it’s not hardat all. It’s who we are and what we do every day. We protect the health and safety of ourselves andothers. We innovate to make our products more efficient and to prevent waste. We support infrastructuredevelopment and environmental responsibility.
We are a diverse global team striving to build a better world, one community at a time.
We elevated Sustainability to one of Our Values in Action in 2014, but sustainability is not new to us,
not at all. “Making Sustainable Progress Possible” has long been a cornerstone commitment to ourcustomers, stockholders and employees. We have also long known that sustainable progress requires
balancing the economic, environmental and social aspects of our business.
Doug Oberhelman
Chairman & CEO
Caterpillar Inc.

This report presents example after example of how we are contributing to that progress and balance.
Sustainability drives innovation at Caterpillar – through innovation and technology, we reduce resource
consumption, emissions and their associated costs.

Sustainability drives innovation.

Caterpillar Chairman
and CEO, Doug Oberhelman,
provides his thoughts on oursustainability commitment andmaking sustainable progresspossible in our communities.
Learn more here.

In these pages, you’ll learn about innovations like Solar Turbines’ new SoLoNOx™ technology that
reduces NOx emissions from gas turbines; and innovations that combine the best attributes of existing
solutions – like Caterpillar Marine’s new twin fin propulsion system that is robust, easy to maintainand, because it’s compact, doesn’t compromise maneuverability or cargo space. This report highlights
innovations with the potential to transform an industry – like our Intelligent Compaction system thatenables paving machines to achieve desired criteria on a new roadway in as little as a single pass.
That increases productivity and safety, and reduces fuel consumption and CO2 emissions.
Sustainability drives innovation in our internal operations, too – like the transportation and packaging
process improvements in Building Construction Products facilities around the world. These facilities
and their suppliers have worked together closely, and now we have fewer, more efficient shipments.
This has increased safety and reduced processing time, CO2 emissions and costs.
Wherever Caterpillar designs, develops, builds and sells, we recognize and respect our responsibility
to build a better world. We envision a world in which people’s basic needs – including shelter, cleanwater, sanitation, food and reliable energy – are fulfilled in an environmentally sustainable way. Our
facilities, products, services and solutions focus on using resources efficiently as we strive to achievethat vision.
And we do it, one community at a time.

We reclaim, recycle and remanufacture.
In greenhouses, our generator sets not only generate power efficiently; they also use CO2 beneficially toaid plant growth. This means many parts of the world have year-round access to food and flowers thatthey might not have otherwise. Mining reclamation sites use Cat® equipment to grade and restore land,
returning it to its native state. You’ll read about a North Dakota site that I visited during the year, wherea landscape that not long ago was producing vital mineral ore has transformed again, back into rolling
hills, woods and grassy fields.
We are especially proud that, for more than 40 years, we have been remanufacturing our products
and parts, restoring them to be as strong and useful to our customers as if they bought them brandnew. Over the last 10 years, Caterpillar’s worldwide remanufacturing operations have recycled more

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2014 SUSTAINABILITY REPORTCHAIRMAN’S MESSAGE
The Chairman’s
Sustainability Awards

than 500,000 tons of materials, keeping them out of landfills or scrap
heaps. Our remanufacturing work alone has kept over 1,000,000 tons ofgreenhouse gas out of the atmosphere. In June, I shared a detailed historyof Caterpillar’s commitment to sustainability with our shareholders.

Learn more here.

Above, left: North Carolina-based BCP Core team members (l to r) Sheila
Adams, Wendy Rinaldi, Matthew Drown, William Lucas, Christopher Self
and Srini Turumella. Above, right: PD&GT team members, (l to r) John
Winkler, Mark Tarvin, Allen DeClerk, Paul Corcoran and Liqun Chi

The Chairman’s Sustainability Awards recognize teams andindividuals who demonstrate our mission of sustainable
progress and help us achieve our 2020 Sustainability Goals.
Honors are bestowed in two areas. The Product/Service/
Solution Sustainability Award recognizes the project orsolution that best delivers excellence in the three aspectsof sustainability – economic, environmental and social
performance – for our business and our customers, while
the Process Sustainability Award recognizes operational or
business process excellence – including collaboration withdealers, customers and suppliers – that best demonstrates
pursuit of sustainability. Now in its fourth year, the awards
program attracted 37 nominations from 17 different divisions
in more than a dozen countries for the 2014 competition.
Every project submitted gives testimony to our commitment
to Making Sustainable Progress Possible. One, for example,
demonstrates $15.4 million in cost savings and over
5,000 metric tons of CO2 emissions reductions. Every
project is certainly a win for Caterpillar, our people andthe environment.
In 2014, a Product Development & Global Technology(PD&GT) team was awarded the Product/Service/Solution
Sustainability Award for its Intelligent Compaction project.
Read more in Measuring What Matters on page 8. Likewise,a team from Building Construction Products (BCP) division
was awarded the Process Sustainability Award for its project that reduces CO2 emissions from logistics processes.
Find more about the project in Supply Network on page 52.

BCP extended team, left to right: Stuart Burton (Leicester, England),Ken Snider (Morton, Ill.), Tabitha Booth (Morton, Ill.) and Jeff Gu(Wujiang, China)

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Sustainability builds communities.
In this report, you’ll also read about our continued safety record improvements.
Our safety record is among the best of any industrial company today. In 2014,
we decreased our Recordable Injury Frequency to 0.71. That’s a 9 percent
reduction from 2013. I think about how lives are better when injuries are
avoided. We started our intense journey to improve safety more than adecade ago, and we’ll never let up.
And our employees live in the communities near the Caterpillar facilities
where they work, so we are personally interested in preserving andimproving those communities. I think our people are proud of Caterpillar’s
work in their neighborhoods, all over the world. We’ve included just a
few examples in this report, including employees in Nashville, Tenn., whoprovide pro bono legal services and employees in Brazil who are preserving
native plants.
The Caterpillar Foundation supports dozens and dozens of efforts like thesethrough grants that are targeted to alleviate the root causes of poverty andprovide paths to self-sufficiency and prosperity. Since its formation in 1952,
the Caterpillar Foundation has given hundreds of millions of dollars to support
sustainable progress for families and communities across the globe.
Sustainable progress is not possible without access to reliable, clean andaffordable energy, water, food and shelter. At Caterpillar, we support thedevelopment of all of these.

Energy access is fundamental to prosperity.
Caterpillar knows that energy is fundamental to higher living standards andeconomic growth. We support traditional fossil fuels and technology that will
make those fuels burn more efficiently. We are also pursuing innovations thatutilize alternative and renewable resources.
Whether it’s our industrial engines that support energy production; our machinesthat excavate and build new dams and power plants; our generator sets thatpower medical clinics; or our diesel-electric locomotives that transport foodand materials across countries – Caterpillar actively leads the world in creating
better conditions for economic growth and opportunity.
We are a company built on values; 2015 is our 90th anniversary as a company
living and operating according to those values. We are a global team, thebest there is, and we will continue to make sustainable progress possible one
community at a time.

Doug Oberhelman
Chairman & CEO
Caterpillar Inc.

2014 SUSTAINABILITY REPORTLOCAL CITIZEN
Championing
a Cultureof Safety

Built In Quality

PropellingMore Value
TowardCustomers
Knocking Out
NOx Emissions
CHP
Greenhouses
Make Growing
Even Greener
Restoring
Mining Fields
to Nature

Black Belt
Delivers Blow
to Energy Wastein Thiruvallur

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Bridging Gapsin the Brazilian
Rainforest
Developing
Suppliers witha Long-Term
MindsetMeasuring
What Matters

2014 SUSTAINABILITY REPORTLOCAL CITIZEN

Local Citizen: Steven Rodriguez
Community: Victoria, Texas
How I make sustainable progress possible:
A 50% reduction in injury frequency

Built In Quality
Our goal at Caterpillar is to deliver the highest-quality machines for our customers, while manufacturing them in the safest, mostefficient way. To help us meet this goal, we introduced Lean manufacturing in 2013, with its foundational principle, Built In Quality(BIQ). BIQ works to ensure that processes are done right the first time, with the right tools, ergonomics and job training with a goalof eliminating unplanned, out-of-process rework to correct defects.
Our hydraulic excavator facility in Victoria, Texas, was part of the seriesof pilot facilities in which Lean manufacturing was implemented.
With BIQ now part of the facility procedures and culture, Steven
Rodriguez, team lead, uses BIQ methodology to trace defects backto their root cause and works to eliminate them. “My team wasvery excited about implementing BIQ,” says Steven. “We’re taking
ownership of what we’re doing on the production line. We find out
what would make a job easier and we get the manufacturing engineers
involved too.” The result? BIQ led to big reductions in production timeand in defects. “BIQ has made my life easier,” says Steven. “I do myinspections and, because there are fewer defects, I don’t have to takemy team away from the production line for rework.” Fewer defects
means less time on rework and fewer safety incidents.
Specifically, the production line is designed to safely and efficiently build
our products the first time, start to finish. Defects are unplanned andtherefore typically are addressed through out-of-process rework. Out-ofprocess rework is often conducted in areas called rework bays, without
the job-specific ergonomic design, tools and fixtures associated withregular production lines. Similarly, because this work is out of process,or “one-off,” employees are frequently performing tasks they’ve neverperformed or performed only a few times. Because of this, reducing theneed to address defects through out-of-process rework also decreases
the risk of injury. With the help of Lean and BIQ, as well as other safety
improvement initiatives, the Victoria facility has had about a 50 percent
decrease in recordable injury frequency (RIF), or safety injuries, from2013 to 2014, resulting in a RIF of 0.82 for 2014. Steven reminds us that
quality is important, but worker safety is still our highest priority. “We
ask, ‘How can we make it safer for my team so that we all go home to
our families at the end of the day?’” he says.

Watch to see more on how the
reduction in rework helped theVictoria, Texas, facility achievesafety improvements. Click here.

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2014 SUSTAINABILITY REPORTLOCAL CITIZEN

Local Citizen: Debbie Johnson
Community: North Little Rock, Ark.
How I make sustainable progress possible:
An engaged safety cultureChampioning a Culture of Safety
Debbie Johnson remembers her first day on the assembly floor of Caterpillar’s Earthmoving Division facility in North Little Rock
(NLR), Arkansas. “I can remember reminding people to put their earplugs in, and take their time and use the assembly platforms –expressing my concern that they get back safely to their families each day.” It was obvious that Debbie needed to be the facility’s
Safety Champion, a role she has filled for the past three-and-a-half years.
In 2014, Debbie was awarded the Caterpillar Safety Star for her
outstanding performance as Assembly Operations Safety Champion
in creating a safer environment for all employees. The Safety Staris a program to recognize employees who have contributed in asignificant way to their facility’s safety initiatives.
When Debbie began as Safety Champion, she built upon the safety
principles that had been well presented and emphasized during her initialassembly training. From the first day of the NLR Caterpillar operation(the days of digging dirt and assembling cabinets/desks), the Leadership
Team built a foundation of Safety First. Building on the basics of thiswell-developed plan, we sought to establish a more visible and sustainablesafety culture. She recalls, “In May of 2011, the operations group manager
called me into his office and gave me a list of about 15 brief items. He said,‘This is my vision for safety. Let’s start on a plan for safety.’

Debbie began to develop methods for achieving that vision, alongwith standards that could be used to identify, define and measuregoals along the way. She also joined a team that helps identify root
causes of incidents and implements actions to reduce the possibilityof repeated hazards. “I make it my personal goal, each day,” shesays, “to make a positive impact on an individual, bringing them tothe realization of the impact they have on their individual lives andthe lives of others, just by making safe and rational decisions.”
The challenge was to develop processes that would encourage
participation, produce visible results and maintain a solid foundationof continued involvement. “We had to recognize that, even though
we had a personal commitment to developing and maintaining aprestigious, sustainable safety culture, it would take the education,
willingness and engagement of all individuals to actually makeit happen.”
Accordingly, Debbie set out to foster a contagious safety culture
with the help of Caterpillar Safety Services and the Zero-Incident
Performance (ZIP TM) process. The facility recordable injury frequency
results reflect the impressive progress on safety culture over that time –improving 89 percent from 2011 to 2014. And she continues to develop
and introduce ways to increase the visibility, efficiency and sustainabilityof the safety culture at North Little Rock. “It is really satisfying to belinked, in some way, to basically everyone in the facility. We are dedicated to expressing the importance of taking individual responsibility
for safety and to ensuring that Caterpillar families and friends knowof our commitment to keeping one another safe.”

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2014 SUSTAINABILITY REPORTLOCAL CITIZEN

Local Citizen: Allen DeClerk
Community: Mossville, Ill.
How I make sustainable progress possible:
A 70% increase in productivity

Measuring What Matters
Insufficient compaction of soil in earthworks construction ends up costing big. Poor stiffness of soil, sand and aggregates(the building blocks of roads, building pads and bridge abutments) costs taxpayers billions of dollars per year in reconstruction
and damage to vehicles. Additionally, roadway construction deficiencies contribute to the $180 billion in annual costs to maintainthe 4 million miles of U.S. roadways. Those poor road conditions are often tied to the materials they are sitting on.
In conversations with earthworks construction customers, Allen DeClerk,marketing consultant in Caterpillar’s Advanced Components and Systems
Division, heard the same point expressed again and again. The Intelligent
Compaction (IC) systems on customers’ compaction machines thatmonitor the level of compaction and tell the operator when sufficientcompaction is achieved were greatly limited. IC methods only worked onhigh stiffness granular materials, and then only when the machine wasoperating in a vibratory mode.
Material on many work sites, however, includes sand or clay, or
requires non-vibratory compactors. “On these sites,” says Allen,“customers were forced to use manual measurement methods,
essentially leaving the operator and site foreman ‘flying blind’
until work was halted for an inspection with special equipment.”
Furthermore, the time, cost and safety risk associated with inspection
meant typically less than 1 percent of the total compacted area wasactually measured for quality assurance. Clearly, better technology
was needed to verify that design requirements were being met for
the full range of materials used in road construction.
Allen began researching IC measurement methods for large static soil
compactors. Of the measurement technologies evaluated, the power-trainbased machine drive power (MDP) measurement method was chosen
for continued development. Allen was the primary research engineer
who set up the machine systems and worked closely with the customers
to evaluate the measurement system. “Caterpillar’s MDP system

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works on the principle of rolling resistance,” Allen explains. “Forexample, rolling a loaded wheelbarrow over concrete is much easierthan pushing it through soft garden soil. This is because the concrete isstiffer and has higher load-bearing strength. This load-bearing strengthof the soil is exactly what MDP measures, providing a truer indicationof quality than conventional systems, which measure the reflectedenergy of a compactor’s vibrating drum to estimate soil stiffness.”
The benefits of MDP to the customer are substantial. “On specific customer
projects, we have seen productivity increases in the compaction process,and corresponding CO2 emissions reductions, of up to 70 percent,” Allensays. “When the customer uses the technology to better control theirprocess, they have a better assurance that they are going to pass
whatever verification is needed.” The machine-based system has theadded benefit of measuring 100 percent of the material being compacted,
versus 1 percent or less with traditional, manual measurement methods.
This results in a more uniformly compacted fill that ultimately leads toimproved service life of the constructed asset.
“I am extremely proud of the whole team that worked to bring thetechnology to market,” says Allen. “For me, the most satisfying aspectof this project was uncovering a customer need that was not widely
recognized at the time, and leading the industry with an innovative
solution to meet that need. Seeing the technology from researchthrough production will be the high point of my career.”2014 SUSTAINABILITY REPORTLOCAL CITIZEN

Local Citizen: David Stansel
Community: San Diego, Calif.
How I make sustainable progress possible:
A 60% reduction in NOx emissions

Knocking Out NOx Emissions
David Stansel has spent a lot of time rolling along remote Canadian roads to conduct field trials of the combustor liners for Solar
Turbines’ SoLoNOx™ gas turbines. His mission was in cooperation with a Solar customer who operates gas transmission lines
throughout Canada, involving scores of gas turbines from many manufacturers.
David, now group manager of SoLoNOxTM sustaining combustion
engineering, was in Alberta to learn how the Mars ABC combustor
liner performs in places where the temperatures fluctuate greatly.
“In the summer we saw moose and deer, miles of grain fields andforests. In the winter, the place was bitter cold and covered in snow
– perfect for demonstrating product performance and robustness atconditions we never see in our San Diego headquarters,” says David.
“The operators told us about the reliability and trouble-free operationof our equipment, which is a key product requirement, along with the
improved local air quality that is helping to preserve the beauty ofthese remote locations.”

The SoLoNOx system uses lean-burn technologies to reduce NOx
emissions. SoLoNOx turbine systems convert fossil fuels into usefulwork or electricity. By improving combustion technology, Solar is able
to do this with a much smaller impact on the environment in the formof NOx emissions and without the need for additional exhaust gas
control measures. The SoLoNOx system has been installed on morethan 3,000 turbines, and most of Solar’s current engine models canbe equipped with the improved system.
“It’s a pretty significant accomplishment that the new system emissions
levels are expected to be better than 60 percent below previous levels,”says David. “I am gratified to visit customers and hear about how reliable
the new system is; it just works right.”
The engineering behind the technology, however, was not without
its challenges. One technical challenge was to keep the metal wallsof the combustor liner cool enough while minimizing the amount ofcooling air that would flow into the combustion space and disrupt thechemical reactions. The solution turned out to be a combination ofa thin layer of ceramic coating on the hot side of the metal wall andthe process of completely cooling the backside of that wall. The teamleveraged experience from previous efforts and conducted extensive
heat transfer calculations and tests to achieve the final design.
“I love being able to deliver what customers desire,” David says.
“We have a great team that accomplished a really successful program.
We feel good knowing we are making a difference and helping ourcustomers to make a difference too. There is also a sense of satisfaction
in knowing that our hard work results in fewer NOx emissions.”

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2014 SUSTAINABILITY REPORTLOCAL CITIZEN

Local Citizen: Mattias Hansson
Community: Gothenburg, Sweden
How I make sustainable progress possible:
A customer-reported 30% gain in
fuel efficiency

Propelling More Value Toward Customers
For an inventor, perhaps the biggest thrill is for your design to perform even better than you imagined. Mattias Hansson knows the
feeling. He is a naval architect and one of three inventors, including Bjørnar Helgesen, SMG, and Bjørn Moving, OMT, who together
in close cooperation, designed and developed Caterpillar Marine’s new twin fin propulsion concept, which brought home the 2014
Technical Innovation Award from the Seatrade Maritime Awards in Dubai. “It was challenging to introduce something new that
didn’t exist in the market, as well as to develop new processes,” says Mattias.
The twin fin system was initially developed as a solution to makevessels operating in Arctic conditions less vulnerable to damaging
the propulsion system. For modern offshore vessels, thrusters andpropellers are the most common diesel electric propulsion system.
As vessels are increasingly deployed in more remote and harsh
operating environments, however, wear and dynamic loads too
often lead to unexpected breakdowns. Repairs usually require
heading to dry dock, resulting in significant downtime and costs.
Conventional diesel-electric or diesel mechanical propulsion systems canbe more reliable than thrusters and propellers. In this case, however,
the gear, shafts and machinery take up valuable space inside the vessel,

while retrofitting is difficult and time-consuming. Mattias and his team
were able to devise a solution that combined the best aspects of bothtraditional propulsion systems. “Originally, we were only looking forthe safety and protection angle – to protect the twin fin propulsion
system in harsh conditions,” says Mattias. In combination with thecompact hydrodynamically optimized and tailor-made fins, we also realizedthat we could utilize larger, slow-turning propellers operating at highpitch setting in order to increase the total propulsive efficiency. On topof that, we could minimize the mechanical losses in the components byusing a short drive shaft having only one stern tube bearing. Dependingon the vessel’s draft limitations, the fins can be shaped and positioned
based on the calculations/simulations either above or preferably below
baseline, allowing even larger propellers. With the wide Cat® and MaK™
engine system portfolios, we are able to find the optimum solutions toincrease the total efficiency on the entire vessel.
Twin fin will be tailored, in close cooperation with our clients, dependingon the vessel requirements, purpose and operational profile. The systemprovides an efficient concept that features a built-in condition
monitoring system and a closed-water lubricated stern tube solution.
Major equipment is accessible from inside the vessel to avoid drydocking, and the combined effect is that the fins provide extra cargospace and increased buoyancy as well as improved maintenancecapability. Because all equipment is contained within the external fins,twin fin is applicable to both new builds and retrofits, where it replaces
existing propulsion.

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2014 SUSTAINABILITY REPORTLOCAL CITIZEN

Propelling More Value Toward Customers (continued)
The first twin fin installation was a retrofit on a seismic
survey vessel earlier in 2014, replacing existing azimuth thrusters.
The ship reported no reliability problems, a 30 percent gainin fuel efficiency and performance improvement of 84 percent
in bollard pull thrust during seismic conditions. These benefits
are expected to boost the customer’s revenue by approximately$3.3 million per year. Through prefabrication, the retrofit
could be accomplished within a 45-day yard stay and withminimum conversion of existing equipment. The customer
reports this is approximately one-third of the time taken
for comparable retrofits of propulsion. We look forward to
retrofitting a sister vessel.

Mattias and his team couldn’t ask for better results. “Caterpillar
and our partners have done a great job performing at the highest
level, turning this concept into reality to maximize uptime,minimize overall running costs and provide a solution thatminimizes life cycle costs for our customers and improves
the environmental footprint.”

For more about the newtwin fin concept and Polarcus
seismic vessel retrofit.
Click here.

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2014 SUSTAINABILITY REPORTLOCAL CITIZEN

Local Citizen: Maheswaran Govindan
Community: Tamil Nadu, India
How I make sustainable progress possible:
The elimination of 3,000 metric tons of
CO2 emissions

Black Belt Delivers Blow to Energy Waste in Thiruvallur
6 Sigma Black Belt Maheswaran Govindan had his work cut out for him. As project lead and change agent for a major electric
power conservation project at Caterpillar in Thiruvallur, India, Maheswaran and his team were charged with finding better ways
to monitor and significantly reduce the facility’s overall power consumption.
The team began by evaluating a day in the life of the facility. “It wassoon apparent that the potential for energy reduction improvements was
not confined to a single area, but could be implemented across the entire
facility,” says Maheswaran. He and his team reviewed the value streams
and targeted the inefficiencies. One finding: power usage was not wellcorrelated with work schedules, which are based on fluctuating demand.
In addition, they found unnecessary energy consumption by water
pumps, air compressors, security lights and other equipment during
nonproduction hours.

Armed with their findings, the team used statistical modeling and analysis
to identify improvement opportunities in energy conservation. “We
implemented everything – from volume-based work schedules, shiftoperations and office usage to minimized lighting requirements to reductions in power consumption to increased utility equipment efficiency,”
explains Maheswaran.
The results were dramatic. By the end of 2014, these initiatives had
already avoided 3,000 metric tons of CO2 emissions and saved theplant more than $234,000.
The positive results from his team’s hard work speak for themselves,
but Maheswaran is especially gratified to see that the impact of the
project runs even deeper. “What brings me perhaps the most satisfactionis the cultural change these adjustments have made in the energy
conservation approach of the entire team at Thiruvallur.”

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2014 SUSTAINABILITY REPORTLOCAL CITIZEN

Local Citizen: Roelf Koster
Community: Rotterdam, Netherlands
How I make sustainable progress possible:
A 90%-plus energy utilization efficiency

CHP Greenhouses Make Growing Even Greener
Today, more than 24,700 acres of vegetables and flowers are growing under glass roofs in greenhouses in the Netherlands, and,increasingly, combined heat and power (CHP) power plants with gas engines generate the energy they need. CHP is an efficientapproach to generating electric power and recovering useful thermal energy from the engine waste heat simultaneously, andrecovering CO2 emissions for use as a plant nutrient.
CHP greenhouse power plants with gas engines first took hold in the
Netherlands, and then in neighboring Belgium, in the 1970s and 1980s.
Now, Roelf Koster, sales manager at MWM Benelux B.V., a wholly
owned subsidiary of Caterpillar Energy Solutions GmbH, helps growers
beyond the Netherlands to produce tomatoes, peppers, cucumbers,
flowers and more in greenhouses that are more efficient than everbefore. In the last five years, MWM Benelux delivered CHP plants forgreenhouses to growers in Germany, Greece, Ireland, Russia and Spain.
Greenhouses are typically a family business and frequently decisions
are made by the grower and their family at their kitchen table. Roelf has
spent numerous hours consulting and in commercial negotiations withgreenhouse owners, and he has learned much about greenhouse
operations, crop growing, crop marketing and installation techniques
for all equipment in the greenhouse. This knowledge is necessary

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for fully understanding the complex energy needs of a greenhouse crop.
”This is a very exciting business to be in,” says Roelf. “While we try to
standardize our product offering, in practice every CHP project isalmost ‘custom-made’ to fit a specific greenhouse in a specific location,
so delivering a solution for these unique technical and commercial needsof a particular greenhouse grower is very rewarding.”
The needs of growing plants are relatively simple. Besides sunlight,
growing plants need warmth, water, nutrients and CO2 to thrive.
Traditionally, growers run natural gas boilers to heat water and keep
the roots of their plants warm, and use electricity from the grid to
run grow lamps, pumps and other equipment. With CHP systems, MWM
is helping change the model of how modern greenhouses function.
Bearing little resemblance to a typical farm, modern large greenhouses
are, in reality, complex, high-tech factories that produce food and othercrops. A natural gas Cat® or MWMTM generator set produces electrical
power for the greenhouse needs, and any excess electricity can be soldto the utility company and fed back to the grid. The extra heat from theengine is collected to keep the greenhouse warm and heat water thatis also stored in large tanks to continue warming the plants throughout
the night. Meanwhile, the CO2 in the exhaust from the generator set –traditionally emitted to the atmosphere – is purified and cycled backinto the greenhouse air to fertilize the plants during the day. In addition
to the benefits from CHP, if there is enough rain, in modern greenhouses
the rainwater can be 100 percent recycled, so growers use only thewater that falls on their roofs. The water is continuously used andreused, cleaned and cleaned again, for all these applications. What2014 SUSTAINABILITY REPORTLOCAL CITIZEN

CHP Greenhouses Make Growing
Even Greener (continued)
was once considered waste is now useful inputs – yielding
efficient energy production and CO2 fertilization.
The benefits of CHP systems and CO2 fertilization with gas
engines in greenhouses are clear – less waste and lower
heating, electricity and CO2 production costs, to name a few.
Modern CHP systems with gas engines deliver total energy
utilization efficiencies of over 90 percent. In greenhouses, thepotential yield is very efficient, as well – for example, a greenhouse tomato grower can obtain about 15 times more pounds
per acre than would be possible in an open field. That’s more
food in less space – and it can be grown locally year-round,even in the coldest winter. Typically, vegetables and flowers
from a greenhouse are exceptionally consistent in shape andsize and have clean surfaces free from outside dust and insects.
As the security of the food supply becomes an increasing
concern, this level of efficiency and product quality is a benefit
for greenhouse growers and consumers.

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For Roelf and others involved in promoting CHP generation ingreenhouses, it’s satisfying to be part of an industry that’s
making a difference. Roelf notes, “Natural gas-driven CHP
plants use our precious natural resources in an efficient way.
It is, indeed, best-in-class energy conservation.”
Though he finds the customer relationship-building part of
his job to be most satisfying, Roelf also appreciates its rolein making sustainable progress possible. “For a growing
population, our activities make sense!” As Mauricio Lopez,a marketing professional in our North American organization notes, “It’s great, as a Caterpillar employee, involved ingreenhouse CHP projects, to open my refrigerator and show
my family the results of my work. It’s even greater to know that
our CHP equipment helps to produce these shiny, great-looking,delicious tomatoes and mini-cucumbers, while also efficiently
generating power and using CO2!”2014 SUSTAINABILITY REPORTLOCAL CITIZEN

Local Citizen: Brad Tilly
Community: Peoria, Ill.
How I make sustainable progress possible:
The reclamation of 730 acres

Restoring Mining Fields to Nature
Pheasant, grouse, deer and an occasional soaring eagle are among the diverse wildlife that make their home in the 730-acre Coal
Lake Wildlife Management Area near Underwood, North Dakota. Public access to the area allows local hunters, fishermen andother outdoorsmen to enjoy pristine Coal Lake, surrounded by woody ravines, wetland and native grassland habitats, as well as
fields of crops and hay.
Twenty years ago, this land was a very active part of what is still asignificant coal mining operation. Today the coal mining in this area
is complete and, as a result of the detailed reclamation project in theirlong-term mine plan, Caterpillar customer Falkirk Mining Company,a subsidiary of the North American Coal Corporation, in partnershipwith its customer, Great River Energy (GRE), has reclaimed the mined
land and has donated it back to the people of North Dakota in a similaror better condition than before they mined it back in the 1990s.
North Dakota, with its coal mining operations and its thriving oil andgas production in the Bakken region, is a focal point in the U.S. boom inenergy independence. With a fleet of Cat® machines supported by Cat®
dealer Butler Machinery, Falkirk delivers approximately 8 million tons ofcoal annually to GRE’s nearby power plant – a co-op that uses coal togenerate electricity that serves several states, as far away as Minnesota
and Wisconsin.

“Our relationship with North American Coal and Falkirk is really strong,”
explains Brad. “We’re very interested in providing the best experience toFalkirk and North American Coal, and we know that they’re interested in
making sure it’s a good relationship for Caterpillar and our dealers.”
In the mining process at Falkirk, Cat® equipment is used to remove topsoil
and subsoil and preserve it for land reclamation. The coal lies under theremaining overburden, about 60 to 120 feet under the surface. Afterthe coal is removed and the mining in a particular area is completed,the steps are reversed to replace the native soil layers, seed the area,
and reclaim the land. Although grading the replaced soil to a flat surface
would be much easier, many additional hours and special care are taken topreserve the trees and to sculpt the land back to its approximate original
topography. That’s where the superior handling of Cat® machines andadvanced technology makes a tremendous difference in restoring theland to same-or-better condition than before mining took place.

Cat® equipment is involved throughout the entire mining process, including
the reclamation work. Brad Tilly, Caterpillar’s North American Coal Global
Account manager, is proud to be part of this thriving customer team that
includes many Cat ® dealers around the country.

15 CATERPILLAR INC.

2014 SUSTAINABILITY REPORTLOCAL CITIZEN

Restoring Mining Fields
to Nature (continued)
In 2014, this reclaimed piece of land became part of a specificwin-win solution for the region. When two highways werewidened in the 1970s, the North Dakota Department ofTransportation (DOT) agreed to offset that land use by managing
the highways’ right of way as wetlands and wildlife habitat,
essentially closing over 8,000 acres to haying. The decision
by Falkirk and GRE to donate the 730 acres to the DOT allowed
the agency to take the final step in a plan to return the right ofway land to the farmers who live along the highway, essentiallyexchanging the donated land for its equivalent.

16 CATERPILLAR INC.

Caterpillar is committed to supporting all of our customers
as they provide jobs and produce energy. But we’re always
looking for ways to help our customers. As Brad notes, “At
Caterpillar, of course we have machines and parts, and thedealer provides the service, but I think we go a step beyond.”

Watch and learn more about the
Coal Lake Wildlife Management
Area and Caterpillar’s role inreclaiming mined land. Click here.

2014 SUSTAINABILITY REPORTLOCAL CITIZEN

Local Citizen: Monica Salles
Community: Piracicaba, Brazil
How I make sustainable progress possible:
The protection of endangered forests

Bridging Gaps in the Brazilian Rainforest
An investment in environmental sustainability is likewise an investment in our quality of life. That’s the message that Monica Salles,
Caterpillar Corporate Responsibility consultant, communicates often in her work with the ConBio Campo Largo project in southern
Brazil. The objective of the two-year initiative is to preserve green, urban areas and protect endangered forests in Brazil, as wellas improving public understanding of conservation. Funding is provided through a $500,000 grant from the Caterpillar Foundation,and the program is executed via a partnership between the Pan American Development Foundation (PADF), a hemispheric development
organization and SPVS – Society for Wildlife Research and Environmental Education (Sociedade de Pesquisa em Vida Selvagem
e Educação Ambiental), a traditional Brazilian conservation organization.
ConBio operates in the Atlantic Rainforest biome, which ranges along
almost all of the Brazilian coast and into portions of Paraguay andArgentina. “This biome has almost disappeared,” says Monica. “Lessthan 7 percent of the original biome remains, much of the area insmall, degraded patches.”

Then it provides educational activities that emphasize the importanceof maintaining biodiversity and its relationship to quality of life. Whatemerges is a collective sense of ownership and responsibility for environmental management and conservation of these vital spaces, as well as
the tools and skills they need to do something about it.

Connecting the local Campo Largo community with its urban green
areas is key to ConBio’s success. The project brings together a networkof students, teachers, property owners and employees from Caterpillar.

Monica enjoys her role in bringing people together and empowering
them to make a difference. “There’s a lack of media coverage aroundpositive environmental initiatives,” she says. “We see news about every
environmental disaster, but positive news about good practices, likethose addressing conservation of biodiversity, are rare. So it’s importantfor us to support environmental education and conservation of ournative plants and species.”
The good news for Campo Largo is evident in a better quality of life
for all members of the Atlantic Rainforest, both flora and fauna. In
improving the quality of the ecosystem, the project enables improved
air quality, pollination, more fresh water and the return of animals,
birds and plants to green areas where key native species like theAraucaria evergreen are being preserved.

17 CATERPILLAR INC.

2014 SUSTAINABILITY REPORTLOCAL CITIZEN

Bridging Gaps in the Brazilian Rainforest (continued)
Caterpillar knows that environmental sustainability doesn’t end with a project – it’s a philosophy and a core value. Caterpillar
executives demonstrate this when they visit Campo Largo. Nobody leaves without planting a tree. “I’m proud to be a part ofthis project,” Monica concludes. “When I see Caterpillar and the Caterpillar Foundation support projects that work toward thecommon good and a more sustainable future for all, it confirms our legacy of being good citizens wherever we are.”

FAMILY DAY IN BRAZIL GROWS TO INCLUDE TREE PLANTING
Our EMD locomotive manufacturing facility in Sete Lagoas, Minas
Gerais, Brazil, turned a family day event into an opportunity to plantnative trees. Minas Gerais lies in one of the most biodiverse regionsof Brazil, including savanna, semidesertic and rocky highlands areas.
Employees and their families took part in “Our Green House,” helping
to plant some of the more than 100 seedlings to enhance the grounds.
The trees also provide shady areas for Caterpillar employees to enjoy.
In addition to planting trees, the day gave employees’ families theopportunity to watch presentations about Caterpillar, as well as tour
the facility and the interior of a locomotive.

18 CATERPILLAR INC.

2014 SUSTAINABILITY REPORTLOCAL CITIZEN

Local Citizen: Frank Li
Community: Beijing, China
How I make sustainable progress possible:
Higher productivity in the supply chain

Developing Suppliers with a Long-Term Mindset
When Frank Li moved to procurement for Caterpillar Asia Pacific, most of his suppliers were smaller-sized facilities. Fifteen years
later, some of these suppliers are leaders in the region, while others are becoming world-class suppliers. Frank views this as thebest part of his job. “In working with our supplier base, I see them grow every day. I’ve seen great results from working with local
suppliers – Caterpillar and the local community both benefit from the suppliers’ success.” And suppliers benefit from our success.
But to achieve this, collaboration is critical.
As segment manager for fabrications and non-metallics, Frank identifies
training and development opportunities from the supply base and thenworks with various teams within Caterpillar’s Global Supply Network
Division to identify solutions. Examples include the Caterpillar Production
System for Suppliers (CPS4S), which teaches suppliers how to integrate
the same efficiencies that Caterpillar does in its facilities; lean principles;
scheduling training for welding or painting; 6 Sigma Black Belt or Advanced
Product Quality Planning (APQP) training for staff and first-line supervisors;
and a Leadership Excellence in Accountability and Development (L.E.A.D.)
core program for core supplier senior managers.

Frank provides coaching to the supplier base as well, often during regularsupplier performance reviews and site visits. In the past few years, thenature of that coaching has shifted. “Previously our main effort wasto train suppliers on quality control and technical compliance,” Franknotes. “Now they know how to make a qualified part, understand computer-assisted design and have basic quality-control tools. What theyneed now is coaching on the ‘soft’ side – employee development, leadership and project management.” He adds, “As our suppliers grow, andour expectations grow for them to supply regionally or globally, theyneed to ensure they have the right people management systems inplace, and they need to be able to replicate their processes consistently in multiple facility locations.”
In addition, labor costs are increasing and environmental regulations are
becoming stricter in China. Efficiency must improve in order to increase
production with the same resources. Since it was introduced to suppliersin China four years ago, CPS4S has helped them use current resources toreduce waste and be more efficient.
That’s also long-term thinking. China’s development has been so rapidthat many manufacturers have focused on the short term. In contrast,
Frank encourages suppliers to look ahead, and that philosophy has paid
off. “Throughout the slowdown that China has been experiencing overthe last few years,” Frank observes, “we have maintained stability in our
supply chain because, right from the beginning of our relationship,
we teach our suppliers to plan ahead for the long term. They’ve learned
from experience that they and their communities have room to growwith Caterpillar.”

19 CATERPILLAR INC.

2014 SUSTAINABILITY REPORTOUR APPROACH.

VISIONOur vision is a world in which all people’s basic needs –such as shelter, clean water, sanitation, food and reliable power –are fulfilled in an environmentally sustainable way anda company that improves the quality of the environment
and the communities where we live and work.

MISSION
Our mission is to enable economic growth through infrastructureand energy development, and to provide solutions that support
communities and protect the planet.

STRATEGY

Our strategy is to provide work
environments, products, services and solutions
that make safe, productive and efficient use ofresources as we strive to achieve our vision.
We apply innovation and technology to improve thesustainability performance of Caterpillar’s products, services,
solutions and operations. We believe sustainable progress ismade possible by developing better systems that maximize
life cycle benefits, while also minimizing the economic,
social and environmental costs of ownership,as reflected in our sustainability principles.
We will execute our strategy by working
to meet our aspirational sustainable
development goals.

20 CATERPILLAR INC.

2014 SUSTAINABILITY REPORTOUR APPROACH

Business Overview
For 90 years, Caterpillar Inc. has been making sustainable progress possible and driving positive change on every continent. Customers turn toCaterpillar to help them develop infrastructure, energy and natural resource assets. With 2014 sales and revenues of $55.184 billion, Caterpillar is theworld’s leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives.
The company principally operates through its three product segments – Construction Industries, Resource Industries and Energy & Transportation,
and also provides financing and related services through its Financial Products segment.

3+ MILLION UNITSANY JOB SITE
3

9

1

10
6
4
5

7
8

MAJOR PRODUCT GROUPS INCLUDE:
ARTICULATED TRUCKCOMPACT TRUCK &MULTI-TERRAIN LOADERDRAGLINEDRILLELECTRIC ROPE SHOVEL
ENGINE
GENERATOR SET
HIGHWALL MINER

HYDRAULIC EXCAVATORHYDRAULIC SHOVEL
LOCOMOTIVEMARINE PROPULSION SYSTEMSMOTOR GRADER
OFF-HIGHWAY TRUCKON-HIGHWAY TRUCKPIPELAYER
SKID STEER LOADERTRACK EXCAVATOR

GLOBALTEAM

21 CATERPILLAR INC.

TRACK LOADERTRACK-TYPE TRACTORTUNNEL BORING
TURBINEWHEEL DOZERWHEEL EXCAVATORWHEEL LOADERWHEEL TRACTOR-SCRAPERWORK TOOLS AND ATTACHMENTS

visit www.caterpillar.com/brands

TO VIEW OUR PORTFOLIO
OF BRANDS

2

MAJOR AREAS
AND INDUSTRIES SERVEDAGRICULTURE
CONSTRUCTIONCUSTOMER SERVICESDEMOLITION AND SCRAP RECYCLING
ELECTRIC POWER GENERATIONFINANCING
FORESTRY
GOVERNMENTAL & DEFENSEINSURANCELANDSCAPING
LOCOMOTIVE & RAILWAY
MAINTENANCE AND REPAIR
MARINE
MATERIAL HANDLINGMININGOEM SOLUTIONSOIL & GASPAVINGPIPELINE
POWER PLANTSQUARRY, AGGREGATES AND CEMENTREMANUFACTURINGRENTALSAFETYTECHNOLOGY & SOLUTIONSTRAINING
WASTE

2014 SUSTAINABILITY REPORTOUR APPROACH

About this Report
At Caterpillar, our sustainability practices are focused on ways to maximize the life cycle benefits of our products while minimizing the economic,
social and environmental costs of ownership for Caterpillar customers. Our most recent results are reflected in this 2014 Sustainability Report,
and build on the themes and results described in our 2013 report.
In preparing the content for this report, Caterpillar consulted the Global Reporting Initiative G4 reporting framework to serve as an informal guideline.
The reporting period is the 2014 calendar year, which is also Caterpillar’s fiscal year. Report content represents 100 percent of the products and operationsof Caterpillar Inc. and its subsidiaries where we have a controlling financial interest. Where noted, Caterpillar’s independent dealer network and supply
chain are also represented. Caterpillar and subsidiary brands are listed here: http://www.caterpillar.com/brands. Caterpillar’s environmental and safety
metrics for operations are consolidated based on the Greenhouse Gas Protocol (GHG Protocol) “operational control” approach. Caterpillar isheadquartered in Peoria, Ill., USA.
Key sustainability aspects
With the recognition of Sustainability as one of our core Values, we reviewed and updated our sustainability priorities and strategies in 2014 througha “materiality assessment.”
Identification of relevant aspects
A total of 35 sustainability aspects were identified and defined, covering environmental, social and governance considerations. Sustainability aspects
were selected based on our existing strategy and goals, peer reviews and criteria in external indices and frameworks, such as the Dow Jones
Sustainability Index and the Global Reporting Initiative.
Assessment of aspect influence on stakeholders and business
The engagement process described below included a combination of surveys and a workshop to collect input from a wide range of Caterpillar leaders
as well as both internal and external stakeholders.
• A n anonymous survey was conducted of our customers, employees, stockholders, dealers, suppliers, nongovernmental organizations, tradeorganizations and academia. Over 100 of our stakeholders participated, identifying the sustainability aspects most influential to them in theirdecisions about Caterpillar.
• An anonymous survey was conducted of Caterpillar executive officers, vice presidents and other key directors and managers to obtain insightfrom our strategic leaders as to the sustainability aspects most important to the success of our business.
• A matrix was developed that incorporated the information collected from both stakeholder surveys. The matrix provided a simple means tocompare the perspectives and priorities of Caterpillar leaders with other stakeholders. It also facilitated the identification of aspects where
the two groups were in agreement versus aspects where their opinions differed.

22 CATERPILLAR INC.

2014 SUSTAINABILITY REPORTOUR APPROACH

About this Report (continued)
Validation of assessment results
Survey results were plotted on a matrix that was considered in a follow-up workshop to further inform our sustainability strategy and externalreporting efforts. The workshop included our External Sustainability Advisory Board – a group representing NGOs, academics and trade organizations
that, throughout the year, provides valuable insight to Caterpillar on external sustainability trends, expertise from their respective areas and feedback
on strategic initiatives. In addition, the workshop included several Caterpillar vice presidents, our internal Sustainability Council, Sustainable
Development team and our chairman and CEO. Insights gained from the workshop were combined with the survey results and matrix and used torefine and prioritize Caterpillar’s material aspects. These aspects will be used to inform and direct future activities for strategic improvements.
Prioritization of aspects
While stakeholders universally agreed that all 35 aspects identified were of importance, the process enabled Caterpillar to prioritize the nine
aspects described below. These aspects primarily focus on the impact of our products while in use by our customers, the operation andsuccess of our business, and the safety of our employees and customers. Although these aspects are specifically identified in this report,
we recognize that priorities will vary by Business Unit and by region. We are committed to continuing to report on other aspects as well –in particular, the environmental impacts of our manufacturing operations.

23 CATERPILLAR INC.

2014 SUSTAINABILITY REPORTOUR APPROACH

About this Report (continued)
Caterpillar Key Aspects
Key Aspect

Definition

Report Content

Business Ethics and Core Values

Provide a global culture guided by business ethics andCaterpillar’s Values: Integrity, Excellence, Teamwork,
Commitment and Sustainability, including a Code of
Conduct to avoid instances of corruption, unethicalbehavior, bribery, extortion and anti-competitive behavior.

• Governance & Ethics

Strategy

Establish an overall vision and strategy for the short term,
medium term and long term, particularly with regard to
managing the significant economic, environmental andsocial impacts, risks and/or opportunities with respect
to Caterpillar’s operations and products.

• Vision & Mission Strategy• Chairman’s Message

Financial Performance of the Enterprise

Maintain healthy economic performance of Caterpillar,
including revenue, supply chain, demand for products
and services, access to capital, stockholder value andoperating costs.

• Year in Review: Performance

Product Performance – Customer
Health & Safety

Provide for and promote the safety and health of Caterpillar
customers’ operating products/equipment through productdesign/engineering, training and solutions specific to job sites.

• Product Stewardship:
Customer Health & Safety

Product Performance – Energy Efficiency/GHG
and Other Air Emissions

Establish more energy-efficient Cat ® products and, as a result,contribute fewer greenhouse gas and other air emissions to
the environment (e.g., Tier 4, fuel efficiency, fuel diversity).

• P roduct Stewardship:
Customer Sustainability• E nergy & Climate

Product Performance – Development for theLife Cycle

Develop Cat products using designs, processes, and materials
that emphasize quality and ability to be remanufactured,rebuilt, reused or recycled.

• P roduct Stewardship:
Circular Flow Materials

Dealer Network

Engage and work with our independent Cat® dealers toenable them to effectively build and maintain customer
relationships and improve efficiency and performanceof products and services to meet the needs of a global
customer base.

• Dealer Network

Innovation Management

Develop systems that enable Caterpillar to achieve innovative • Product Stewardshipproduct and process breakthroughs such as integration of• Feature Stories
information technology systems (e.g., GPS, remote monitoring,
autonomy) and technologies that improve energy efficiency,
emission reductions and carbon capture and storage.

Employee Occupational Health & Safety

Provide for and promote the health and safety of Caterpillar’s
global employees and contractors, as measured by avoidanceof recordable incidents/fatalities/lost days/absenteeism.

24 CATERPILLAR INC.

• Workforce Health & Safety

2014 SUSTAINABILITY REPORTOUR APPROACH

Sustainability Principles
Sustainability is part of who we are and what we do every single day. We recognize that progress involves a balance of environmental stewardship,social responsibility and economic growth.
Caterpillar Sustainability Principles drive our commitment to make sustainable progress possible.
Prevent Waste (Improve Safety, Efficiency and Productivity):
By increasing the safety, efficiency and productivity of processes and products, wereduce cost and minimize the use of materials, energy, water and land. We provide
a safe work environment and the tools and training employees need to work safely.
We provide customers with products, services and solutions that improve thesustainability of their operations.
Improve Quality (Team, Community, Environment and Operations):
We focus on improving quality for our company, customers, communities,
environment and the quality of life for our employees. We use Lean and6 Sigma to improve the sustainability of our operations and products.
Our employees and their families experience a better quality of life whenthe quality of our company, communities and the environment is maintained.
We attract and develop the best team.
Develop Better Systems (Innovate):
We leverage innovation and technology to maximize efficiency and productivity.
We remanufacture, rebuild and recycle to conserve resources for multiple life
cycles. We develop products that contribute to communities through infrastructuredevelopment and energy access. We develop better systems throughout the value
chain, “engineering the whole chain, not just the links” in order to maximize life
cycle benefits.

25 CATERPILLAR INC.

Prevent
Waste

Develop
Better
Systems

Improve
Quality

2014 SUSTAINABILITY REPORTOUR APPROACH

The Value of Sustainability Leadership
Compliance with all applicable regulatory requirements is always a minimum expectation for Caterpillar employees. However, if we focus only on meeting
requirements imposed by external interests, we may fail to consider innovations that could be more effective. Caterpillar is committed to working with
our employees to develop proactive options for enabling sustainable progress. This sustainability report focuses on contributions that employees havemade to sustainability leadership that have led to community improvements, environmental benefits and compelling business prospects.
This report demonstrates how multiple benefits can be achieved by operating more sustainably for our stakeholders, including employees, customers,
dealers, and the communities and environment where we work and live. These benefits include:
Environmental Stewardship Benefits• Reduced emissions, by-products and wastes• Preservation of resources for future generations
Social Responsibility Benefits• Reduced hazards and enhanced safety conditions• Better quality of life in our communities• Improved career opportunities for our employees
Economic Growth Benefits• Reduced resource use and costs• Improved life cycle benefits and minimum cost of ownership to our customers• Improved reputation and market differentiation
We recognize that the constraints placed on our planet’s resources are increasing and we are committed to being a global leader, driving sustainable
progress. Our products, services and solutions are deployed at the forefront of many of the world’s biggest challenges. They are used to constructcommunity infrastructure that improves access to water, sanitation and transportation. They are used to extract all types of resources ranging fromminerals to timber, and they are used to restore the lands when extraction is complete. Our power generation products provide energy access to people
around the world. Our combined heat and power systems are up to twice the efficiency of conventional power grids. Our products use diverse fuels,
including fossil fuels and renewables such as biofuels and biogas generated from landfills, livestock operations and wastewater treatment.
We hope that this report will inspire you to pursue your own sustainability initiatives. Now that Sustainability is elevated to a Value at Caterpillar,
we will unleash the talents and passions of our employees all over the world to enable sustainable progress. Doing so will produce great benefits
for our communities, our environment and our company, and leave an enduring legacy that we all can be proud of.
Finding ways to address our planet’s constraints that are both good for business and good for our communities can be an overwhelming challenge.
Some of the problems may take a very long time to fix. That’s precisely why Sustainability is the power of endurance.

26 CATERPILLAR INC.

2014 SUSTAINABILITY REPORTOUR APPROACH

External Advisors & Comments
Our thanks to the advisory council of experts who provided their comments on Caterpillar’s sustainability report and progress. Inclusion below indicatesthe provision of feedback, not the endorsement of the contents of the report. Comments below are advisory in nature and do not necessarily reflect
corporate policy.
Luke Danielson
President, Sustainable Development Strategies Group
Bruce M. Everett
Professor of International Business, The Fletcher School, Tufts University
Bradley Googins
Professor, Carroll School of Management; Former Executive Director,
Center for Corporate Citizenship, Boston College“In an era where unpredictable, unthinkable and even unknowablecharacterize the new operating environments for global corporations,creating sustainable strategies, engaging communities andco-creating breakthrough solutions to social and environmental
issues are the hallmarks of successful companies.”
Stuart L. Hart
S. C. Johnson Professor Emeritus, Cornell University; President,
Enterprise for a Sustainable World
Thomas Lovejoy
University Professor of Environmental Science and Policy, George
Mason University; Senior Fellow, The United Nations Foundation“Looking ahead, it is very clear that a sustainable future is not just aboutprotecting current ecological assets and managing them sustainably;
it also must encompass restoration. Restoration of ecological systems
brings multiple benefits, including climate change mitigation, andrepresents a significant business opportunity for Caterpillar.”

27 CATERPILLAR INC.

Mark B. Milstein
Clinical Professor of Management and Director, Center for Sustainable
Global Enterprise, Cornell University
William R. Moomaw
Professor, Center for International Environment and Resource Policy,
The Fletcher School, Tufts University
William A. Wallace
Lead Designer, Institute for Sustainable Infrastructure, Envision™
Sustainable Infrastructure Rating System; Past President and Memberof the Governing Board, Engineers Without Borders – USA“Caterpillar is in an excellent position to help communities adapt andbecome more resilient in the face of increasingly scarce resources anda changing environment. In these times, Caterpillar needs extraordinary
flexibility: the capability to continually realign their products, services andsupply chains in response to these new, and frankly daunting, challenges.”
Durwood Zaelke
President, Institute for Governance & Sustainable Development“I am very pleased that Caterpillar has elevated Sustainability to be
one of its core Values. This level of dedication will benefit both thecorporation and the communities where it operates. All corporations
must adhere to an ethic that strives above and beyond the interests of
its shareholders if we are to create a healthy, sustainable society.”2014 SUSTAINABILITY REPORTOUR APPROACH

Affiliations and Investments
Business Council for Sustainable Energy
Solar Turbines is a member of the board of
directors of the Business Council for Sustainable
Energy, which promotes clean energy technologies
as solutions to economic, environmental andnational security challenges.
bcse.org
Business Roundtable
Caterpillar is a member of the Business Roundtable,
which supports sustainable development throughits member companies in addressing a vast range
of environmental, social and economic issues tohelp ensure a sustainable future.
businessroundtable.org
Diesel Technology Forum
Caterpillar is a member of the Diesel Technology
Forum, a leading resource and educator on theimportance and unique value of diesel engines,
fuels, equipment and emissions control technology.
dieselforum.org
Dow Jones Sustainability Indices
Included for 13 years; sector leader 2006, 2007,2008 and 2010.
sustainability-index.com

28 CATERPILLAR INC.

Energy Technologies Institute
Caterpillar is a member of the Energy Technologies
Institute, a U.K.-based public-private organization
focused on projects that create affordable, reliable,
clean energy for heat, power and transport.
energytechnologies.co.uk

The Nature Conservancy
The Caterpillar Foundation and the Nature
Conservancy formed the Great Rivers Partnershipproject in 2005, aimed at preserving and protecting
the world’s great rivers.
nature.org

ONE Campaign
The Caterpillar Foundation invests with ONE,an international campaigning and advocacy
organization of more than 6 million people taking
action to end extreme poverty and preventabledisease, particularly in Africa.
ONE.org

Tropical Forest Foundation
The Caterpillar Foundation began investing in
the Tropical Forest Foundation in 1990. The
Tropical Forest Foundation works to advanceenvironmental stewardship, economic prosperity
and social responsibility through sustainable
forest management.
tropicalforestfoundation.org

Opportunity International
The Caterpillar Foundation invests in Opportunity
International to provide microfinance loans, savings,
insurance and training to over 4 million people working their way out of poverty in the developing world.
opportunity.org
Remanufacturing Industries Council
Caterpillar is one of the founding members andcurrent Chair of the Board of Directors of theRemanufacturing Industries Council (RIC),
which endeavors to promote the growth ofremanufacturing. The RIC works across industry
sectors to support the entire remanufacturingindustry through a combination of collaboration,
education, advocacy and research.
remancouncil.org

United Nations Foundation
The Caterpillar Foundation invests with theUnited Nations (UN) Foundation, supporting multiple
programs. This strategic support includes the Global
Alliance for Clean Cookstoves to teach women in
Africa about the dangers of traditional cooking andthe benefits of adopting clean cooking solutions;+SocialGood, a global community movement madeup of innovators, social entrepreneurs and thought
leaders from more than 120 countries around theworld working together to accelerate positivesocial change through technology and social
media; and the Girl Up campaign and its role inproviding American girls a voice in the global
conversation about issues that directly affectthe lives of girls in impoverished nations.
unfoundation.org

2014 SUSTAINABILITY REPORTOUR APPROACH

Affiliations and Investments
U.S. Green Building Council
Caterpillar has been a corporate member of the
U.S. Green Building Council (USGBC) since 2007.
The USGBC provides information, tools andtraining on how to design, build and operate
more sustainable buildings.
usgbc.org
Woody Biomass Coalition
Caterpillar is a member of the Woody Biomass
Coalition, which provides advocacy, education,
information and outreach to public and private
entities to promote research, development andfunding for sustainable woody biomass utilizationand markets in the U.S.
woodybiomass.net

29 CATERPILLAR INC.

(continued)

World Food Programme
The Caterpillar Foundation invests in the World
Food Programme, the world’s largest humanitarianagency, to fight hunger worldwide, delivering foodwherever and whenever it is needed most.
wfp.org
World Resources Institute
Caterpillar is represented on the board of
directors of the World Resources Institute, an environmental organization that goes beyond research
to find practical ways to protect the earth andimprove people’s lives. The Caterpillar Foundation
supports the World Resources Institute to catalyze
the development of smart cities, which promote
infrastructure development that is economicallyand environmentally efficient and serves as amodel for sustainable development.
wri.org2014 SUSTAINABILITY REPORTFOCUS AREAS
Caterpillar currently operates in more than 180 countries worldwide and in 2014, generated
more than half its annual sales outside the United States. Operating on a global scalerequires us to work within a variety of different cultures, governmental systems andeconomic environments. We acknowledge and respect the diversity of cultures andcustoms wherever we operate, and maintain a flexible business approach to best serve
our customers, dealers and suppliers, while always adhering to Our Values in Action –Caterpillar’s Code of Conduct.
As part of our work in sustainable development, we have identified a set of focus areasthat intersect with our business on a daily basis and that guide our thinking as we makeday-to-day business decisions. Many of these areas are associated with our 2020
aspirational, operational and product stewardship goals, while others represent areas
impacting our business long term and that are important to our various stakeholders.
During 2014, these focus areas were validated as part of an assessment that we conductedwith key stakeholders. Read more about the assessment on pages 22 to 24.

Workforce
Energy& Climate
Waste
Minimization

Water
Management
Product
Stewardship
DealerNetwork

SupplyNetwork
Economic
Development

Governance& Ethics
Human
Rights30 CATERPILLAR INC.

Philanthropy/
SocialInnovation2014 SUSTAINABILITY REPORTFOCUS AREA: WORKFORCE

Workforce
Improving quality is a key sustainability principle at Caterpillar.
Traditionally, this applies to the quality of the processes, products,
services, solutions and safety practices used throughout theenterprise. However, it also applies to the quality of life for our
employees, as well as the quality of life for members of thecommunities where we operate.
Our employees have always been the backbone of Caterpillar’s
success. They provide the vision, creativity and hard work requiredfor our businesses to be marketplace leaders. That is why we arefocused on providing a workplace that values safety, talent, drive
and diversity, and one in which our employees can bring a variety ofskills, ideas and experiences together in a supportive environment.
We promote the health and safety of everyone on our property with
policies and proactive programs that help individuals safeguard themselves and their co-workers. We develop our products, manufacturing
processes, training programs and customer assistance programs tominimize safety risks. We understand and accept the uniqueness of
individuals and welcome and value differences, unique talents, skills,
abilities, cultures and experiences. The safety of our operations andthe unique capabilities of our employees ensure the long-termsustainability of our enterprise.

OUR GLOBAL REACH
Executing Caterpillar’s strategic vision requires hiring and retaining
the best people, which is why we are focused on providing employeeswith significant and long-term career opportunities. Our global reachprovides employees with the ability to move between different business
units, locations and products during the course of their careers. These
opportunities, coupled with career development resources, make itpossible to have a truly diverse and meaningful, long-term career within
our organization. The long average tenure of our employees speaks totheir satisfaction with career progression.

OUR TIMELESS VALUESIn 1974, Caterpillar first published a Worldwide Code of Conduct.
Our Values in Action – Caterpillar’s Code of Conduct – articulates ourcommitment to Integrity, Excellence, Teamwork, Commitment andSustainability. We want to surround ourselves with talented people
who love what they do and who want to help others succeed. In addition, Caterpillar strives for a diverse and inclusive work culture thathelps bring our best ideas to the forefront. The passion of our employees is infectious and inspiring, as is their emphasis on teamwork. The
people of Caterpillar are called to bring integrity, accountability andcourtesy to every interaction between our employees, our independent
dealer network, our supply chain and our customers.

To help create such an environment, we leverage our global reach,values and transformational impact.

31 CATERPILLAR INC.

2014 SUSTAINABILITY REPORTFOCUS AREA: WORKFORCEOUR TRANSFORMATIONAL IMPACT

In 2008, Caterpillar launched a global risk assessment initiative, focusedon safety and ergonomic risk, which has resulted in the reduction of
thousands of work elements that, using our standard, were consideredhigh risk to medium or low risk, further driving the reduction in ergonomic
and other injuries. Initiatives at many of our locations continue to drive
our safety results.

Caterpillar provides the opportunity for employees to feel a part ofproducts, services and programs that make a transformational, tangible
impact – not only on their own community, but also on communities
around the globe. Our employees, our customers and our products play
an indelible role in developing countries and creating economic growththroughout the world. Our contributions range from helping provide
basic infrastructure like roads, sanitation, airports
and power toRecordable Injury Frequency (RIF) 1
developing societies; to widening the Panama
Canal andbuilding
the hours worked
Recordable
injuries
per 200,000
world’s superhighways. We play a part in some of the world’s most
6.22
important transformational projects.

0.23

2.97

SafetyWe are dedicated to the safety of everyone at Caterpillar, including
our extended team: contractors, dealers, suppliers and customers.
1.03
Our commitment to safety begins with the engineeringof our1.02
products0.78
and manufacturing processes, and extends to operator training, jobsite solutions and the workplace cultures thatguide 2011
the way2012
we work.2013
2003
Caterpillar’s Global Health & Safety team plays
a key
role1in providing
EnergyIntensity
Absolute
gigajoules
energy use/expertise and support to Caterpillar operations
worldwide.
Caterpillar
million dollars of revenue
Safety Services supports enterprise facilities, dealers, suppliers andcustomers by leveraging cultural assessment tools, guiding continuous
improvement processes and providing a wealth692 of free, industryspecific safety resources. The safety.cat.com site provides access toa wide range of interactive online training courses for safety, health 502
474
and the environment – in full support of our vision: Safely home.
417
Everyone. Every day.™

0.71

Lost-Time Case Frequency Rate (LTCFR)1
Work-related injuries resulting in lost timeper 200,000 hours worked

0.71
2014

2003

0.28

0.30

0.29

0.23

2011

2012

2013

2014

1Data prior to 2014 has been restated due toa) data updates realized
from improved accuracy
Alternative/Renewable
EnergySum
alternative
andofb)renewable
updates toand
goal
reporting electricalformat.
energy use/total electrical use x 100
Alternative
Renewable

At Caterpillar’s Material Handling 28.0%
and Underground
27.4% Division facility
in East Peoria, Ill. (EP), the facility focused on improving ergonomics.
The facility needed to develop9.4%
an effective means9.8%
to evaluate injuries496
andcurrent processes for18.2%
ergonomic risk and injury history, and provide
14.8%to our medical
18.6%
ergonomic information
and workers’
17.6% compensation groups.
Following a very successful pilot program, the ergonomic risk assessment
tools developed by EP were added to the global ergonomics tool box,
and Global EHS has begun to train other facilities to use the tools.
Lost-Time Case Frequency Rate (LTCFR)1

Recordable Injury Frequency (RIF) 1
Recordable injuries per 200,000 hours worked

Work-related injuries resulting in lost timeper 200,000 hours worked

achievement2011
began withaudit to identify triggers built
2012a preliminary
2013 20142013 EP’s
2014
into the daily process. Then, a project team conducted a general surveyof work practices, using comprehensive ergonomic assessment tools
2.97
GHG Emissions Intensity 1
to pinpoint and analyze the areas where the greatest risk existed and
Absolute metric tons of CO2e/
million dollars of revenue
where most injuries were occurring or likely to occur. In 2014, EP rolled
1,2
Water process,Consumption
Intensity
out its new ergonomic
which
includes training for manufacturing
Absolute thousand gallons of water/engineers, assistanceprioritizing
areas of the value stream, support
millionfor
dollarsof revenue
1.03
72.1 0.71
1.02 0.78
0.29
0.28
0.30
0.23
for initial assessments, follow-ups
and ways to communicate these76.3
in clear language to
get employees working together toward the goal
2003 2011 2012 2013 20142003 2011 2012 2013 2014
47.3
zero injuries. Nearly 100 assessments have already been carried out
44.3 of44.7
39.6
1 Data prior to 2014 has been restated due totoidentify risks. The value of the project is already evident: In 2014,
1 realized from improved accuracy
52.3a) data
updates
Alternative/Renewable Energy
EnergyIntensity
50.1
post-pilot,
there were
zero lost-time45.6
injuries48.9
in the large-tractor assembly
Absolute
gigajoulesuse/
Sum of renewable
and alternativeelectricaland b) updates
to energy
goal reporting
format.
million dollars of revenue
energy use/total
use x 100 37 ergonomic claims were avoided, saving an
area,electricaland an estimated
Alternative
Renewable
estimated half million dollars.
From 2013 to 2014, we continued to build upon a trend toward world-class
28.0% 27.4%
performance in safety
692 with a 9 percent reduction in Recordable Injury
2006 2011 2012 2013 2014
2006 2011 2012 2013 2014
Frequency (RIF) and a 21 percent reduction in Lost-Time Case Frequency
9.4%
9.8%
Rate (LTCFR).
502
496
1
18.2%
474
By-Product Materials Intensity
417
Absolute metric tons of by-product14.8% materials/ 18.6%

6.22

2006

2011

2012

million dollars of revenue

32 CATERPILLAR INC.

17.6%

2014 SUSTAINABILITY REPORTFOCUS AREA: WORKFORCE
With an added emphasis on cascading ergonomic education, it’s not
surprising that our employees often come up with the best solutions
for the production challenges they face every day. At Caterpillar’s Work
Tools Division facility in Jacksonville, Fla., moldboards, or outsides ofbuckets, are manufactured by cutting the parts from a large metal
plate, and then moved by hand through the forming process, using pry
bars and force. As production has increased in recent years, the risk of
injury from moving more plates also has increased.
Employees identified a machine that was previously used to push pins
into fork frames and asked if they could experiment with a modification.
Three weeks and less than $1,000 later, the innovators had a solution.
Now, one operator uses the machine’s motor to guide the plate, while
the other validates the plate’s position. The new process reduced
36 manual movements to six, reduced cycle time by 67 percent andreduced the risk of ergonomic injury dramatically. The cycle time savings
are about $96,000 per year.
Another challenge is keeping Caterpillar workers safe while thoroughly
testing our equipment to ensure customer safety. Our Global Engine
Development – North America (GED-NA) facility in Mossville, Ill., forexample, plays a critical role in testing the performance of diesel engines
in secure test cells. Due to the original design of test cells and early engine
test build technologies, personnel were required to enter the test cells
to make manual adjustments while the engines were running. Although
this practice was the industry norm, it presented the potential for injury
to those employees inside the test cell in the event of a catastrophic
engine or facility system failure. In rare instances this can result in flying
debris, fire or hot fluid.
Despite the low probability of such failures, the leadership team set
forth to change the practice of entering test cells when engines are
running. Situations that required individuals to enter a test cell werefirst identified. The team determined that the technology designed into
the newer engines coupled with improved testing capabilities, such as
automated adjustments, thermal imaging cameras, leak detection

capabilities and particulate filter designs, could eliminate the needfor operators to enter the test cell while engines are running. The newpolicies resulted in eliminating the need to enter a test cell, reducing
the safety risk for our employees.

Diversity and Inclusion

Diverse and inclusive work environments embrace the values and uniquetalents, experiences and viewpoints of employees. This approach isaligned with our strategic goal of Best Team. To achieve the Best Teamgoal, our global Diversity and Inclusion strategy includes:•D efining a clear set of roles, responsibilities and accountabilities
for all employees•H olding management at all levels accountable for results throughdefined diversity and inclusion metrics• B uilding sustainability by embedding diversity and inclusion into key
people processes
In addition, Caterpillar’s Diversity and Inclusion initiatives are also
exemplified in the work of the Caterpillar Foundation. The Caterpillar
Foundation supports global endeavors that help drive economic stability,
including programs for underrepresented groups, such as helping girls
and women leave the path of poverty.
Caterpillar’s diversity and inclusion progress has earned Caterpillar
several accolades. In 2014 alone:• DiversityInc magazine named Caterpillar to a pair of prestigious lists –“25 Noteworthy Companies” and “Top 10 Companies for Employee
Resource Groups.”• Designation as a “Military Friendly Employer” in the U.S.
• Placed on Corporate Equality Index and Dow Jones Sustainability Index

33 CATERPILLAR INC.

2014 SUSTAINABILITY REPORTFOCUS AREA: WORKFORCEEMPLOYEE RESOURCE GROUPS
To help us embrace diversity and inclusion at Caterpillar, we haveestablished global Employee Resource Groups (ERGs) that are open
to all employees. ERGs not only help drive innovation, but also provide
personal and professional development opportunities, help attract
talent at recruiting events and help retain this talent through mentoringand networking opportunities. In addition, ERG members frequently
reach out as groups to serve the communities where they live andwork, demonstrating their support of the U.S. Armed Forces, learning
institutions, charitable organizations, crisis relief efforts, and culturaland artistic programs, to name a few. Members of an ERG also help
sustain an engaged workforce at Caterpillar – as evidenced by members
having consistently higher responses to questions related to engagementon the Employee Opinion Survey.

Talent Development & Benefits

As a single company with hundreds of global locations, and serving
industries as varied as transportation, mining, marine and forestry,
we are in a unique position to offer opportunities and valuable rewards
for all our employees. This includes learning opportunities both insideand outside of Caterpillar, tuition reimbursement programs, targeted
leadership, skills or language training and formal benefits such as
medical plans that help promote the long-term health and wellnessof our employees and their families.

LOCAL TALENT DEVELOPMENT
In 2014, the Building Construction Products (BCP) Division wasrecognized for its efforts in developing people in its Athens,Ga., facility and multiple North Carolina facilities. Georgia Lt.
Gov. Casey Cagle awarded the Athens facility with the 2014
Business Partner of the Year Award. This award recognizedCaterpillar’s collaboration with various technical institutes,
including the Athens Career Academy, Broad River Career
Academy and Athens Technical College. North Carolina Gov.
Pat McCrory awarded Caterpillar the Governor’s Award for
Excellence in Workforce Development, Innovative Partnershipfor its Youth Apprenticeship Program in Welding in Sanford,
N.C., and Pre-Apprenticeship Program in Clayton, N.C. Thisaward honors organizations for outstanding contributions tothe state of North Carolina’s workforce development goals.

CATERPILLAR UNIVERSITY
Our talent development efforts are led by Caterpillar University, which
offers classes, e-learning and development opportunities to sharpen
the skills of our employees, dealers and suppliers. Established in 2001,
Caterpillar University now offers classes to our customers at Cat.com/catu.

LEADERSHIP EXCELLENCE IN ACCOUNTABILITY
AND DEVELOPMENT
Leadership Excellence in Accountability and Development (L.E.A.D.) is a
global leadership program, designed by Caterpillar, for Caterpillar, which
offers a comprehensive leadership development program, focused on
educating leaders to effectively develop and guide individuals and teams
to achieve business results. The objective of the program is to ensurethat leaders, at all levels, are ready to lead and hold themselves andothers accountable for results.
For leaders with the potential to move to higher leadership levels
within the organization, L.E.A.D. has offered additional programs.
The flagship program, Digging Deep, provided leaders an opportunity
to travel to growth markets such as China and Brazil, and to go beyondclassroom learning through participation in action learning projects
that address actual business challenges.

34 CATERPILLAR INC.

2014 SUSTAINABILITY REPORTFOCUS AREA: WORKFORCELEARNING MANAGEMENT SYSTEMThe Caterpillar Learning Management System is a common, easy-to-use
repository for employees seeking Caterpillar-provided learning
opportunities. The web-based program can be accessed throughCaterpillar’s intranet and allows employees worldwide to browse theonline course catalog, register for information and courses in theirlocal language, launch web-based training, track individual learning
history and review learning needs with their supervisor.

TUITION ASSISTANCE PLAN
The continuing education of Caterpillar employees is an importantcomponent of providing growth and development, and one that alsosustains the company’s talent pipeline. We encourage employee
development and provide financial assistance for this purpose.

Collective Bargaining

As of Dec. 31, 2014, we employed 114,233 full-time persons of whom
63,419 were located outside the United States. In the United States,
most of our 50,814 employees are at-will employees and, therefore,
not subject to any type of employment contract or agreement. At selectbusiness units, certain highly specialized employees have been hired
under employment contracts that specify a term of employment andspecify pay and other benefits.
As of Dec. 31, 2014, there were approximately 10,400 U.S. hourly
production employees who were covered by collective bargaining
agreements with various labor unions, including The United Automobile,
Aerospace and Agricultural Implement Workers of America (UAW), The
International Association of Machinists and The United Steelworkers.
Approximately 7,700 of such employees are covered by collective
bargaining agreements with the UAW that expire on March 1, 2017and Dec. 17, 2018. Outside the United States, the company enters into
employment contracts and agreements in those countries in which such
relationships are mandatory or customary. The provisions of these agreements correspond in each case with the required or customary terms inthe subject jurisdiction.

35 CATERPILLAR INC.

2014 SUSTAINABILITY REPORTFOCUS AREA: ENERGY & CLIMATE

Energy & Climate
Energy is a key requirement for sustainable progress and development
around the world. Energy consumption is rising rapidly, driven by
worldwide population growth, swiftly developing economies, improving
global living standards and the rapidly increasing use of ever moreenergy-dependent technologies. Global demand for energy is expected
to increase significantly over the next 20 years, based on outlooks fromthe International Energy Agency.
As a global energy consumer and industrial manufacturer, and a major
manufacturer of energy conversion and power-generation products,
Caterpillar has a fundamental interest in, and understanding of, energy
needs. We are providing products with leading integrated technology
to various energy markets and leverage our technology and innovation
to meet the world’s growing energy needs.
Greenhouse gas (GHG) accumulation in the atmosphere is a major concern
for many in both the public and private sectors because of the potential
for these gases to affect climate patterns. As a result, many governmental
and intergovernmental organizations are implementing mechanisms in
an attempt to reduce GHG emissions. We support intelligent, responsible
public policies addressing climate and energy issues.
Additionally, we support the reduction of GHG accumulation throughimproved GHG management practices. Atmospheric GHG accumulation
can occur as a result of inefficient or excessive fossil fuel combustion,
poor waste-management practices or poor land-management practices.
Caterpillar is a leader in the development and deployment of innovations
and technologies that, through our products, assist in the mitigationof all three of these sources.
36 CATERPILLAR INC.

Caterpillar has established aggressive energy efficiency and GHG-reduction
goals for our facilities. For our customers, job site fuel efficiency is strongly
considered in our new-product development efforts, which contributes
to reductions of GHG emissions. As a result, breakthroughs have beenachieved in the development and implementation of innovations suchas combined diesel and electric drives, hybrid systems, continuously
variable transmissions, job site optimization technologies and services
and alternative fuel utilization.

Energy Access

Energy is a key requirement for sustainable progress and development
around the world. We believe:• Energy sources need to be developed and used in anenvironmentally responsible and sustainable manner.
• There is no one single solution to providing abundant, reliable, secure,clean and reasonably priced energy on a global basis. Political andindustry leadership is required to forge consensus and a commitment
to providing energy and related infrastructure that address economic
development, stability and environmental impacts.
• Market-based, cost-efficient energy solutions are the best way
to help meet the world’s growing energy demands.
• Access to affordable and dependable energy resources is criticalfor energy security, economic prosperity and growing economies.
Caterpillar supports balanced and comprehensive energy policies
for the responsible development and utilization of all energy
resources, including traditional sources of energy and expanded
use of alternative energy technologies.

2014 SUSTAINABILITY REPORTFOCUS AREA: ENERGY & CLIMATE• When regulation is necessary, we support regulatory structuresthat provide a technology-neutral and level playing field thatembraces competition and in which Caterpillar, our independent
dealers and our customers can operate.
• We support the development and use of strategies and technologies
to increase energy efficiency and reduce emissions.

OUR OPERATIONS
Caterpillar has set targets for energy efficiency in our operations since1998. We currently have a target for the use of alternative and renewableenergy in our operations, as well as a target for reducing our energy
intensity in operations. Our enterprise energy management team is
instrumental in building awareness, encouraging action and developing
projects in the areas of energy efficiency and alternative/renewable
power generation. Our current uses of renewable energy sourceswere achieved through facilities’ installing renewable energy sources
such as biogas and photovoltaics (PV), as well as the purchase ofrenewable energy certificates. Our largest contribution to alternative
energy consumption is the operation of Combined Heat and Power(CHP) facilities to power several manufacturing facilities. The energy
management team is evaluating additional opportunities for replicationof CHP at other locations.

OUR PRODUCTS, SERVICES AND SOLUTIONS
Caterpillar collaborates with our independent dealers to deliver highly
customized and site-specific solutions that result in optimized use of ourequipment and an improved bottom line for our customers. We offer training
to our customer operators on how to use our products more efficiently.
Because energy is a key requirement for development, we focus ourefforts on improving efficiency and reducing emissions while increasingenergy access. Caterpillar leverages technology to create more efficient
power-generation solutions. With distributed generation solutions utilizing
diesel and natural gas engines, as well as alternative fuels, Caterpillar iswell-positioned to get power where it needs to be. Further, Cat® equipment helps meet the demands of the mining and resources industries
to get raw materials where they need to be to create increased accessto power.
Caterpillar has implemented hundreds of distributed power generation
systems all over the world, which contribute to improving energy accessin the developing world while emitting fewer greenhouse gas (GHG)
emissions compared with traditional power grid systems. We provide
combined heat and power systems, and combined-cycle power systems
that can double the efficiency of power generation when comparedwith the efficiency of conventional power grids. Additionally, our powersystems utilize fuels from diverse sources such as gas from landfills,

37 CATERPILLAR INC.

livestock operations, wastewater treatment operations, mine methane,flare gas, syngas and biofuels. These systems provide energy diversity
from plentiful (and in many cases, renewable) energy sources.

ENERGY POVERTY
One of the biggest differences between a developing nation and adeveloped nation is access to energy. We support and are committed
to increasing that access, helping economies grow and reducing energy
poverty where it exists. According to the International Energy Agency,
nearly 1.3 billion people, close to one-fifth of the global population, do nothave access to electricity. Lack of access to modern energy services hinders
economic and social development, making it more difficult to provide
water purification, sanitation and education. Today, the technology andnatural resources exist to rapidly expand energy access, but the challenge
is accomplishing this in an effective and efficient manner.
Energy diversification – such as coal in combination with carbon captureand storage, new nuclear buildouts, new natural gas reserves, plus
renewable energy sources like biogas, wind, PV, tidal and others – willcontribute to an energy portfolio that helps eliminate energy poverty,raise standards of living and propel economic growth with less impact on
the environment. Coal is abundantly available and has the scale to meetthe primary energy needs of the world’s rising population and expectedeconomic growth during the next several decades. According to BP, natural
gas production, in addition, has increased 10 percent from 2008 to 2013
and over 1 percent from 2012 to 2013, resulting in economic growth formany communities with recoverable reserves. Products capable of using
alternative or blended fuels are also increasingly available. Eliminatingenergy poverty is a vision that can be achieved.

2014 SUSTAINABILITY REPORTFOCUS AREA: ENERGY & CLIMATE
Climate Policy
Caterpillar supports integrated carbon and climate policies that areboth environmentally effective and economically sustainable. We
understand that the most immediate and measureable benefits will
occur through energy-efficiency improvements and corresponding
greenhouse gas (GHG) emissions reductions.
The U.S. Environmental Protection Agency (EPA) has recognizedCaterpillar with its ENERGY STAR Combined Heat and Power(CHP) Award. The honor followed the U.S. EPA’s review of a global
research facility in Spring House, Penn., which houses a highly
efficient CHP system powered by a Caterpillar generator set, which
can supply 60 percent of the annual power needed at the site.
In responding to the challenge of reducing our GHG emissions, Caterpillar
has formed cornerstone beliefs about carbon and energy-efficiency issues.
Caterpillar supports intelligent, responsible public policies addressingthese issues. We are:• Setting aggressive energy efficiency and GHG reduction goals forour operations.
• Investing in efficiency and emissions-reduction technologies thatare important to our stakeholders and represent significant areasof opportunity for our business.
• Committing to the development and deployment of advanced
technologies that capture and store GHG emissions.
• Supporting policies and mechanisms that harness the marketplace
to drive innovation, mobilize investment and facilitate sharing thesetechnologies.
• Encouraging the coordination of domestic and international programs
that maximize the use of flexible, proven mechanisms to sequester
carbon in soils, plants and ecosystems.
Through these activities, Caterpillar will continue making contributions
to efforts designed to reduce GHG emissions.

OPERATING IN A CARBON-CONSTRAINED WORLD
Despite the divergent proposals under discussion worldwide,
Caterpillar believes that technology and innovation play a key role inany successful strategic approach to emissions reduction. We believethat the private sector must take the lead in developing and deploying
technology solutions to reduce GHG emissions. Ideally, regulatory
structures should provide a technology-neutral and level playing field inwhich competitive solutions can be developed.

38 CATERPILLAR INC.

Caterpillar believes in the importance of providing energy-efficient
products and technologies for our customers and our facilities, and we
advocate for policy solutions that balance environmental stewardship,social responsibility and economic growth. We work with policymakers
on developing economy-wide emissions-reduction programs in the
United States that work in conjunction with international efforts to
reduce GHG emissions.
Business will struggle to find solutions if vastly differing approaches to
GHG reduction are implemented around the world. That is why we willcontinue to advocate for a comprehensive, international approach thatencompasses emissions-reduction commitments from all major economies.
Although a comprehensive international approach should be the goal,
we realize that action must also take place at a local level. Accordingly,
in addition to our advocacy for a global approach, we advocate for GHG
policy change at local, regional and national levels through our Government
Affairs teams and our memberships in trade and lobbying associations.
At each level, we support legislation that is both environmentally effective
and economically sustainable, and we encourage a constructive dialogue
and a proactive approach to providing energy safely, efficiently andaffordably to the billions of people who inhabit our planet.

OUR OPERATIONS
Caterpillar has been a leader in setting aggressive GHG-reduction targets
for our operations since 2003. We have now established an intensitybased GHG-reduction goal that measures the efficiency of our growth.

OUR PRODUCTS, SERVICES AND SOLUTIONS
Caterpillar is committed to the success of our customers. As customers
increasingly demand greater fuel efficiency and technology that helps
them reduce GHG emissions, we are further motivated to help ourcustomers achieve their emission-reduction goals. Their needs provide
valuable business opportunities to Caterpillar.
We continue to invest in research and development aimed at developing
products with fewer direct emissions, improved efficiency and/or
improved productivity. In doing so, we help our customers to improvetheir own operations, while also driving our competitors to improve.
Job site fuel efficiency is strongly considered in our new productdevelopment efforts, which contributes to reductions of GHG emissions.
By developing products, services and solutions that increase customer
efficiency, we also are reducing the emissions that would otherwise
have been generated from the use of less efficient products or solutions.

CARBON RESEARCH INVESTMENTS
Up to 25 percent of the world’s land is now highly degraded due todeforestation, desertification, wetlands destruction and soil erosion,
among others. The health and productivity of these lands must be2014 SUSTAINABILITY REPORT

2003

2011

2012

0.78

0.71

2013

FOCUS
AREA:
ENERGY & CLIMATE
2014
2003 2011 2012 2013 2014

27.4%

restored to help feed and support the additional 2 billion
Energy inhabitants
Intensity1
Absolute
gigajoules
who will occupy the planet by 2050. Carbon is a crucial
element
for energy use/
million dollars of revenue
ensuring the health and productivity of vegetation, ecosystems and soils.
Consequently, removing carbon from the atmosphere and incorporating
it into lands where it can help restore health and productivity
offers a692
significant opportunity for sequestering carbon. The Caterpillar Foundation supports organizations such as the World Resources Institute, the502
474
Tropical Forest Foundation and the Nature Conservancy to help improve417
land and ecosystem health.

Caterpillar invests in research aimed at carbon capture and storage (CCS)
with the U.K. Energy Technologies Institute (ETI). We are a founding
member and co-funder of the ETI, a collaboration between industry and2011 that2012 2013
the U.K. government to accelerate the development of2006
technologies
address the challenges of climate change and provide affordable energy
access. The use of CCS technologies could reduce emissions
from Intensity
fossil 1
GHG Emissions
Absolute metric tons of CO2e/fuel power stations by as much as 90 percent.
million dollars of revenue

Energy Performance

Operational energy intensity decreased 28 percent from 2006 to 2014.
2011in more
2012
This progress represents a continued commitment to2006
investment
energy-efficient equipment and processes, as well as the implementationof best practices at our facilities around the world. In addition, we havefurther increased our use of alternative electrical energy sources, namely
combined heat and power. In 2014, 27.4 percent of our electrical energy
was from renewable or alternative sources.

39 CATERPILLAR INC.

0.30

0.29

0.23

Alternative/Renewable Energy
Sum of renewable and alternative electricalenergy use/total electrical use x 100
Alternative
Renewable
Recordable Injury Frequency (RIF) 1
Recordable injuries 28.0%
per 200,000 hours worked

27.4%

6.22
496

9.4%

Lost-Time
Work-relaper 200,00

9.8%

18.2%
14.8%

2.97

18.6%

17.6%

1.03

1.02

0.78

0.71

2012
2011

2013
2012

2014
2013

2014

2014

2011
2003

496

Energy Intensity1
Absolute gigajoules energy use/
million dollars of revenue

To accelerate the deployment of new, low-carbon energy technologies,
ETI has an $80 million per year portfolio of technology72.1
development anddemonstration projects across a wide energy spectrum, including distributed energy; offshore wind power; marine power technologies; energy
47.3
44.3 44.7
infrastructure; transport, including heavy-duty vehicles; CCS; bio-energy
39.6
and demand-side management for buildings. The ETI carbon captureand storage work includes research on power station-scale technology,
evaluating a number of technologies that absorb CO2 from the power
station flue gas and then desorb the CO2 to be piped to a storage
reservoir. Design guidelines for piping and pumping of CO2 and review
2006 2011 2012 2013 2014of new CCS technologies are being evaluated as technology companies
and universities develop them. In addition, Caterpillar supported ETI
By-Product Materials Intensity 1
research to look at mineralization, although energy consumptionof tons
this of by-product materials/
Absolute metric
milliondollars
revenuetechnology is currently too high to justify its deployment
in theshortofterm.
Additionally, we serve as project advisors to the Midwest GeologicalSequestration Consortium. From 2012 to 2014, the integrated CO2 storage
15.2
project in Decatur, Ill., successfully demonstrated large-scale,deep 13.2
13.8
saline geological storage of 1 million metric tons (1.1 million U.S. tons)of CO2. The project is in the three-year post-injection period, withscheduled conclusion in 2017.

0.28

2003

Alternative
Sum of renenergy use
Alterna

Water Consumption Intensity 1,2Absolute thousand gallons of water/
million dollars of revenue

692

76.3

474
52.3

2011
2006 2011

417

502

496

1
14.8%

45.6

48.9

50.1

2012

2013

2014
2014

2011

1D
 ata prior to 2014 has been restated dueto a) acquisitions, b) divestituresand c) data
GHG Emissions Intensity 1
updates realized from improved accuracy.
Absolute metric tons of CO2e/
million dollars of revenue

Water ConThe strides made in areas of energy efficiency and alternative energy
Absolute t
have allowed us to rethink
and restructure the ways we’re using energy million dol
72.1
in our facilities. For example, as part of an ambitious waste and energy14.0
76.3
12.5
efficiency
project, Advanced Components & Systems Division – Joliet
47.3
44.3
Hydraulics, set a goal in 2014 to reduce power and gas
usage44.7
by 10 percent
39.6
over 2013. To decrease chemical and natural gas consumption, the project
team recommended that the process steam system be converted toelectric, which allowed boilers to be shut down during the summer
months. They also ordered a compressed air leak inspection to decreasedemand on electrical systems and implemented routine inspections
2013 20142011audits
2012
2014
going forward. Regularly2006
scheduledof the 2013
shop floor
help keep 2006
adherence to goals on track and identify talking points for communication
1
By-Product
Intensitywith employees. The project
beganMaterials
in January
2014 and yielded cost
Absolute metric tons of by-product materials/
savings of about $212,000by theendofofrevenue
the year, with nearly 2.4 million
milliondollars
kWh and over 1,600 metric tons of CO2 emissions avoided. Natural gas
savings in the same period were about $41,500, with 320 metric tonsof CO2 emissions avoided.
15.2
14.0
13.8
13.2
12.5
2014 SUSTAINABILITY REPORTFOCUS AREA: ENERGY & CLIMATE
We continued to leverage lighting improvement projects throughout theenterprise in 2014. New technologies in lighting are making it possible
to provide increased brightness in the workplace and to realize greater
energy and cost savings. Caterpillar Transmissions in Arras, France,
for example, replaced low-performance, energy-consuming lightingwith electronic ballast lighting to help achieve energy improvements.
The retrofit resulted in a workplace that is twice as bright with nearly
half the lights. Likewise, Caterpillar Global Mining in Langfang, China,
replaced metal halide lighting with LED lamps that provide over fourtimes the brightness of the original lamps and save over 33,000 kWheach year. And Caterpillar Electric Power Division in Newberry, S.C.,
performed a comprehensive lighting analysis and determined upgrades
were needed. The facility replaced metal halide lights with fluorescentfixtures and occupancy sensors to shut off lights automatically when
not in use, reducing their projected operating costs, even with added
fixtures, by $30,000.

GHG Emissions Performance

Through 2014, Caterpillar has reduced GHG emissions intensityfrom our facilities by 38 percent compared to our 2006 base year.
From 2013 to 2014, our absolute GHG emissions remained constantat 2.47 million metric tons.

44.7

72.1
47.3

Multiple energy management projects have contributed to our successin reducing the greenhouse gas (GHG) emissions of our facilities aroundthe world. Working to achieve our goal of fewer GHG emissions usuallyleads to ways we can also reduce our energy use and associated costs,
with multiple benefits to Caterpillar and the environment. Although
Caterpillar Reynosa, S.A. de C.V. in Mexico, for example, had already
reduced energy consumption, costs and GHG emissions by nearly halffrom 2012 to 2013, a project team targeted additional initiatives that
could produce similar results for 2014.
The team began with consumption management – implementing
automatic shutoffs for lights, equipment and tools when not in use;
posting signage to promote switching off lights in nonproduction areas;
and replacing older equipment, such as air compressors and welders,with new, higher-efficiency models. Capacitors were also installed
to reduce peak start and stop, as well as stress on belts and pulleys.
The next priority was lighting. Skylights and translucent sheets on walls
and ceilings replaced high-wattage sodium vapor lamps. All of these
improvements added up to dramatic results: the facility reduced, yetagain, both energy consumption and GHG emissions by 55 percent
and energy costs by 54 percent year over year.

GHG Emissions Intensity 1
Absolute metric tons of CO2e/
million dollars of revenue

2006

2011

2012

44.3

44.7
36.0

2013

2014

2020
Goal

1D
 ata prior to 2014 has been restated due toa) acquisitions, b) divestitures and c) data updates
realized from improved accuracy.

2.47

Total Absolute GHG Emissions
Million Metric Tons

0.99 million metric tons
Scope 1 GHG Emissions(Direct emissions)1.48 million metric tons
Scope 2 GHG Emissions(Indirect emissions frompurchased electricity,
Water Consumption Intensity 1,2heat or steam)Absolute thousand gallons of water/
million dollars of revenue
Million metric tons

2.47
76.3

52.3
40 CATERPILLAR INC.

39.6

total absolute GHG emissions

45.6

48.9

50.1
38.2

2014 SUSTAINABILITY REPORTFOCUS AREA: WATER MANAGEMENT

ncy (RIF) 1
0,000 hours worked

Lost-Time Case Frequency Rate (LTCFR)1
Work-related injuries resulting in lost timeper 200,000 hours worked

2.97

0.78

0.71

2013

2014

y use/

2003

0.28

0.30

0.29

0.23

2011

2012

2013

2014

Alternative/Renewable Energy
Sum of renewable and alternative electricalenergy use/total electrical use x 100
Alternative
Renewable

Water Management

28.0%
27.4%
The scarcity of water resources is
an issuethat crosses cultures,
geographies and industries. Today, water scarcity affects around9.4%
million people, and current trends indicate the9.8%
problem will escalate.
502 700496
18.2%
By 2025, water security could be an issue for two-thirds of the world’s
14.8%
18.6% 17.6%
population. The implications are so significant
that leaders attending
the 2013 World Economic Forum in Davos, Switzerland, cited water
scarcity as one of the top two risks currently facing the global population.
While our manufacturing operations are not as water-intensive as those ofother industries, we nonetheless recognize the far-reaching economic,
2013 social
2014and environmental
2011 implications
2012 20132014scarcity may have in thethat water
future – and have taken steps to mitigate our consumption.

O2e/

50.1

Water Consumption Intensity 1,2Absolute thousand gallons of water/
million dollars of revenue

We continue to implement conservation strategies that reduce water
use in our operations, explore water-treatment technologies, introduce
water-recycling processes at new and existing facilities and train
employees about water resources to raise their awareness of the issue.
Through 2014, these types of efforts have reduced water consumption
intensity, the measure of water consumption normalized by revenue, at
our facilities by a total of 34 percent from our 2006 base year intensity.
Our 2014 absolute water consumption, including non-contact coolingwater from foundry operations, is 4.34 billion gallons of water.

4.34

Total Absolute Water Consumption
Billion Gallons

1.57 billion gallons non-contact
cooling water from foundry operations

76.3
44.3

2.77 billion gallons enterprise water
consumption excluding non-contact
cooling water from foundry operations

44.7
52.3

45.6

48.9

50.1

4.34
Water Sources

2013

2014

nsity 1
-product materials/

12.5

2006

2011

2012

2013

2014

1 Data prior to 2014 has been restated due toa) acquisitions, b) divestitures and c) data updates
realized from improved accuracy.
2 Water consumption intensity does not include
non-contact cooling water from foundry operations.

41 CATERPILLAR INC.
14.0

Billion gallons
total absolute water consumption

46% municipal water
31% groundwater
23% surface water<1% other (e.g., grey water)2014 SUSTAINABILITY REPORTFOCUS AREA: WATER MANAGEMENT
In areas where water is already scarce, Caterpillar is finding ways to conserve
more of it. The state of Victoria, Australia, for instance, experienced a stateof drought for more than five years, so it became imperative to collect andconserve as much water as possible. To this end, Caterpillar of Australia
Pty. Ltd. in Tullamarine recently completed a long-term project to use
rainwater tanks to furnish almost all the non-potable water used by
the facility. Total potable water use at the facility has dropped fromover 4.5 million gallons in 2006 to 2.0 million gallons in 2014, which
is a 56 percent reduction from 2006 usage. The voluntary installationof rainwater tanks aided the efforts of the local water authority toconserve water resources and make them available to the wider
community throughout the drought period.
Another important way we’re conserving water resources is by using
water more efficiently. That was the solution for Caterpillar Hydraulics
Advanced Components & Systems Division in Jesi, Italy, which uses
ground water for its paint and cooling systems. Before modifications,the facility’s wastewater treatment system managed both process waterfrom the paint system and cooling water from machining. However, thecooling water did not require treatment, so a cooling tower was installed
to reuse that water in a closed loop. A new wastewater treatment system
was also installed and now treats only the water from the paint system.
By initiating processes to appropriately manage these two types ofwater separately, the facility was able to reduce its water consumption
by 55 percent from 2012 to 2014.
We also focus on water conservation in our office facilities. In 2014,
many restroom lavatory “sink” aerators in our offices in Peoria, Ill.,
were replaced with low-flow aerators. This improvement is estimatedto conserve over 2 million gallons of water per year, resulting in an
estimated cost savings of more than $30,000 per year.

42 CATERPILLAR INC.

2014 SUSTAINABILITY REPORT

9.4%
FOCUS AREA: WASTEMINIMIZATION
502
496
18.2%
474

417

2006

2011

2012

14.8%

2013

2014

2011

2012

GHG Emissions Intensity 1
Absolute metric tons of CO2e/
million dollars of revenue

Water Consumpti
Absolute thousan
million dollars of r

72.1

76.3
47.3

Waste Minimization
Minimizing waste is an important strategy for competing in today’s markets.
Improving the efficiency of our products, processes, services and solutions
not only reduces costs, but also reduces our utilization of materials, energy,
water and land. Throughout the past few years, we have demonstrated great
improvements in recycling. Since 2009, our enterprise recycling rate has been
greater than 90 percent. Beginning in 2013, we transitioned from a focus onpercent recycled to a goal focused on reduction of all by-product materials,
or minimization of waste.

14.0

2006

2011

39.6

2012

44.3

44.7
52.3

2013

2014

2006

By-Product Materials Intensity 1
Absolute metric tons of by-product materials/
million dollars of revenue

13.8

15.2

13.2

12.5

2012

2013

14.0

Caterpillar focuses on by-product material reduction strategies thatare associated with improved efficiency and quality measures, asthese offer the greatest opportunity to enhance cost competitivenessand reduce the potential for short- and long-term impacts.

2006

In 2014, we generated a total of 772,000 metric tons of by-productmaterials, and 90.6 percent of those materials were recycled. Our
by-products material intensity increased 1 percent from our 2006
base year to 2014.
In accordance with our waste minimization goal, we are using fewer
materials wherever we can. At the Caterpillar Global Mining facility in
Dortmund, Germany, where we manufacture hydraulic mining shovels,
we’ve made material efficiency improvements in the paint process.
Previously, an operator mixed paint components manually. Now, a newpaint system houses pumps, agitators, filters and lines in a closed mixing
system for three paints, two hardeners and solvents. The process ensuresproper mixing ratios and minimizes operator exposure to paint and VOCemissions, as well as reducing paint consumption by 41 percent.

43 CATERPILLAR INC.

2011

2014

1D
 ata prior to 2014 has been restated dueto a) acquisitions, b) divestitures and c) data
updates realized from improved accuracy.

772

By-Product Materials
Thousand Metric Tons

Recycled 90.6%
Disposed 9.4%
(sent to landfill or incineration)2014 SUSTAINABILITY REPORT2011

FOCUS AREA: WASTE MINIMIZATION
BY-PRODUCT MATERIALSMANAGEMENT
In 2013, Caterpillar transitioned away from our zero-waste aspirational
goal to a goal focused on reduction of all by-product materials, orminimization of waste. By-product materials are generated as wastematerials of our production processes. Where materials are generated,
we focus on remanufacturing, rebuilding, reusing and recycling.
When more efficient measures are not feasible, treatment/control
options can reduce associated environmental impacts and, as a lastresort, disposal/discharge in an appropriate and lawful manner may
be considered acceptable. The use of the term by-product materials
in our 2020 aspirational goal reflects our focus on minimizing waste
and effectively managing all that remains.

Effective waste management also means getting the most out of thematerials we use. For our East Peoria Material Handling & Undergroundfacility, that meant launching a project to increase reclamation of metalworking fluids and extend the life of those fluids. Two separate technologies
have been employed. First is a centrifuge designed specifically for processing water-based metalworking fluid that is rotated around to multiple
fluid sumps to extract non-soluble lubricants and other contaminantsfrom the systems. Reducing contaminant levels in the metalworking
fluids lessens the potential for harmful microbiological growth that can
destroy the fluid. The process extends the life of metalworking fluids andreduces the amount of chemical additives required to manage the fluid.
Second, a treatment system allows products pumped from the system
to be treated and recycled back into the sump. In the past, these fluids
were taken to waste treatment for disposal. Using both technologies has
extended metalworking fluid life, conserved water and reduced the costsof fluid and water treatment by $80,000 per year.

44 CATERPILLAR INC.

Clearly, the best way to minimize waste is to avoid practices that generate
it in the first place. That’s what we had in mind when designing theCaterpillar Building Construction Products (BCP) Division facility in Athens,
Ga. The commitment to develop and use returnable packaging wasincorporated into the facility’s construction. Packaging engineers worked
to develop returnable part-specific racks that maximize shipping efficiency
and keep parts safe during travel. Before the new racks were developed,
parts arrived at the facility on wooden pallets, often wrapped with yardsof shrink-wrap and plastic tie-downs – all of which could not be reused.
The returnable packages not only reduce waste, but also maximize
the number of parts in each package, as well as the number of packages that can be stacked in a truck. As a result, fewer trucks areneeded for transport, resulting in lower emissions, and more than
6 million pounds of pallet waste are avoided each year.

2014 SUSTAINABILITY REPORTFOCUS AREA: PRODUCT STEWARDSHIP

Product Stewardship
Product stewardship covers the full lifespan of our equipment from the
supply chain to the customer’s job site. This means taking active steps toreduce possible environmental, health and safety impacts, as well as optimizing operational quality and efficiency throughout the life of the product.
We accomplish this in numerous ways – engineering products to eliminate
hazardous substances, utilizing more sustainable energy sources and/or extending a product’s life through the use of remanufactured partsor rebuilt machines. Caterpillar also works with customers and distributors
to ensure the proper disposal or recycling of end-of-life materials.

Caterpillar makes management and technical expertise available toregulatory bodies in advisory roles and provides technical assistanceas new product standards are developed. These activities include
participation and leadership roles in organizations such as the ISO,
industry associations, membership in governmental and nongovernmental delegations to international bodies such as the International
Maritime Organization, participation in European Union industry
expertise panels and participation in federal advisory committees
chartered under the Environmental Protection Agency.

Wherever possible, we keep resources in the Caterpillar value chain
through a circular flow of materials, energy and water. Our focus ondeveloping better systems reduces our need for resources, maximizes
the total life cycle of our products and minimizes the cost of ownershipfor our customers. Viewing our equipment through a total life cycle lensallows us to make sustainable progress for communities, the environment
and the economy.

STANDARDS HARMONIZATION

We establish and adhere to policies and practices that direct us toconsider sustainability in product design, engineering and manufacturing in all of our facilities worldwide. In our operations, Caterpillar’s
Environment, Health & Safety Assurance framework helps us comply
with applicable laws and regulations. Successfully identifying andmanaging environmental issues helps protect the environment we alllive in and is a good business practice.

45 CATERPILLAR INC.

Industry consensus standards, including those for visibility, rolloverprotection structures, braking and sustainability, are needed forearthmoving equipment. We are involved on an international level
to develop global standards through the International Standards
Organization (ISO) and chair the technical committee for earthmoving
machines. Our global standards and regulations team works closelywith organizations like the ISO to enhance machine safety standards
worldwide. Caterpillar also provides input to regulatory agencies tohelp ensure the smooth introduction of new technologies.

2014 SUSTAINABILITY REPORTFOCUS AREA: PRODUCT STEWARDSHIPIn product development, our Technology Strategy establishes the foundationof Caterpillar’s innovation. Our strategy includes four themes – Energy
and Transportation, Machine and Machine Systems, Automation andEnterprise Solutions and Factory Technology Solutions. Each theme
includes customer-focused goals that serve as targets against which
progress can be measured. Research activities currently underway
within these areas include efforts to reduce customer owning andoperating costs, enhance safety and reduce greenhouse gas emissions,increase product reliability and improve productivity.
While it is important to innovate and explore many new ideas, ourtechnology transfer process, the governance model for the strategy,
ensures that only those technologies that can be integrated into new
products and provide customer value move forward in each stage ofthe development process. In 2014, through ongoing execution using thetechnology readiness level process, 25 technologies were transferredfrom research into New Product Introduction programs.
In 2014, three new awards were added to our Chairman’s Award process
focused on Emerging Innovations, Delivered Innovations and Process/Business Innovations. Each project recognizes teams for new productand process solutions that create a significant positive impact on ourcustomers and our business.

Caterpillar’s commitment to product safety is embedded in our productdevelopment process. This safety commitment begins at the first stageof the NPI process and involves such tasks as identifying opportunities tointegrate new technology in order to enhance product safety. Potential
product hazard identification is a critical element of each stage of theprocess, right up to the disciplined product validation that is completed
prior to market introduction.
We’re always looking for new ways to replicate ideas that work. At thesame time, we’re seeking additional opportunities to improve customer
safety. These aspirations came together in a strategic agreement in 2014
between Caterpillar subsidiaries Progress Rail Services and Electro-Motive
and the Seeing Machines company, based in Canberra, Australia. The
objective was to develop and adapt systems that monitor in-cab operator
fatigue and distraction for use in locomotives. The Seeing Machines
Driver Safety System is based on patented eye-tracking and analytics
that detect operator distraction and fatigue while on the job. Similar
technology has already been implemented on Cat® mining equipment.
Operator-facing visual, motion and accelerometer sensors provide
key streams of data designed to help improve productivity and safety
outcomes in those applications. The success of these technologies inchallenging mining applications supports the delivery of enhanced
safety to our customers and their fleets by helping operators remainalert while behind the controls.

In 2014, the Caterpillar Joliet facility and two innovative products from
Caterpillar Technical Center in Mossville, Ill. – the Cat® HYDOTM Advanced
Hydraulic Oil and Cat® Proprietary Fluid Filters – won the Illinois Governor’s
Sustainability Award, and the Caterpillar Visitors Center was awarded
an honorable mention for its sustainability efforts.

Customer Safety

Caterpillar’s safety culture extends beyond our internal operations
to include the safe operation of our products in the field, as wellas the safety and health of all individuals who come into contact
with Cat ® products. This commitment encompasses the design andengineering of our products and extends to operator training andcertification, solutions for the job site and the tools and resources
to improve the workplace culture – all of which are coordinatedthrough Caterpillar Safety Services. For full details about how
Caterpillar Safety Services meets customers at any point of need,visit safety.cat.com.

46 CATERPILLAR INC.

2014 SUSTAINABILITY REPORTFOCUS AREA: PRODUCT STEWARDSHIP
Circular Flow of Materials

Caterpillar strives to provide customers with quality equipment thatprovides the best economic proposition for their business. Our remanufacture (reman) and rebuild businesses provide customers not only with
an immediate cost savings, but also help us use materials more efficiently.

REMANUFACTURED PRODUCTS
AND REBUILT PRODUCTS
Caterpillar encourages sustainable business practices through ourremanufacturing and rebuild businesses. This starts with durable
products, many designed to be rebuilt multiple times. Through our reman
and rebuild programs, components and machines are overhauled,rather than completely replaced. Reuse of parts reduces waste andminimizes the need for the raw materials necessary to produce newparts. This system is where Caterpillar is making some of its greatest
contributions to sustainable development – keeping nonrenewable
resources in circulation for multiple life cycles.

%

2

64%

• Ensuring maximum productivity• Increasing reliability and equipment uptime• Ensuring cost-effective performance94%• Providing the lowest total owning and operating life cycle costs
Reman End-of-Life “Take Back” Percent 1
Actual end-of-life returns/eligible returns x 100

94%

95%

94%

XX

93%

94%

• Receiving a like-new warranty• Increasing the customer’s return on their investment• Providing the customer with a variety of repair options to meettheir service needs• Providing the customer with a higher resale value• Preserving the majority of energy and materials required to makethe original component or machine
Given the significant role that reman and rebuild operations play in oursustainability initiatives, we created a new customer goal in 2013 aroundthis area of the business. Using 2013 as a base year, our goal is to growthe reman and rebuild business revenues by 20 percent by 2020.

REMANUFACTURING ELECTRONICS

2013

2014

2010

2011

2012

2013

2014

1 Data does not include Progress Rail,Electro-Motive or Solar Turbines.

e Back” by Weight 1
d-of-life material received

1

The reman and rebuild programs allow customers to maximize the built-in
value of their equipment by:

Our reman parts and components program provides customers an
exchange system where they can return an end-of-life component(called “core”) for a remanufactured replacement. For more than 40 years,
Caterpillar’s remanufactured products have provided same-as-new
performance, reliability and warranty at fraction-of-new costs, aswell as availability that gives customers more options at repair andoverhaul time.

heline 2006; future
as baseline.
1,2

Rebuild programs increase the lifespan of equipment by providing customers
with product updates for a fraction of the cost of buying a new machine.
Rebuild programs include Cat® Certified Rebuilds, component overhauls
at Cat ® dealers, Solar Turbines rebuilds and Progress Rail Services
rebuilds. A complete Cat Certified Rebuild includes more than 350 tests
and inspections, automatic replacement of approximately 7,000 parts,
and a like-new machine warranty. In addition, trained dealer service
professionals perform this work using genuine equipment and parts.
Caterpillar provides information, data, training and service tools to help
dealers make the most appropriate decisions on which parts to reuse inorder to achieve expected longevity of rebuilt components. Reuse ofcomponents helps us use materials and energy more efficiently.

The Caterpillar Reman, Solar Turbines and Progress Rail Services
remanufacturing programs – operating around the world – provide
174 customers with lower- cost products, shorter downtime and quick,166
dependable service. Caterpillar Reman alone operates facilities
in eight countries around the world.

47 CATERPILLAR INC.

As we continue to expand our remanufacturing business, electronics is anatural place to focus. Caterpillar is designing electronics that hold up underheavy-duty applications to withstand severe vibration, extreme operating
temperatures, humidity, corrosion and excessive dust. Drawing on our
broad expertise, we introduced a line of remanufactured Electronic Control
Units (ECUs) a decade ago. Today, the team at our remanufacturing facility
in Nuevo Laredo, Mexico, continues to provide Caterpillar customers
with reasonably priced, remanufactured electronic controls that are
ready for another life cycle, while minimizing waste and helping toprotect the environment.

2014 SUSTAINABILITY REPORT

68%

64%

64%

XX

FOCUS AREA: PRODUCT STEWARDSHIP

45%
With the introduction of such worldwide directives as RoHS (Restrictionof Hazardous Substances) and WEEE (Waste Electrical and Electronic
Equipment) in the European Union, as well as different state laws in theAlong with our continuing focus on sustainability throughU.S., new electronic products face strict limits on certain substancesremanufacturing, Caterpillar is always looking for ways to rebuildused in devices as well as in the manufacturing of them. Additionally,
and improve machines and engines still in service. One way we2010 2011 do2012
2013 retrofitting
2014 existing lean burn engines to have2010affects
2011many2012
2013 limiting
2014 what suppliersparts obsolescence
ECUs, further
this is throughcan provide at an affordable price.
much lower emissions for high horsepower applications in gas
compression. The G3516 Low Emissions Upgrade (LE Upgrade) kit
allows operators to economically retrofit existing engines that enable
Reman End-of-Life “Take Back” by Weight 1
up to a 75 percent reduction in NOx emissions. The power rating forMillion pounds of end-of-life material received
the engine remains the same, and upgrade conversions can be donein the field, eliminating the time and costs of transporting the engine
174
171
to a dealer rebuild facility. Customers are able to reduce emission
166
161
levels utilizing existing assets instead of purchasing new engines.
134

NOx UPGRADE KIT

166

2010

2011

2012

2013

2014

1 Data does not include Progress Rail,Electro-Motive or Solar Turbines.

The remanufacturing process at Caterpillar provides a differentiatedsolution. In addition to reusing precious materials, remanufacturing also
keeps electronic waste that contains toxic substances such as lead,
mercury and cadmium from ever reaching landfills. And, what’s more,Cat® equipment is designed to last through several life cycles that canbe measured in decades rather than months or even years. The ability
to provide long-term product support is also a significant driving factor
for electronic remanufacturing.
There is considerable confusion, however, on the true definition ofremanufacturing, as opposed to refurbishing or repairing in the field ofelectronics. Refurbishing tests for functionality and restores appearance.
Repair is simple, and fixes only a specific problem. Remanufacturing, on
the other hand, takes place in a factory environment with 100 percent
genuine parts, upgrades to the latest engineering changes and sameas-new warranties to support same-as-new performance.

48 CATERPILLAR INC.

Caterpillar’s approach takes an electronic component which has
already had one life in the field and applies our broad electronic design
experience and processes to put the component back in the field witha guaranteed full second life – at lower cost to the customer and with lesswaste. It’s just one of the ways that Caterpillar is putting sustainability
into practice and providing the best value to our customers.

INCREASING GLOBAL ACCESSTO REMANUFACTURED PRODUCTS
While global customers have driven demand for reman products, not all
customers can benefit from the significant cost and efficiency savings
that Cat® Reman products deliver. Why? Because certain countries –mostly in developing markets – fail to recognize the value of remanufactured goods for the environment and their national economy and place
trade barriers around reman products.

1%

 ebuild Business GrowthR
Our rebuild sales increased 1 percent
from 2013 to 2014.

2014 SUSTAINABILITY REPORTFOCUS AREA: PRODUCT STEWARDSHIP
There are typically two types of trade barriers. A tariff barrier might
include excessive fees or taxes levied by a certain country that significantly
increase the customer’s cost of choosing a viable reman product. On theother hand, a nontariff barrier might be customs officials categorizing
remanufactured goods as “used” goods, which cannot be imported under
any circumstance or can only be imported after complying with special
inspection, certification, licensing or other onerous requirements. Similarbarriers are often faced when customers seek to export their cores andreturn them to Caterpillar in exchange for a remanufactured engine orcomponent. With the durability, performance, quality and a warranty
equal to that of all other Cat® engines and components, Cat® Reman
products should not be treated as “used” goods. Indeed, this fact has
been acknowledged in a number of free trade agreements and othermultinational statements such as the Asia-Pacific Economic Cooperation(APEC) Pathfinder Initiative. Countries participating in the global economy
should treat reman products the same way as new finished goods are treated.

4% eman Business Growth 1
R
Our reman sales increased 4 percent
from 2013 to 2014.

enhance their current diverse energy-generation portfolio of natural gas,coal and wind, while also serving as a reliable and cost-effective means
to meet members’ growing demand for energy. This type of generation
resource also has a fast-start capability, allowing our customer to rapidly
respond to market conditions and the growing integration of wind energy.

Learn more here.

1 Data does not include Progress Rail, Electro-Motive or
Solar Turbines.

Caterpillar has worked with policymakers in several countries to open
markets and expand reman options for our global customers, providingthem with cost-effective, sustainable options for extending the life of
their existing equipment. Caterpillar teams, including Caterpillar Remanand Global Government and Corporate Affairs, continue in ongoing
efforts to inform and educate government regulators around the worldon the sustainable benefits of Cat Reman products.

Customer Sustainability

Caterpillar helps our customers improve their sustainability performance.
As customers increasingly demand greater energy efficiency, we arefurther motivated to help them reduce their energy use and, corresponding gas (GHG) emissions of our products. We collaborate withcustomers to deliver customized solutions that help optimize energy
use and provide training for customer operators on how to use ourequipment more efficiently.
As the demand for energy grows, there is also an increasing awarenessof the need for that energy to be sustainable. This often means different
solutions in different locations. In the U.S. midwest, for example, one of
the natural choices is wind energy. Because of inherent fluctuations,however, wind energy generation alone is not currently reliable enough tomeet demand. Generators may be used as a backup power source toconsistently meet demand. Our largest natural gas-fired power plant in
the world is bridging this gap. Twelve Cat® G20CM34 generator sets now
provide Mid-Kansas Electric Company LLC with 110 MWe of power to

49 CATERPILLAR INC.

18%

2014 reported sales and revenue derived from products,
services and solutions that demonstrate an improved
sustainability benefit over existing offerings.
The benefits of natural gas power have encouraged us to continue
exploring wide applications for liquefied natural gas (LNG)-fired engines
around the world. Among these is the world’s first LNG-hybrid powerbarge – representing a brand-new way to supply alternative power tocold ironing cruise ships during layovers at the Port of Hamburg, Germany.
Five new spark-ignited Cat® G3516C marine gas engines installed aboard
the barge provide 7.75 megawatts of power while operating solely on
LNG, thereby eliminating the need for idling and related emissions of thecruise ships. The barge is owned by Becker Marine Systems’ subsidiary,Hybrid Port Energy, and is compliant with the strict Marine Classification
Societies requirements, SOLAS, and certified by Bureau Veritas. The
engines represent a pinnacle in efficiency and peak performance, providing
a customer solution that is not only safe and with fewer emissions, butalso one that is cost effective.
While LNG-powered solutions are a natural fit for many Caterpillar
customers, those in industrial regions with a rapidly growing economy,such as China, may find that coke oven gas (COG) is an alternate
resource. Coke is an essential ingredient for making steel and is thesolid product left over from the distillation of coal. COG is normallyflared as a waste product, emitting carbon dioxide into the environment.

2014 SUSTAINABILITY REPORTFOCUS AREA: PRODUCT STEWARDSHIP
Some of our customers are using COG for energy, resulting in reduced
CO2 emissions compared to traditional flaring. One of Caterpillar
subsidiary Solar Turbines’ customers, Shanxi Liheng Steel Co., Ltd.
(Liheng Steel), has become one of the first companies in China to receive
a Certificate of Avoided GHG Emissions from the U.S. Environmental
Protection Agency Combined Heat and Power Partnership for its
achievement in reducing carbon emissions with its combined heatand power (CHP) system.
The company uses four TitanTM 130 gas turbines to burn COG to produce
electricity and uses exhaust heat from the turbines to produce steam.
As a result of using this technology, Liheng’s 55 megawatt CHP system
has avoided CO2 emissions of approximately 301,000 metric tons per
year, compared with conventional energy sources and industry practices.
This reduction is equivalent to removing 55,000 passenger cars from theroads per year. Since 2005, dozens of Solar’s customers have begun
using COG for power generation.
One of the many ways we’re facilitating sustainable growth around theworld is with our revolutionary products – like the hydraulic hybrid technology in Cat® large excavators. The hybrid system offers significantly
improved fuel efficiency of up to 50 percent, along with uncompromised
performance, reduced operating noise and lower customer owning andoperating costs. The foundational technologies (with more than 300 filed
patents) are being leveraged across the hydraulic excavator product line.
The team is proud of the positive impact the product line will have on
fuel efficiency and subsequent GHG emissions.

Watch as the Cat ® 336E H hybrid
excavator keeps a light-rail project on trackin Silicon Valley, Calif. Learn more here.

Job Site Efficiency

Several years ago, Caterpillar recognized that our customers are looking
for us to do more to help them capture the full value from their assets.
So we developed a new solutions business model that goes beyond
iron to deliver this value to our customers. Designed and delivered by
the Caterpillar Job Site Solutions (JSS) team in partnership with Cat ®
dealers, solutions help customers find new and innovative ways toimprove their operations and be more competitive in the marketplace.
JSS leverages Caterpillar’s financial, technological, application andmanagement expertise to tailor solutions based on the customer’s own
needs, typically in the areas of safety, sustainability, equipment, productivity and financials. As a result, every solution is different, scalable andcan range from a short-term consulting engagement to a multiyear fleet
ownership and maintenance solution.

50 CATERPILLAR INC.

CATERPILLAR FOREST PRODUCTS: DELIVERING
IMPROVEMENT THROUGH SHARED EXPERTISE
Caterpillar Forest Products’ Global Solutions Team (GST) works with
forest products companies to help them improve their businesses byimproving profitability, sustainability and safety. The team does this bytaking a high-level view of a company’s operation and bringing theexpertise, services and machines needed to improve it.
The team looks at the operation from a system standpoint – the total
cost of harvesting or total cost of load and transport, or total cost in
the millyard. It’s not just about the equipment; it’s about providing acomplete solution.
The first step is a site assessment. The team analyzes the current
operation in light of the company’s business goals – how much theyneed to produce, expansion plans, fleet replacement time frame, etc.

47%

Increase in fleet hours managed by Caterpillar
Job Site Solutions (2013 to 2014).
The next step is to analyze the data and develop a proposal. The team
generates a system cost model based on the current operation anduses that to pinpoint areas in the system, in the workflow, that could
be improved. The proposed system’s cost, including fuel and maintenance,
is compared with the current system.

2014 SUSTAINABILITY REPORTFOCUS AREA: PRODUCT STEWARDSHIPWhen a company implements a GST recommendation and purchasesmachines, the team’s trainers demonstrate daily maintenance requirements and how to work safely and most efficiently. This phase can
include training on Cat ® Simulators, a safe method for training new
operators that also reduces the customer’s expense for fuel andmaintenance on machines used in training.

46%

Forest Energies CEO Lenn Morris says, “Their boots on the ground and theirexpertise have helped us understand how to better use our machines to
get more productivity.” For example, Morris tells how optimizing skid trails
and training the skidder operator on pulling in the correct gear, dependingon the load, have reduced fuel consumption up to 7 percent. He says theCaterpillar team also taught their loader operators to use the Economy
Mode. “Every operator we had just put it in Power Mode, no matter what
we were loading,” he says. “Now, with their help, we’ve educated ourloader operators and we’ve seen a significant drop in fuel consumption.”

Increase in number of machines covered by services
agreements with Caterpillar Job Site Solutions (2013 to 2014).

In 2014 the team began working with Forest Energies, a timber company
in the southern United States, to help improve the company’s harvesting
operations. The GST, Cat® dealer Thompson Tractor and Caterpillar engineers worked with Forest Energies to find the best solution for harvestinga tract with terrain as steep as 45 degrees. They presented detailed
simulations and cycle time comparisons that illustrated higher production
and lower cost per ton that would be achieved by switching to a Cat® 522B
Track Feller Buncher with the HF201B head and adding two skidders.

51 CATERPILLAR INC.

2014 SUSTAINABILITY REPORTFOCUS AREA: SUPPLY NETWORK

Supply Network
We seek long-term business relationships with suppliers that demonstratestrong values and ethics, in concert with those of Caterpillar, and represent
that they will comply with all applicable laws and regulations. These
include product regulatory standards, environmental and employee safety
requirements, wage and labor laws, anti-corruption laws and various
export regulations.

natural disasters and other risks to the source of supply. This is achieved
through advanced visibility, analytics and case management services.
The ASC ensures that proper orders are delivered from our supply
network, enabling the enterprise to provide world-class delivery
performance, high quality and low total cost to meet our customer
commitments today and into the future.

The Caterpillar Supplier Code of Conduct formally expresses the values
we expect our suppliers will adhere to, and was derived from
Caterpillar’s Worldwide Code of Conduct.

In 2014, Caterpillar’s intensive focus on supply network management
again earned us a prestigious spot on Gartner’s Supply Chain Top 25 list.
Gartner, an information technology research and advisory company, ranked
several global supply networks on peer opinion, return on assets, inventory
returns and revenue growth. It’s our third consecutive year on the list.

We have a risk management plan that outlines our response tocertain risks identified in our supply network. To ensure our impacted
suppliers understand our expectations, we request that they respondto our supply network survey or complete a training program. As
issues arise, members of our senior management are apprised andsuppliers are expected to implement corrective action plans for
mitigation or remediation. Any supplier’s failure to take corrective
actions when required may lead to additional actions, up to andincluding the termination of our business relationship.
Caterpillar has also developed the Assurance of Supply Center (ASC) tosupport our enterprise strategy to manage a world-class supply network.
The ASC focuses on understanding the current state of tools, systems
and processes, and develops projects to close gaps that may obstruct
an end-to-end perspective of our supply network. The ASC continues
to develop the ability to monitor and mitigate risks surrounding our
suppliers’ capacities, capabilities and financial positions, as well as
monitoring the greater geopolitical environment, vulnerability to any
52 CATERPILLAR INC.

SUPPLIER DIVERSITYDiversity within our supply base is important to Caterpillar and we
strive to mirror the demographics of the varied markets in which we
operate. Our passion for continuous improvement is the driving spirit
behind our Supplier Diversity Initiative as we strategically position
diverse suppliers (minority-owned small businesses, veteran-owned
small businesses and many others) who can provide quality products
and services, innovation, cost competitiveness and volume flexibility
in support of our business goals.
Our goal is to provide sourcing opportunities to a wide range of diverse
business types throughout our enterprise. Seamless integration of thesebusinesses allows for synergies as we assist them in growth and development. In 2014, Caterpillar was again recognized as one of the “Best of theBest” for supplier diversity programs by Black EOE Journal, which partneredwith three other diversity publications to evaluate U.S. companies on their2014 SUSTAINABILITY REPORTFOCUS AREA: SUPPLY NETWORK
outreach and accessibility to the African-American, Hispanic/Latino,
female and veteran populations.

REDUCING CO2 EMISSIONSIN THE SUPPLY CHAIN
Transportation and packaging are an integral part of the supply
chain. When utilized effectively, these functions allow Caterpillar
to improve efficiencies, maximize velocity and minimize cost,
while also reducing CO2 emissions.
A team in our Building Construction Products division has beenworking to design these benefits into the supply chain during
the New Product Introduction (NPI) phase. Four areas have been
identified for possible CO2 savings: changes to transportation
modes; density improvements; elimination of unnecessary
mileage and a reduction in the number of shipments over time.
By moving Small Wheel Loader lift arms from truck to rail, forexample, 2,503 tons of CO2 have been eliminated. Likewise,a partnership with a steamship line is matching loads for return
trips, which previously contained empty containers.
These and other initiatives are among 92 projects implemented
globally by the team. To date, this has led to savings of $15.4 million,
elimination of 7,512 shipments and a reduction of 5,473 metrictonnes of CO2 emissions. Indirect benefits include offsetting fueland rate increases, improving safety and decreasing transportation
capacity requirements.

53 CATERPILLAR INC.

LOGISTICS
Caterpillar’s logistics team moves thousands of supplies and partsaround the world to manufacture and service our equipment during thecourse of its life cycle. We drive sustainability through collaboration with
our dealer network and suppliers that embrace sustainable solutions.
In 2014, our logistics team reduced its total energy consumption by
130,000 gigajoules and its carbon emissions by 11,000 tons.
We leverage state-of-the-art technology to optimize the loads wetransport across land and water. Shipments are analyzed and strategicallyplanned to ensure trucks and vessels are full (to reduce the amount of trips
our carriers must make) and determine whether ocean or inter-coastal
barges should be utilized to reduce truck and air miles traveled. We
also utilize a process (trade lane management) to consolidate machine
shipments at port, which reduces the amount of inland miles traveledand improves delivery velocity for our customers.
• Our largest ocean vessel carrier has reduced its carbon emissions by morethan 25 percent in the past six years by introducing more fuel-efficient
vessels. Also, the majority of our ocean vessel carriers are required touse a low-sulfur fuel.
• More than 90 percent of the miles driven in North America to transport
Caterpillar’s cargo are with carriers who are partners in SmartWay,
a United States Environmental Protection Agency program focusedon reducing greenhouse gas emissions and air pollution.
• Our new ground transportation network optimization program has
been successfully deployed to more than 2,000 supplier locations
and 70 manufacturing facilities.

2014 SUSTAINABILITY REPORTFOCUS AREA: DEALER NETWORK

Dealer Network
Our independent dealers serve as a critical link between our company
and our customers. We rely on them to collaborate with us in building
and maintaining the long-standing customer relationships that havemade Caterpillar successful. We value their positive contributions to
our reputation and their deep commitment to the customers and communities they serve, and are proud of the outstanding relationships that we
maintain with suppliers and dealers through trust, communication andshared rewards.
Cat® branded products and services are distributed through a worldwide
network of Cat® dealers (the Cat dealer network), 48 of which are locatedin the United States and 129 are located outside the United States. The
large majority of our worldwide dealers are independently owned andoperated, and many of these businesses have been in families for multiple
generations. The Cat dealer network brings value to customers throughunmatched service, integrated solutions, after-sales support, fast andefficient parts fulfillment and world-class rebuild capabilities. We workwith our dealers to provide products, services and support solutions
necessary to satisfy customer needs worldwide. Other brands in our
portfolio are distributed through their respective channels that optimize
customer value in accordance with their brand value propositions.

54 CATERPILLAR INC.

Our distribution model, which has consistently delivered unmatchedlocal support, is increasingly measured by global standards. The Cat
dealer network is one of our biggest competitive advantages, and wemust make sure that it continues to uniquely position itself so that ourcustomers succeed into the future. Caterpillar and Cat dealers worked
together to define and lay the foundation for a strategy that addresses
our mutual challenges and builds the foundation for our next century of
progress. This requires a thoughtful transformation within our distribution
model, without changing the principles that define our relationship.
Together, we have mapped the path forward to achieving the transformation we need around four objectives, collectively known as our “Across
The Table” initiative:• S trengthening the Cat Dealer Model• E nhancing Customer Focus•A chieving Superior Economics for Caterpillar and the Dealer• S eizing Opportunities While Mitigating Risks
Our dealers worldwide have been working side-by-side with Caterpillar
employees from every area of the company on projects focused on suchthings as e-business, technology-enabled solutions, service strategy,
rental and used equipment strategy and parts logistics. A global teamfocused on one ideal – ensuring that our distribution network is built forour next century of progress.

2014 SUSTAINABILITY REPORTFOCUS AREA: GOVERNANCE & ETHICS

Governance & Ethics
Caterpillar’s governance structure provides leadership, accountability
and transparency to company business on behalf of our employees
and our stockholders. Our corporate governance framework serves theinterests of stockholders with the highest standards of responsibility,
integrity and commitment, and in compliance with all applicable laws.
These standards are developed and implemented by our Board of
Directors and global management team, who oversee the company’s
performance and governance policies.
Caterpillar’s Board of Directors currently has 11 members. This structure
enables a diversity of experience without hindering effective discussion
or diminishing individual accountability. In 2013, Caterpillar amended its
bylaws to require that each director be elected annually by a majority
vote. There are currently three standing board committees: Audit,
Compensation and Human Resources and Public Policy and Governance.
Each committee, solely comprised of independent directors, has a written
charter. Full details on the Board and its committees can be found at
http://www.caterpillar.com/en/company/governance.html.
Caterpillar has established several corporate governance policies that are
intended to reflect Caterpillar’s emphasis on good corporate governance.
These include Guidelines on Corporate Governance Issues, Caterpillar’s Codeof Conduct, stock ownership handbook, mandatory retirement ages for
directors, and an officer compensation claw back policy. Caterpillar policy
also requires 1) former employees of its independent auditors who weresenior managers or higher to wait a minimum of three years before becoming
eligible for certain management-level positions at Caterpillar, and 2) the
rotation of independent audit partners in compliance with the requirements of the 2002 Sarbanes-Oxley Act.
55 CATERPILLAR INC.

Ethics and Compliance

Caterpillar’s reputation is something we value as much as our products
and our customers. In 1974, Caterpillar introduced its first Code of
Conduct. Our current Code of Conduct and Our Values in Action define
what Caterpillar stands for and what we believe in, documenting theuncompromisingly high ethical standards that our company has upheld
since its founding in 1925. The Code of Conduct helps Caterpillar
employees every day by providing detailed guidance on the behaviors
that support Our Values in Action – Integrity, Excellence, Teamwork,
Commitment and Sustainability. Through our Code of Conduct, we
envision a work environment all can take pride in, a company others
respect and admire, and a world made better by our actions.
Full details on the Caterpillar Code of Conduct can be found at
http://www.caterpillar.com/en/company/code-of-conduct.html.

CORRUPTION & BRIBERY
Caterpillar believes that fair competition based on quality, innovationand overall value is fundamental to free enterprise and economic
growth. Bribery and corruption can have serious social, environmental
and economic consequences – impeding trade, competition, investment
and economic growth; and limiting a nation’s ability to reduce poverty
and improve standards of living.
In some areas of the world where Caterpillar does business, bribery
and corruption are significant issues. We firmly believe that fair competition is fundamental to free enterprise. For this reason, we observeanti-corruption, antitrust and competition laws wherever we do business,

2014 SUSTAINABILITY REPORTFOCUS AREA: GOVERNANCE & ETHICS
and we reinforce these messages through advocacy and ongoing employee
training throughout our company. We have also made enforcement ofthese standards part of Our Values in Action.

INFORMATION SECURITY
Information security risks in every business sector have increased
exponentially in the past decade. At Caterpillar, we focus our efforts on
an Information Security Transformation aimed at three objectives: securetechnology, secure behavior and watchful eyes. Six business outcomes
guide all of our information security efforts, which center on protecting
our most valuable information by making risk-based decisions and operating on a secure network. We take a holistic approach to security andmaintain information security standards that are contemporary and riskbased. Greater security awareness across the enterprise is evidenced inour employees’ ability to spot suspicious emails and report them to ourhelp desks and security incident response teams. This positive employee
behavior, coupled with secure technology and detection and response
capabilities is helping to secure Caterpillar’s future. Caterpillar always
has a focus on security and protection of our confidential information.

Risk Management

Risk is an inherent part of conducting business, and especially so on a
global scale. Risk can stem from a variety of factors – from internal
issues such as operational inefficiencies or personnel policies to external
factors such as the competitive landscape, economic conditions or
government regulation.
Caterpillar regularly identifies and monitors business risks through arobust internal management system, and engages in constructive regulation and public policy discussions that benefit employees, customers
and stockholders. We manage operational, strategic, financial andcompliance risk through two programs: the Business Risk Management(BRM) Program and Caterpillar’s Ethics and Compliance Program. The
BRM Program helps business units identify, track and mitigate morethan 50 discrete business risks.
Each year, we conduct a comprehensive Enterprise Risk Assessment
by reviewing risk information from multiple sources, including business
units. To better inform our decision making, Caterpillar evaluates risks
using three dimensions (Significance, Likelihood and Velocity) at thebusiness unit and enterprise level.

Compliance risks are also reviewed as part of the BRM risk assessment
process and are managed as part of Caterpillar’s Ethics and Compliance
Program. These risks cover a broad range of issues including legal andregulatory compliance, labor and health and safety.
Every risk identified under the Ethics and Compliance program has an
Enterprise Risk Owner who is responsible for managing efforts to mitigate
the risk for Caterpillar. They help drive risk management through governance, evaluation, controls, communication and training, and compliance
audits throughout the world.
Through these programs, Caterpillar can better manage risk and gauge
the potential impact of various outcomes on our ability to achieve
strategic goals.

Public Policy

Government decisions around the world can have a significant impact
on our employees, customers and stockholders. Where legal, appropriate
and constructive to do so, Caterpillar will advocate for public policy outcomes that help promote sustainable business conditions for our company,
our suppliers and our stockholders. The form of advocacy Caterpillar uses
may differ depending on the political system and local law.
We communicate the importance of key public policy issues to ouremployees and other stakeholders, including dealers, suppliers and retirees. In some countries, we may encourage them to express their views
to lawmakers – if this practice is consistent with local custom and citizenship rights. Our leaders will also utilize opportunities to interact withgovernment officials directly to advocate our legislative positions.
Finally, we support many organizations and associations that champion
public policies that contribute to the success and growth of the business
community and manufacturing industry as a whole.
We:•M onitor state, federal and international government affairs issues.
•A dvocate and seek implementation of policies and legislation thatallow Caterpillar, our dealers and customers to succeed.
• P artner with elected officials and policymakers to ensure theirunderstanding on the key issues that impact our business, suchas trade, tax, infrastructure and energy.

The results of this BRM risk assessment are incorporated into future
action plans to mitigate the identified risks.

56 CATERPILLAR INC.

2014 SUSTAINABILITY REPORTFOCUS AREA: GOVERNANCE & ETHICS
Where allowable by law, Caterpillar may make corporate contributions
to campaigns, individual candidates or political action committees that
support public policies that we believe will have an impact on our business.
As outlined in Our Values in Action, all corporate contributions areapproved by Caterpillar Government Affairs. Full details on thesecontributions can be found at http://www.caterpillar.com/nl/company/
corp-overview/global-issues.html.

57 CATERPILLAR INC.

Where corporate contributions are not permitted in the United States,
Caterpillar employees also fund and administer the Caterpillar Employee
Political Action Committee (CATPAC). CATPAC is entirely funded throughvoluntary contributions by eligible employees. A Steering Committee
comprised of Caterpillar nonofficers who represent a diverse mix of U.S.
locations and business units oversees all donations made by CATPAC.
CATPAC contributions go to federal and state political campaigns
and organizations.

2014 SUSTAINABILITY REPORTFOCUS AREA: HUMAN RIGHTSHuman Rights
Caterpillar has a long history of building products and equipment
to advance sustainable global economic development and improvestandards of living in communities where we operate. Our approachand commitment to upholding and respecting human rights is articulated
in Our Values in Action – Caterpillar’s Code of Conduct and governed by
our Human Rights Policy, which Caterpillar developed in 2015. The policy
will also align with expectations in our Supplier Code of Conduct. The
policy is informed by international human rights principles described in
the United Nations Declaration of Human Rights (UNDHR) and theInternational Labour Organization’s (ILO) Declaration on Fundamental
Principles and Rights at Work. The policy is a result of a comprehensive
process that included benchmarking with a number of organizations thatlead in this area, cross-functional business input and review by thegovernance committee of Caterpillar’s Board of Directors.

58 CATERPILLAR INC.

In 2015 and beyond, Caterpillar will work to implement this policy
into direct operations and management processes. This includes
adopting a formal human rights governance structure, delivering
training for employees and reporting on progress made in our next
sustainability report.

2014 SUSTAINABILITY REPORTFOCUS AREA: ECONOMIC DEVELOPMENT

Economic Development
The Caterpillar organization and our products support economic growtharound the world, both in developed countries and emerging markets.
The road to sustainable progress often begins with a road, and Caterpillar’s
products provide critical contributions to the construction of that road.
From growth economies, where new infrastructure is required, to developed
areas where aging networks need improvement, our products help ensurethat investments in transportation, energy, telecommunications, waste andwater infrastructure produce maximum benefits. We support theseinvestments as key enablers for sustainable development for local communities, economic growth, competitiveness and long-term job creation.

PROMOTING DEVELOPMENT THROUGH ADVOCACY

In order to promote economic development, governments have a
responsibility to maintain appropriate levels of productive investment
in infrastructure while providing a level playing field for suppliers.
Leveraging private investment can bring additional sources of funding,provided that investment is supported by fair and predictable policies
to maximize the certainty and timeliness of financial returns.

We believe increased commercial engagement leads to economic
gains that raise standards of living, improve the quality of life and promotesustainable development. More importantly, trade liberalization can promote
peace and understanding and can be an important contributor to solving the
global problems of hunger, poverty and disease. Economic growththrough international trade is essential for poverty reduction, but alsocomes with challenges. Chief among them is the need to balance economic,
environmental and social policies to achieve sustainable development.
Balanced economic, environmental and social policies provide a common
framework for allowing environmental and trade policymakers to engage
stakeholders, analyze issues and evaluate policy more efficiently.

Growth-enhancing infrastructure investments, however, cannot be fully
delegated to the private sector, and public financing should continue tocomprise the bulk of infrastructure investment. Governments caninfluence the affordability of infrastructure through the facilitation of
permitting, the reduction of administrative burden and the simplificationof related requirements. The role of government for infrastructure financing should be based on national needs, including urbanization, commerce
and trade policy, transportation, disaster prevention and mitigation,
defense and global competitiveness.

59 CATERPILLAR INC.

Caterpillar believes that the best means of economic development andthe efficient distribution of goods and services is the pursuit of businessexcellence in a climate of free enterprise, free trade and global competition. Further, such international exchange promotes better understanding
across borders and cultures, leading to a more peaceful world. Thesebenefits have been demonstrated by the enormous rise in post-WorldWar II gross domestic product and living standards in countries participating in international commerce. By contrast, many isolated countries
have frequently not experienced such advantages.

2014 SUSTAINABILITY REPORTFOCUS AREA: ECONOMIC DEVELOPMENT
Caterpillar has a long history of advocating for free trade. Our interest
comes not from the perspective of any one country, but from our global
perspective – that companies compete best in a free trade environment.
Free trade requires us to continually improve our global competitivenessand creates an environment that allows us to better respond to our customers’ needs and to grow our business. It offers us the opportunity tosource globally and thus compete effectively while providing maximum
value to users. Our suppliers, in turn, also have an easier time satisfying
our global sourcing requirements. Our employees around the world, andtheir respective communities, benefit from a higher standard of living, as
they have access to more product choices at lower prices. Free tradealso allows us to provide more and better job opportunities, because
open markets lead to improved competitiveness.
Caterpillar will continue to support policies that enhance competitionin the global marketplace and reduce – or better yet, eliminate – tradeand investment barriers. We believe that developed countries should
adopt policies that allow the benefits of the global economy to beextended to developing countries. To this end, Caterpillar also recognizes thathumanitarian and developmental assistance is necessary to fight disease,improve living conditions and combat corruption – all of which can be barriers
to free trade and economic growth in the world’s poorest countries.

PROMOTING DEVELOPMENT THROUGH EMPLOYMENTOur facilities in more than 180 countries provide quality jobs andopportunities for the people in those locations, currently, at the endof 2014, more than 114,000 employees – not to mention the jobs also
created within our extended dealer network and supply chain. The
importance of manufacturing jobs to the economy – not just in the
United States, but worldwide – cannot be overstated. According to
the Bureau of Economic Analysis, manufacturing contributed $2.03 trillion
to the United States economy in 2013, an increase from the year before.
For every dollar spent in the manufacturing industry, another $1.48
is added back into the economy – the highest such multiplier for any
economic sector that the Bureau tracks. The Advanced Manufacturing
National Program Office estimates that total hourly compensation for
manufacturing workers is about 17 percent higher than workers in nonmanufacturing sectors. In addition, manufacturing jobs translate into
additional jobs in other parts of the economy, with
2.2 additional jobs created in both direct support and service support
capacities for every manufacturing job.
The number of jobs that Caterpillar and its suppliers bring to communities
varies by site, and they often vary according to economic cycles. A significant economic impact is created in the communities where Caterpillar
facilities operate as a result of not only newly created jobs, but existing
employment levels as well.

60 CATERPILLAR INC.

PROMOTING DEVELOPMENT THROUGHMICROFINANCING
The Caterpillar Foundation invests in organizations through grants. These
organizations aid local economic development by providing funds to individuals or groups who might not otherwise have access to traditional
financial services to start small businesses. The Caterpillar Foundation
has been investing in Opportunity International for more than 21 years,
supporting various development efforts in more than 22 countries andimpacting over 18 million lives around the world.
Support from the Caterpillar Foundation enables Opportunity
International to provide access to financial services and training to help
entrepreneurs and their families in the developing world launch andexpand successful businesses – even in the face of extreme poverty.
We especially see women thrive with access to savings, loans, insurance
and business training. Communities flourish as entrepreneurs create jobs.
In Africa, for example, Opportunity International expanded outreach topoor women and their families, significantly increasing the number ofloan and savings programs by disbursing over 149,000 agriculture loans
to farmers and helping more than 3,000 families obtain school fee loans
for their children’s education. Educated children can break the grip ofpoverty. In China, where the Caterpillar Foundation has supported
Opportunity International’s work for more than a decade, 150,000 jobs
have been supported and created. In India, where 900 million people liveon less than $2 a day, Opportunity International has empowered 2.5 million
new entrepreneurs, expanding financial services from 170 districts across
18 states in India to more than 275 districts across more than 20 states.
The work is also improving access to toilets, safe drinking water and clean
energy solutions at the household and community levels in India.
Together, the Caterpillar Foundation and Opportunity International
collaboration has improved millions of lives – and our work continues
to move the needle against poverty.
The Caterpillar Foundation also invests in Water.org’s WaterCredit
initiative, which puts microfinance tools to work in the water andsanitation sector. It is one of the most effective and comprehensive
programs of its kind to respond to the current U.S. $12 billion demand
for microfinance for water and sanitation in developing countries.
Through WaterCredit, Water.org builds upon existing systems of
microfinance in these countries to meet this significantly untappedmarket as a means to secure access to water and sanitation for thepoor. The global water and sanitation crisis is pervasive, urgent anddebilitating. Nearly 750 million people lack access to any improved
water source, while 2.5 billion people do not benefit from hygienic

2014 SUSTAINABILITY REPORTFOCUS AREA: ECONOMIC DEVELOPMENT
sanitation facilities. The human toll takes on many forms, including
the death of 1,800 children every day. In India alone, more than 92 million
people lack access to safe drinking water, while more than 792 million
people do not have the dignity of a toilet. Girls and women, who areparticularly affected by this issue, often waste more than 180 million
hours per day scavenging for water, hindering their capacity to participate
in school and income-generating activities.

61 CATERPILLAR INC.

However, a significant proportion of poor households in these areas
have also demonstrated an ability and willingness to pay for access toclean water and sanitation when these services are available. Indeed,in many instances, the world’s poor pay on average 5 to 10 times more
for their water than their middle-class neighbors who are connected topiped water services. Further, these are also the same disadvantaged
communities that are often deemed “unfinanceable” by financial providers
due to their lack of assets, affecting their ability to access credit andcapital to meet their water and sanitation needs. Through this demanddriven and market-based approach of WaterCredit, poor households gain
access to capital that enables them to finance the water and sanitation
solutions they need most. Access to water and sanitation allows thesefamilies the health, time and opportunity to engage in income-generating
endeavors, and a chance to break the cycle of poverty.

2014 SUSTAINABILITY REPORTFOCUS AREA: PHILANTHROPY

Philanthropy/Social Innovation
We contribute to the well-being of communities around the world.
From charitable contributions to volunteerism, philanthropy has long
been part of Caterpillar’s culture. As Our Values in Action states:“WE ARE PROACTIVE MEMBERS OF OUR COMMUNITIES.”

Through strategic investments and collaborations, we leverage ourunique strengths to make contributions that support poverty alleviation.
We collaborate across our value chain to develop programs that provide
job training and increase workplace safety. Globally, our employees
generously volunteer their time, skills and talents to achieve significant
community impact where they work and live.

As individuals and as a company, we contribute our time and resources
to promote the health, welfare and economic stability of communities
around the world. We conduct our business in a manner that respects
human rights. We encourage all employees to participate in activities
that strengthen our communities. Our success should also contribute to
the quality of life, prosperity and sustainability of communities where
we work, live and serve.

62 CATERPILLAR INC.

2014 SUSTAINABILITY REPORTFOCUS AREA: PHILANTHROPY
THE CATERPILLAR FOUNDATIONFounded in 1952, Caterpillar has supported the philanthropic work of
the Caterpillar Foundation, which has contributed more than $600 million
to help make sustainable progress possible around the world. The
Caterpillar Foundation’s mission is to turn the spiral of poverty into a pathto prosperity by investing in those proven to yield the best results – girls
and women. We champion programs that support:• Environment: natural resource management• Education: literacy and numeracy, STEM (Science, Technology,
Engineering and Math), leadership and workforce readiness• Basic Human Needs: energy access, food, shelter, water, disaster relief

2014 Caterpillar Foundation
Investments in our Communities•45% U.S.
•55% International$49.6 Million Total
As a change in methodology from previous reporting,these investments do not include administrative costs.

The future of a growing, vibrant Africa is inherent to Caterpillar’svision of sustainable progress. We have a history of almost 90 years
on the continent and operate in 52 of 54 African countries. Caterpillar’scommitment to Africa can also be seen through its support of theCaterpillar Foundation. The Caterpillar Foundation has invested morethan $30 million to enable growth and development through accessto clean water, energy and microfinance, with a specific focus onempowering girls and women.
The Caterpillar Foundation made a commitment to invest $10 million
with the ONE Campaign, an advocacy group that fights extreme poverty,
to address public policy needs and the lack of access to energy, which isa key factor in making it more difficult for Africa to lift itself out of poverty.
The investments are being used toward the group’s vital advocacy efforts
and to help bring reliable energy to as many as possible of the 600 million
people across Africa lacking reliable access.

63 CATERPILLAR INC.

A reliable supply of clean and safe water is another fundamental need
if a country is to emerge from poverty and prosper. Accordingly, theCaterpillar Foundation is investing nearly $5 million to bring clean water
to three countries in Africa through charity: water, whose mission is
to bring clean and safe drinking water to every person on the planet.
The investment will help bring clean water to hundreds of communities
throughout Ethiopia, Malawi and Uganda, where the Caterpillar
Foundation has been working with charity: water since 2010, 2012, and2014, respectively. This gift will also serve to support the pipeline initiative,
which is committed to developing innovative programs that increase thesustainability of clean water services. “The Caterpillar Foundation has
been a key contributor to charity: water since 2010. During that time,
we’ve funded nearly 14,000 projects to bring clean water to more than
4.6 million people throughout Africa and beyond,” said Scott Harrison,charity: water CEO. “We are honored to continue working with theCaterpillar Foundation in such a significant way. Together, we’re putting
thousands more people on the path to prosperity.”
Along with water, adequate and safe food is another basic necessity.
However, in some developing countries, even when there is enough food,there is a danger in preparing it. Chronic exposure to smoke from wood-firedor kerosene cookstoves is one of the largest, but almost unknown, causes ofdeath in developing countries where traditional cooking practices arecommon. As cooking and fuel collection largely remain a woman’s
responsibility in many African countries, the health and economic effects
of household air pollution from traditional cookstoves disproportionately
impact girls and women. The Caterpillar Foundation is investing morethan $1 million in energy and cookstoves programs to help address thisdeadly issue in Ghana, Kenya, Nigeria and Uganda. Through a United
Nations Foundation program, the money will provide education about
the dangers of traditional cooking and the improvement to health andwell-being of adopting clean cooking solutions.

Our Goal: Place 50 million people on thepath to prosperity by 2020.

50 MILLION
Since 1952, the Caterpillar Foundation has been
dedicated to transforming lives in the communities
where we live and work around the world.
We champion programs that support education,
environment and basic human needs. Learn moreat CaterpillarFoundation.org.
2014 SUSTAINABILITY REPORTFOCUS AREA: PHILANTHROPY
In places where health can be compromised by extreme poverty and alack of wholesome resources and practices, there is an added humanand economic imperative to help ensure that health systems are strong
and resilient. Sadly, the Ebola outbreak in West Africa poses an immediate threat to already taxed health systems and threatens the strides
that have already been made. Ebola has not only taken thousands of
lives – it has also broken down health systems, closed schools,
shut down agricultural markets and hampered economic growth.
The ONE Campaign is among the best organizations advocating on global
health issues and has recently been at the forefront of Ebola policy andadvocacy efforts. ONE has responded vigorously to the Ebola crisis, witha particular focus on resource mobilization and donor accountability;communications and advocacy messaging; and social mobilization
among its 2 million African members.

Caterpillar supports a culture ofvolunteerism and employee engagement.
The Caterpillar Foundation made a special donation of $1 million in2014, specifically to boost the organization’s response to the Ebola
outbreak. Along with the Foundation’s earlier investments in The ONE
Campaign’s work to fight extreme poverty and preventable disease in
Africa, this investment will help ensure that the Ebola crisis and its
damaging effects on global health systems remains a top priority forpolitical leadership and the public. The outcomes will help government
officials put healthcare policies and measures into place aimed at
protecting the citizens and stopping the spread of Ebola.
The Caterpillar Foundation is dedicated to continue targeting the root causesof poverty, which is key to Caterpillar’s corporate social innovation strategy.

VOLUNTEERISM & EMPLOYEE ENGAGEMENT
The volunteer efforts of our employees distinguish our people anddemonstrate they are leaders not only in the workplace, but also in thecommunity. We continuously strive for innovative ways to empower andsupport our employee volunteers, which is why we are expanding our
focus on employee volunteerism and engagement. We are developing
and launching new strategies to enable employees across the globe
to contribute to the well-being of their communities.
Caterpillar employees and retirees volunteer countless hours every
year, contributing selflessly to hundreds of nonprofit organizations
across the globe.

64 CATERPILLAR INC.

U.S. VOLUNTARY CONTRIBUTIONSOur employees not only volunteer their time to worthy causes, theyalso contribute their financial resources. Caterpillar has joined with our
employees to support giving in two ways – through our Caterpillar
Employee United Way Appeal and through a Matching Gifts Program
managed and matched by the Caterpillar Foundation.
Since the 1950s, Caterpillar has had only one corporate solicitation toemployees – the Caterpillar Employee United Way Appeal. All employee
contributions raised through this solicitation are distributed back to theUnited Way of their choice, along with a dollar-for-dollar match from theCaterpillar Foundation. The individual United Way then invests in programsin the community. This is a great way for Caterpillar employees to invest
in local charities, with each local United Way helping assess community
needs, identifying programs delivering measurable outcomes and working
to eliminate future needs by creating long-term solutions. In 2014,
a total of more than $12.8 million was donated to the United Way –$6.4 million in employee contributions, and a $6.4 million match fromthe Caterpillar Foundation.
The Caterpillar Foundation is proud to offer the Matching Gifts Program
to support the monetary contributions that U.S. employees, retirees anddirectors make to worthy causes in the areas of arts and culture, two- andfour-year colleges and universities, environment and public policy. The program provides a dollar-for-dollar match on contributions between $50 and$2,000 per organization with no limit to the number of organizations
per person. Last year the Foundation matched $3.5 million through thisprogram. For more details on the Matching Gifts Program, visit
http://www.caterpillar.com/en/company/caterpillar-foundation.html.

In 2014, our Product Development andGlobal Technology employees locatedin China donated more than $20,000
to the FIRST Tech Challenge.

2014 SUSTAINABILITY REPORTFOCUS AREA: PHILANTHROPYLEGAL SERVICES PRO BONO PROGRAM WORKS WORLDWIDEAs the young man looked out over the faces of the attendees at
Renewal House’s “A Women’s Thanksgiving” celebration dinner, heremembered how Renewal House staff helped him and his motherwhen their lives were in chaos and how, due to the legal assistanceprovided by Caterpillar’s Pro Bono volunteers, he and his mother wereable to stay together. Today, his mother is clean and sober. He is on
his way to medical school. Now it was his turn to inspire the audience
with the possibility of changing their own lives.

In the U.S., Caterpillar’s lawyers, paralegals and legal staff regularly
undertake a wide range of pro bono matters, including wills, divorce,
orders of protection, adoption, 501(c)(3) organization, small claims,
debt collection, intellectual property matters and employment issues.
Each year, division employees staff numerous legal clinics coveringvarious matters, such as helping immigrants who have been victimsof domestic violence obtain U-Visas to preparing powers of attorney
and living wills.

His story is one of the many success stories to come out of the
Nashville, Tenn., nonprofit organization. Renewal House provides
comprehensive residential and outpatient long-term recovery support
for women with substance-use addictions, addictions that often
manifest in other co-occurring issues such as mental health disorders
and entanglements with legal and child-welfare systems. Renewal
House is one of the many local collaborations developed in theCaterpillar Pro Bono Program. Since 2007, Caterpillar’s attorneys andparalegals have provided legal assistance to the organization, fromassisting on individual client matters, such as custody matters, toworking with the organization in developing a records management
policy, to producing an employee manual, amending their bylaws andhelping Renewal House obtain a grant.

Caterpillar also has been successful taking on global pro bono projects.
Nearly 70 lawyers and paralegals in 11 countries, for example,
conducted extensive research to help draft model legislation that willprotect Nepalese women working in “cabin and dance” restaurants
from socioeconomic and sexual exploitation. The Supreme Court of
Nepal issued a decision decrying the practices and directing theenactment of legislation to address the issue. Other global pro bono
projects include the promotion of inheritance rights in Kenya and theTahirih Justice Center’s Forced Marriage Initiative.

Caterpillar’s collaboration with Renewal House was one of the firstprograms undertaken after Jim Buda, Caterpillar Executive Vice
President and Chief Legal Officer, charged Deputy General Counsel
Mike Sposato with developing a pro bono legal program in 2006.
Mr. Buda was passionate about reaffirming our commitment to thecommunities in which we live and work and supporting employees
who provide their service.

In creating a pro bono culture within the division, Caterpillar also
works to foster pro bono work in general. For example, we worked
closely with leaders in Illinois to change the rules that restricted
limited admission in-house counsel from performing pro bono work.
The Caterpillar Pro Bono Program has shown itself to be a great
success. Success not only measured by the many awards andaccolades received from outside organizations and from within thecompany, but by the fact that more than 80 percent of Caterpillar’s
legal professionals participate in the program voluntarily.

Today the Caterpillar Pro Bono Program is active in many locales
in the United States, Europe and Asia. Through the program, legal
representation is not only provided to low-income clients referred fromlocal legal services organizations or from local nonprofit organizations,but also to the nonprofits themselves. Since its inception, more than
360 division members have provided more than 15,000 hours of freelegal services.

65 CATERPILLAR INC.

2014 SUSTAINABILITY REPORTGOALS AND PROGRESS

Goals and Progress
Caterpillar has set aspirational, long-term goals for its operations and product stewardship. We believe these standards affirm ourdetermination to lead our industry to a more sustainable future.

ENERGY
Reduce energy intensity
by 50 percent
from 2006.

SAFETY
Reduce our recordable
workplace injury rate to
0.6 and lost-time caserate due to injury to 0.15.

2020 GOALS FOROPERATIONSBY-PRODUCTMATERIALS
Reduce by-product materials
intensity by 50 percent
from 2006.

SAFETY
Provide leadershipin the safety of people in,on and around our products.

2020 GOALSFOR PRODUCTSTEWARDSHIP

66 CATERPILLAR INC.

ENERGYUse alternative/renewablesources to meet 20 percent
of our energy needs.

GHG
EMISSIONSReduce greenhousegas emissions intensity
by 50 percent
from 2006.

PRODUCTS,SERVICES AND
SOLUTIONSWATERReduce water consumption
intensity by 50 percent
from 2006.

LEED

Design all-new facility
construction to meet Leadershipin Energy and Environmental
Design (LEED) or comparable
green building criteria.

Leverage technology
and innovation to improvesustainability of our products,
services and solutions forour customers.

SYSTEMSOPTIMIZATION
Increase managed fleet
hours by 100 percent
from 2013.

REMAN ANDREBUILD
Increase remanufactured
and rebuild businesssales by 20 percent
from 2013.

2014 SUSTAINABILITY REPORT20032011 2012 AND
2013 PROGRESS2014 2020
GOALS
Goal

SAFETY

Goal: Reduce our recordable workplace injury rate
to 0.6 and lost-time injury case rate to 0.15 by 2020.

0.71

0.23

Recordable Injury Frequency (RIF) 1
Recordable injuries per 200,000 hours worked

Lost-Time Case Frequency Rate (LTCFR) 1
Work-related injuries resulting in lost timeper 200,000 hours worked

6.22
2.97

2003

1.03

1.02

0.78

0.71

0.60

2011

2012

2013

2014

2020
Goal

2003

0.28

0.30

0.29

0.23

0.15

2011

2012

2013

2014

2020
Goal

1 Data prior to 2014 has been restated due to a) data updates realized from
improved accuracy and b) updates to goal reporting format.

1 Data prior to 2014 has been restated due to a) data updates realized from
improved accuracy and b) updates to goal reporting format.

We have improved our Recordable Injury Frequency rate by 89 percent
from our 2003 base year and 9 percent from our last reporting period.

We have improved our Lost-Time Case Frequency rate by 92 percent
from our 2003 base year and 21 percent from our last reporting period.

Lost-Time Case Frequency Rate (LTCFR) 1
Work-related injuries resulting in lost timeper 200,000 hours worked

2.90
2.97

2003

0.28

0.30

0.29

0.23

0.15

2011

2012

2013

2014

2020
Goal
2003

67 CATERPILLAR INC.

2014 SUSTAINABILITY REPORTGOALS AND PROGRESSENERGY GOALS & PROGRESS

Goal: Reduce energy intensity by 50 percent
from 2006 to 2020. 1

496

Goal:

27.4%

Energy Intensity 1
Absolute gigajoules energy use/
million dollars of revenue

 se alternative/renewable sources to meetU
20 percent of our energy needs by 2020.

Alternative/Renewable Energy
Sum of renewable and alternative electricalenergy use/total electrical use x 100
Alternative
Renewable

28.0% 27.4%

692
474

2006

2011

417

2012

502

9.4%

496
346

2013

2014

2020
Goal

1 Data prior to 2014 has been restated due to a) acquisitions, b) divestituresand c) data updates realized from improved accuracy.

Operational energy intensity decreased 28 percent from our 2006
base year to 2014. This progress represents a continued commitment
to investment in more energy-efficient equipment and processes, aswell as the implementation of best practices at our facilities around theworld. Our total absolute energy use for 2014 was 27.4 million gigajoules.

Alternative/Renewable Energy
Sum of renewable and alternative electricalenergy use/total electrical use x 100
Alternative
Renewable

28.0% 27.4%
9.4%

9.8%

9.8%

18.2%
14.8%

2011

2012

18.6%

17.6%

2013

2014

Energy obtained from alternative resources increased from 2013 to 2014.
With the combination of alternative and renewable energy sources, wehave achieved 27.4 percent energy from alternative or renewable sources.
Renewable Energy: Caterpillar defines renewable energy as energy resources thatare naturally replenishing over a short period of time and virtually inexhaustible.
Power generation examples include wind, solar, hydro, geothermal, tidal, wave,
biomass and biogas from anaerobic digestion.
Alternative Energy: Caterpillar defines alternative energy as any source ofusable energy that offers substantial environmental benefits compared to theconventional sources of energy that it replaces. Power generation examples
include renewable sources listed above, plus landfill gas, coal mine andabandoned mine methane, combined heat and power (cogen, trigen andquadgen), coal with carbon sequestration and localized power generation.
Transportation fuel examples include renewable sources listed above, plus
pure methanol, ethanol blends of 85 percent or more with gasoline, purenatural gas, natural gas blends of 85 percent or more with diesel fuel, liquid
fuels domestically produced from natural gas (compressed natural gas,
9.4%
liquefied natural gas and gas to liquid fuels), propane, coal-derived
liquid fuels,hydrogen and electricity.

18.2%

14.8%

18.2%
14.8%

18.6%

17.6%

2011
2011

2012

68 CATERPILLAR INC.

2013

2014

2012

2013

27.4%
2014 SUSTAINABILITY REPORTGOALS AND PROGRESSGHG EMISSIONS GOALS & PROGRESS

Goal: Reduce greenhouse gas emissions intensity
by 50 percent from 2006 to 2020.1

44.7 Reduce water consumption intensity
by 50 percent from 2006 to 2020.1,2Water Consumption Intensity 1,2Absolute thousand gallons of water/
million dollars of revenue

76.3

72.1
47.3

2011

39.6

2012

44.3

52.3

44.7
36.0

2013

2014

2020
Goal

1 Data prior to 2014 has been restated due to a) acquisitions, b) divestituresand c) data updates realized from improved accuracy.

In 2014, Caterpillar achieved a reduction in GHG emissions intensity
by 38 percent over our 2006 base year. While our intensity increased
compared to last year, our absolute GHG emissions remained constantfrom 2013 to 2014. Our total absolute GHG emissions equaled 2.47 million
metric tons for the year.

2.47

2006

2011

52.3

2.47
2011

69 CATERPILLAR INC.

45.6

1.48 million metric tons
Scope 2 GHG Emissions(Indirect emissions from
50.1
48.9
purchased electricity,heat or steam)

38.2

Million metric tons
total absolute GHG emissions

48.9

2012

2013

50.1
38.2

2014

2020
Goal

2 Water consumption intensity does not include non-contact cooling waterfrom foundry operations.

Through 2014, we have reduced water consumption intensity at ourfacilities by a total of 34 percent from our 2006 base year intensity.
Our 2014 absolute water consumption, including non-contact coolingwater from foundry operations, is 4.34 billion gallons of water.

Total Absolute Water Consumption
Billion Gallons

0.99 million metric tons
Scope 1 GHG Emissions(Direct emissions)

76.3

45.6

1 Data prior to 2014 has been restated due to a) acquisitions, b) divestituresand c) data updates realized from improved accuracy.

4.34

Total Absolute GHG Emissions
Million Metric Tons
Water Consumption Intensity 1,2Absolute thousand gallons of water/
million dollars of revenue

2006

Goal:

50.1

GHG Emissions Intensity 1
Absolute metric tons of CO2e/
million dollars of revenue

2006

WATER GOALS & PROGRESS

1.57 billion gallons non-contact
cooling water from foundry operations
2.77 billion gallons enterprise water
consumption excluding non-contact
cooling water from foundry operations

4.34
Water Sources

Billion gallons
total absolute water consumption

46% municipal water

2012

2013

2014

2020
Goal

31% groundwater
23% surface water<1% other (e.g., grey water)2014 SUSTAINABILITY REPORTGOALS AND PROGRESSBY-PRODUCT MATERIALS GOALS & PROGRESS

Goal: Reduce by-product materials intensity
by 50 percent from 2006 to 2020.

14.0

772

By-Product Materials Intensity 1
Absolute metric tons of by-product materials/
million dollars of revenue

13.8

15.2

13.2

12.5

By-Product Materials
Thousand Metric Tons

Recycled 90.6%

14.0

Disposed 9.4%
(sent to landfill or incineration)

6.9

2006

2011

2012

2013

2014

2020
Goal

1 Data prior to 2014 has been restated due to a) acquisitions, b) divestituresand c) data updates realized from improved accuracy.

In 2014, our by-product material intensity increased 1 percent fromour 2006 base year. We generated a total of 772,000 metric tons of
by-product materials, and 90.6 percent of those materials were recycled.

70 CATERPILLAR INC.

772

Thousand metric tons
90.6% was recycled and 9.4% disposed(sent to landfill or incineration)2014 SUSTAINABILITY REPORTGOALS AND PROGRESSLEED GOALS & PROGRESS

Goal: Design all-new facility construction to meet Leadership in Energy and Environmental Design (LEED) or comparable
green building criteria.

According to the U.S. Green Building Council, 88 percent of theFortune 100 companies use LEED design and construction criteria.
Facilities designed to the LEED criteria are more energy- andresource-efficient than traditional construction. LEED facilities arealso designed to create a healthier indoor environment for employees.
In 2014, the following Caterpillar facilities received certification inaccordance with the U.S. Green Building Council’s LEED BD+C (Building
Design and Construction) certification process or comparable criteria:
LEED Gold• Track-Type Tractor, Rayong, Thailand• Caterpillar Financial Center, Nashville, Tenn. (recertification)
LEED Silver• Caterpillar Corporate Hangar, Peoria, Ill.
LEED Certified• Caterpillar Energy Solutions, Santa Fe, N.M.
The following facilities were designed and constructed following
LEED BD+C or comparable criteria, but were not certified:• Logistics, Spokane, Wash.
• Underground Mining, Rayong, Thailand

75%

F acilities completing construction in 2014 that
met LEED or comparable green building criteria.
For example:• GOLD, Rayong, Thailand – Track-Type Tractor Facility
This 500,000-square-foot facility, which began productionof medium track-type tractors in late 2013, includes an energyefficient building shell that utilizes a combination of natural andmechanical ventilation and rainwater harvesting for toilets andirrigation systems, among other sustainable construction
features. In addition to incorporating energy, water and waste
minimization tactics into its operation, the facility’s design supports
healthy and energy-efficient practices for employees as wellthrough alternative transportation, preferred parking forlow-emissions vehicles and large, open green spaces withnative landscaping that requires less irrigation.
•G OLD Recertification, Nashville, Tenn. – Cat Financial
The Caterpillar Financial Center is an 11-story, 324,000-squarefoot office building in downtown Nashville, Tenn. In March 2009,
this property became the first privately owned commercial
office building in the state to achieve LEED for Existing Buildings
certification. In May 2014, the Caterpillar Financial Center wasawarded LEED Gold recertification. Over the past five years, Cat
Financial has built a more sustainable culture by implementing acompost/recycle/waste program to position its headquarters toachieve a goal of zero waste by 2020.
•C ertified, Santa Fe, N.M. – Caterpillar Energy Solutions
Caterpillar Energy Solutions in Santa Fe, N.M. completed a LEEDcertified building expansion that nearly doubled the previous manufacturing capacity of the facility. During construction, nearly 95
percent of the waste generated on-site was diverted from landfill
to be recycled or reused and the new building materials contained
more than 24 percent recycled content. The building was designed
for energy and water efficiency, and is purchasing “green” power
through agreements with the local electricity provider.

71 CATERPILLAR INC.

2014 SUSTAINABILITY REPORTGOALS AND PROGRESSPRODUCT STEWARDSHIP GOALS & PROGRESSSAFETY

Goal:

Provide leadership in the safety of people in, on and around our products.

Progress: See Focus Areas for examples of our progress.

PRODUCTS, SERVICES AND SOLUTIONS

Goal: Leverage technology and innovation to improve sustainabilityof our products, services and solutions for our customers.

18%

2 014 reported sales and revenues derived from products, services and solutions
that demonstrate an improved sustainability benefit over existing offerings.

Progress: In 2014, 18 percent of Caterpillar’s reported sales and revenues was from products, services
and solutions that demonstrated an improved sustainability benefit over existing offerings. This includes
remanufacturing, component overhauls at Cat ® dealers, power generation using alternative energy sources,
customer job site optimization and innovative new products. The components are evaluated each year toadjust for acquisitions, divestitures, offerings that become standard and improvements to data accuracy.

SYSTEMS OPTIMIZATION

Goal: Increase managed fleet hours by 100 percent
from 2013 to 2020.

47%
46%

I ncrease in fleet hours managed by Caterpillar
Job Site Solutions (2013 to 2014). I ncrease in number of machines covered byservices agreements with Caterpillar Job Site
Solutions (2013 to 2014).

Progress: Caterpillar Job Site Solutions (JSS) team was formed in 2005 and has grown significantly.
JSS offers customers complete solutions that are designed to improve performance on the job site
and to increase the sustainable benefits of the work performed.

72 CATERPILLAR INC.

2014 SUSTAINABILITY REPORTGOALS AND PROGRESS

Reman End-of-Life “T
Actual end-of-life ret

PRODUCT STEWARDSHIP GOALS & PROGRESS

Reman Business Growth 1,2
Revenue increase. Baseline 2006; futurereporting will use 2013 as baseline.

68%

REMAN AND REBUILD

Goal: Increase remanufactured and rebuild business sales
by 20 percent from 2013 to 2020.

64%

64%

94%

ne 2006; futurebaseline.

64%

Reman End-of-Life “Take Back” Percent 1
Actual end-of-life returns/eligible returns x 100

94%

95%

94%

XX

93%

166

95%

9

2010

2011

2

XX

45%

Progress: Our reman and rebuild businesses reduce waste and minimize the need for the raw materials necessary to produce new parts.
This system is where Caterpillar is making some of its greatest contributions to sustainable development – keeping nonrenewable resourcesin circulation for multiple life cycles. Our reman sales increased 4 percent from 2013 to 2014, while our rebuild sales increased 1 percent
2010 2011 2012 2013 2014
during the same period.

,2

94%

Reman End-of-Life “Take Back” by Weight 1
Millions of pounds of end-of-life material received

94%
161

171

174

2012

2013

166

134

2013

2014

2010

2011

2012

2013

2014

1 Data does not include Progress Rail, Electro-Motive
or Solar Turbines.

2010

2011

2014

1 Data does not include Progress Rail, Electro-Motive
or Solar Turbines.

Back” by Weight 1of-life material received

174

2013

166

2014

73 CATERPILLAR INC.

2014 SUSTAINABILITY REPORT

1.03

1.02

0.78

0.71

2006 0.28
2011

2011

2012

2013

2014

2003
2011 2012 2013
GHG Emissions Intensity 1

PERFORMANCE AT-A-GLANCE
2003

Energy Intensity1
Recordable
Injury Frequency(RIF) 1
Absolute
gigajoules
energy use/
Recordable
injuries
per 200,000 hours worked
milliondollarsof revenue
Recordable
InjuryFrequency (RIF) 1
Recordable injuries per 200,000 hours worked

6.22
6.22
692

474
1.03
1.03

417
1.02
1.02

2003 2011 20122003 2011 20122006 Intensity
20111 2012
Energy

502

496
0.71
0.71
2014
2014
2014

Absolute gigajoules energy use/
Energy Intensity12
million dollars of revenue
Absolute gigajoules energy use/
1
GHG Emissions
milliondollars ofIntensity
revenue
Absolute metric tons of CO2e/
million dollars of revenue

692
692
72.1

474
474
47.3

2006
2006

2011
2011

417
417
39.6

2012
2012

502
502
44.3

47.3

9.4% 39.6

72.1

64%
64%
44.3
44.3
12.5

44.3

44.7

2014
2014

XX
XX
44.7
14.0
44.7

2006 2011 2012 2013 2014
2006 2011
2011 20122012 20132013 2014
2014
2010
2010
2012
2013
2014
2006 2011
2011
2012
2013
2014
1
By-ProductMaterials
Intensity

474
52.3

0.23
0.23
2014
2014
2014

Renewable
28.0%
27.4%
1,2
Water Consumption28.0%
Intensity27.4%
15.2 gallons of water/
Absolute thousand
9.4%
9.8%14.0
13.8dollars of revenue
13.2
million12.59.8%
18.2%
9.4%
14.8% 18.2% 18.6% 17.6%
76.3
14.8%
18.6% 17.6%

48.9

Reman End-of-Life “Take Back” Percent 311
1,2 Percent
RemanConsumption
End-of-Lifereturns/eligible
“Take
Back”
Water
Intensity
Actualend-of-life
returns x 100
Actual end-of-life
returns x 100
Absolute
thousandreturns/eligible
gallons of 1,2
water/
Water Consumption Intensity
million dollars of revenue
Absolute thousand gallons of water/
95%of revenue
94% dollars
million95% 94% 93% 94%

94%

52.3
52.3

2006
2006
2010
2010

2011
2011
2011
2011

93%

2014
2013 2014

Alternative
Sum of renenergy use
Alterna2006 2011
2006 2011

2012
2012

502

496

48.9

50.1

2013
2013

2014
2014

2011

Reman E
RemaneE
ActualActual e

2

GHG Emissions Intensity 1 1,2
Reman Business
Growth1,2Absolute
metric tonsof CO2e/Reman Business
GrowthRevenueincrease.
Baseline 2006; future
milliondollarsof revenue
Revenueincrease.
Baseline
2006; futurereporting will use 2013 as baseline.
reporting will use 2013 as baseline.

72.1

45%
45%

68%
68%

64%
64%

14.0
14.0
166

1
14.8%

64%
64%

XX
XX

Water
94%Con94% t
Absolute
million dol

76.3
47.3

39.6

44.3

44.7

2010 2011 2012 2013 20142010 2011
2011 20122012 20132013 20142014
2006
By-Product Materials Intensity 1
Absolute metric tons of by-product materials/
RemanEnd-of-Life“Take Back” by Weight 311
million dollarsof revenue
Reman End-of-Life“TakeBack”material
by Weight
Millionsof pounds of
end-of-lifereceived
Millions of pounds of end-of-life material received

94%

13.8
134
134

15.2
161
161

171
171
13.2

174
174
12.5

166
14.0
166

50.1
50.1

45.6
45.6

48.9
48.9

2012
2012
2012
2012

2013 20142013 20142013 20142013 2014

2006 2011 2012 2013 20142010 2011 2012 2013 20142010 2011 2012 2013 2014

Absolute metric tons of by-productmaterials/
By-Product Materials Intensity 1
1million
Data prior
to 2014has been restated due to a) data updates realized from improved accuracy and b) updates to goal reporting format.
dollarsof revenue
Absolute metric tons of by-product materials/
2 Data prior to 2014 has been restated due to a) acquisitions, b) divestitures and c) data updates realized from improved accuracy.
million dollars of revenue
3 Data does not include Progress Rail, Electro-Motive
or Solar Turbines.
1
Reman
“Take
Back”
by Weight
1
4RemanWaterEnd-of-Life
consumption
intensitydoes
not include
non-contact cooling water from foundry operations.
End-of-Life
“Take
Back”
by
WeightMillions of pounds of end-of-life material received
Millions of pounds of end-of-life material received

15.2
13.8
74 CATERPILLAR
INC. 12.5
15.2 13.2
174
13.8
171
13.2
174
12.5
171
161

2003

50.1

2006 20122011 20132012 20142013 20142011
2011 2012 2013 2014
2006 2011 2012 2013 2014

94%
76.3
76.3

417
45.6

17.6%

0.28
0.30 0.29
0.28
0.30 0.29
2003
2006 2011
2011 20122012 201320132003 2011 2012 2013
1
2011
2012
2013
Alternative/Renewable
Energy2014
By-ProductMaterials
Intensity

45.6

2013
2012

692
76.3

18.2%

18.6%

2012
2011

Energy Intensity1
Absolute gigajoules energy use/
1,2
millionof revenue
Water dollars
Consumption
Intensity 2,4Absolute thousand gallons of water/
million dollars of revenue

44.7

Alternative

496
496

2011
2003

9.8%

Sum
of renewable
and ofalternativeelectrical
Absolute
metric tons
by-productmaterials/
Alternative/Renewable
Energyenergyuse/totalelectrical
use x 100
milliondollarsofrevenue
Sum of renewable and alternative electrical
Alternative
Renewableenergyuse/total electrical
use x 100

2006Emissions
2011Intensity
20121 2013 2014
GHG
Absolute metric tons of CO2e/
GHG Emissions Intensity 1
million dollars of revenue
Absolute
metrictons ofIntensity
CO2e/ 21
By-ProductMaterials
1,2
milliondollarsofrevenue
Absolute
metrictonsofmaterials/
Reman Business Growthby-product
1,2
Reman
millionBusinessdollarsof Growthrevenue
Revenueincrease.
Baseline 2006; future
Revenue
Baseline
2006; future72.1 increase.
reportingwill use 2013as baseline.
reporting will use 2013 as baseline.

68%
68% 64%
64%
47.3
15.2
13.8 47.3 39.6
13.2
45%
45%
39.6

2.97
2.97

28.0% 27.4%

52.3
2013
2013

2014

Absolute metric tons of CO2e/
million dollars of revenue
Alternative/Renewable Energy
11
Lost-Time
Case Frequency
Rate (LTCFR)
Sum of renewable
and alternativeelectrical
Work-related
injuries
resultingin100
lost time1energyuse/totalelectricaluse
Lost-Time
Case Frequency
Ratex (LTCFR)
per
200,000 hours worked
72.1
Work-related
resulting in lost time
Alternative injuries
Renewable
per 200,000 hours worked

14.8%
0.78
0.78
2013
2013
2013

2012 0.29
2013 2014
0.30
0.23

GOALS
1.03 AND
1.02 PROGRESS
0.78 0.71

2014 SUSTAINABILITY REPORT

2010
2010
2006

LEGAL STATEMENTS

Legal Statements© 2015 Caterpillar All Rights Reserved. CAT, CATERPILLAR, their respective
logos, ACERT, BUILT FOR IT, MineStar, Product Link, Solar, VisionLink, “Caterpillar
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used herein, are trademarks of Caterpillar and may not be
used without permission.
FORWARD-LOOKING STATEMENTS Certain statements in this 2014
Sustainability Report relate to future events and expectations and are forwardlooking statements within the meaning of the Private Securities Litigation ReformAct of 1995. Words such as “believe,” “estimate,” “will be,” “will,” “would,”“expect,” “anticipate,” “plan,” “project,” “intend,” “could,” “should” or other similarwords or expressions often identify forward-looking statements. All statements
other than statements of historical fact are forward-looking statements, including,
without limitation, statements regarding our outlook, projections, forecasts ortrend descriptions. These statements do not guarantee future performance, andwe do not undertake to update our forward-looking statements.
Caterpillar’s actual results may differ materially from those described or
implied in our forward-looking statements based on a number of factors,
including, but not limited to: (i) global and regional economic conditions andeconomic conditions in the industries we serve; (ii) government monetary or
fiscal policies and infrastructure spending; (iii) commodity price changes, component price increases, fluctuations in demand for our products or significant
shortages of component products; (iv) disruptions or volatility in global financial
markets limiting our sources of liquidity or the liquidity of our customers, dealersand suppliers; (v) political and economic risks, commercial instability andevents beyond our control in the countries in which we operate; (vi) failure to
maintain our credit ratings and potential resulting increases to our cost of
borrowing and adverse effects on our cost of funds, liquidity, competitive
position and access to capital markets; (vii) our Financial Products segment’s
risks associated with the financial services industry; (viii) changes in interest
rates or market liquidity conditions; (ix) an increase in delinquencies,

75 CATERPILLAR INC.

repossessions or net losses of Cat Financial’s customers; (x) new regulations
or changes in financial services regulations; (xi) a failure to realize, or a delay
in realizing, all of the anticipated benefits of our acquisitions, joint ventures ordivestitures; (xii) international trade policies and their impact on demand forour products and our competitive position; (xiii) our ability to develop, produce
and market quality products that meet our customers’ needs; (xiv) the impactof the highly competitive environment in which we operate on our sales andpricing; (xv) failure to realize all of the anticipated benefits from initiatives toincrease our productivity, efficiency and cash flow and to reduce costs; (xvi)
additional restructuring costs or a failure to realize anticipated savings or
benefits from past or future cost reduction actions; (xvii) inventory management decisions and sourcing practices of our dealers and our OEM customers;(xviii) compliance with environmental laws and regulations; (xix) alleged or
actual violations of trade or anti-corruption laws and regulations; (xx)additional tax expense or exposure; (xxi) currency fluctuations; (xxii) our or
Cat Financial’s compliance with financial covenants; (xxiii) increased pension
plan funding obligations; (xxiv) union disputes or other employee relations issues;(xxv) significant legal proceedings, claims, lawsuits or government investigations;(xxvi) changes in accounting standards; (xxvii) failure or breach of IT security;(xxviii) adverse effects of unexpected events including natural disasters;and (xxix) other factors described in more detail under “Item 1A. Risk
Factors” in our Form 10-K filed with the SEC on Feb. 17, 2015 for the year
ended Dec. 31, 2014.

2014 SUSTAINABILITY REPORT