2018 | Sustainability Progress Report®

TO OURSTAKEHOLDERS:
Caterpillar’s efforts to drive sustainability across the company in 2018 led to outstanding
business performance, which allowed us to invest in sustainable solutions that enhancecommunities and protect the planet.
We achieved record financial results and profitable growth,
while introducing innovative products and services. In 2018,
our new enterprise strategy took firm hold, and each component —services, expanded offerings, and operational excellence —played a significant role in our sustainability strategy.
SERVICES MEANS TRANSFORMING TRADITIONALPRODUCT SUPPORT IN WAYS THAT REDUCEENVIRONMENTAL IMPACT
Caterpillar and our dealers provide services that support
customers with digital solutions, e-commerce offerings,
financing and more. The newly refreshed Cat® digital model
guides investment in advanced technology to create connected
fleet solutions, autonomous machines and apps for monitoring
equipment. In the process, we help customers reduce fuelconsumption, lower emissions, improve productivity andenhance worker safety. Today, Caterpillar has one of theworld’s largest industrial connected fleets at 850,000 assets— and it’s growing every day.
Caterpillar’s remanufacturing and rebuilding businesses
increase the lifespan of equipment, reusing instead of
discarding components, reducing waste and keeping
nonrenewable resources in circulation for multiple lifetimes.
In 2018, Caterpillar received more than 150 million poundsof end-of-life material for remanufacturing.
EXPANDED OFFERINGS MEANS THE RIGHT SOLUTIONSFOR CUSTOMERS AND THE ENVIRONMENT
Our team continues to expand offerings across all businesslines in innovative and sustainable ways. Innovations to makeour products and our customers’ operations more sustainable
have included the introduction of the Cat D6 XE. This model
uses up to 35 percent less fuel, lowers service and maintenancecosts, and boosts customer profitability compared to priormodels. And, our Energy & Transportation team is helping thecruise industry find ways to reduce the emissions footprint ofmarine transport. We have developed dual-fuel engines for
cruise ships that can be operated with either diesel fuel ornatural gas, with the potential for the latter to realize
significant exhaust emissions reduction.
OPERATIONAL EXCELLENCE MEANS BUILDINGA SUSTAINABLE ADVANTAGE IN OUR BUSINESSAND OUR COMMUNITIESOperational excellence speaks to the core of social
responsibility — safety, quality, continuous improvement
and waste reduction.

2

We want every person at Caterpillar to go home safely everyday. As we make our facilities safer with automation — forexample, implementing robotic solutions that have the potential
to reduce employees’ ergonomic injuries — we also improve
efficiency. In 2018, we continued to reduce lost time injuries
with a 6 percent improvement over 2017 and a 95 percent
improvement against our 2003 baseline.
PEOPLE ARE BOTH THE REASON AND THE INSTRUMENT
FOR BUILDING A BETTER, MORE SUSTAINABLE WORLDWhen we have the best talent assembled on a globally
diverse team, we’re best prepared to meet customer needs
and make a difference in the communities where we live andwork. We champion diversity, treat people fairly, prohibit
discrimination and foster an inclusive environment. Full
inclusion drives business results.
Through the Caterpillar Foundation, we set a goal in 2013 andare on track to help 50 million people rise out of poverty by
2020. Since 1952, the Foundation has contributed more than$740 million to help make sustainable progress possiblearound the world. Our team members amplify this impact
by giving money and time. The Caterpillar Foundation also
launched the Value of Water campaign to raise awarenessof global water issues.
I’m proud of all that our global team has accomplished thispast year — creating strong company performance andreaching key sustainability milestones. We are proud tomake Fortune’s World’s Most Admired Companies for 2018.
And, for the 19th time, our company was named to the
Dow Jones Sustainability Indices, including both the Worldand North America indices in 2018. I’m excited about theopportunities that lie ahead. Our team is empowered andready to make great things happen for our customers, for
our communities and for our world.

Jim Umpleby
Chairman & CEO

2018

SUSTAINABILITY PROGRESS REPORTHOW CATERPILLAR’S STRATEGY IS
HELPING TO BUILD A BETTER WORLDOver the past year, Caterpillar continued executing ourenterprise strategy to achieve long-term profitable growth –supporting our customers, rewarding our shareholders
and providing opportunity for our employees and thecommunities where we live and operate. As we execute
this strategy, we’re not only driving growth, but also
furthering our sustainability journey.

OPERATIONAL
EXCELLENCE

EXPANDED
OFFERINGSSERVICESOPERATIONAL EXCELLENCE
Our focus on excellence translates into initiatives that improvesafety, deliver high-quality products and implement Lean
principles to enhance efficiency and resource conservation. For
instance, our facility in Thiruvallur, India, is located in a waterstressed area and relies on groundwater for its operations.
Following an extensive water analysis and employee survey,
projects implemented across the facility have reduced water
use by 14.2 million gallons of water per year.

3

2018

SUSTAINABILITY PROGRESS REPORTEXPANDED
OFFERINGS
Expanded product and technology offerings
help us reach new markets and better meetthe unique needs of our customers. As an
example, our updated Cat® G3600 A4 gas
compression engine better enables customers
to pursue opportunities that require compliancewith strict environmental regulations. The newmodel increases the engine’s power and provides
greater flexibility for different fuel qualities,
all while allowing operators the possibilityof complying with stringent site-specificemissions thresholds.

SERVICES
Digital technologies and aftermarket services
connect engines, machines and entire fleets toprovide our customers with new levels of insight,
enabling them to work smarter by optimizing
productivity. That often means using less fuel,reducing emissions and extending the life of their
Cat products. One technology leading the way for
our Resource Industries’ customers is Cat MineStar™,a suite of technologies that collects, organizes andanalyzes a myriad of data points, helping machines
run more efficiently and keeping operators out ofharm’s way.

4

2018

SUSTAINABILITY PROGRESS REPORTPRODUCT
WORKING TO OFFER MORE
EFFICIENT SOLUTIONS
Caterpillar has a long history of and a strong process forinnovation in research and development.

Cat® Connect Technologies
Offer Sustainability Benefits

We develop products that are efficient, safe and designed forremanufacture. By continually improving the performanceof our products, we meet customer demand to make theiroperations more sustainable, while driving our industry
to improve.

•C at Detect – Creates a safer
job site by tracking vehicles
and assets•C at Link – Provides
comprehensive information
about site operations andproductivity•C at Compact – Speeds
compaction time, saving fueland material costs•C at Command – Enables
operators to run equipment
remotely, making work safer
and more precise

Our strategy continues to move beyond traditional iron productofferings to include job site connectivity, which unlocks evenmore operating efficiencies. Our Job Site Solutions team, forexample, works with Cat® dealers to help customers improvetheir operations and be more competitive. Solutions oftendeliver sustainability benefits, such as extending a machine’s
life, which in turn reduces raw material consumption. Whencustomers require new machines or components, we offer
remanufactured and rebuilt products that not only provide
cost savings, but also help customers extend life cycles anduse materials more efficiently. This life cycle approach allows
us to provide sustainable solutions that help customers build
a better world.

5

2018

SUSTAINABILITY PROGRESS REPORTIn 2018 in the United States

STAYING SAFER
IN THE LINE OF FIRE

alone, 8.6 million acresof land burned. The cost offighting wildfires has increased

more than 500% over the past

20 years.

Wildfires are increasing in number
and intensity around the world,
causing devastation and damage.
Alongside forestry management andfirefighting agencies on the front
lines of these fires are Cat® D6N Fire
Suppression Tractors, which havehelped protect forests, property andlives for decades. Firefighters andfirst responders count on the D6N
to move combustible material,
clear fire lines, open roadways andassist firefighting equipment overchallenging terrain. Although thedozer, built for construction andland clearing, is ideally suited forthese tasks, the harsh environmental
conditions presented by fires suchas falling trees, ash-filled air andextreme temperatures require
extensive modifications.
We now offer comprehensive, factory-installed equipmenton the D6N for fire suppression applications. It includes
extensive heat and fire insulation on fluid and electricallines, machine guarding, enhanced cab air filtration andadditional powerful lights. Maintaining an operator’ssafety and keeping the tractor running is paramount.
Machines can run 24 hours a day, seven days a week,with several operators alternating until every last flameis extinguished.

6

2018

SUSTAINABILITY PROGRESS REPORTNEW MACHINES PAIRPERFORMANCE & SUSTAINABILITY
Our customers want to reduce energy costs and associated emissions – but they can’t afford tosacrifice power in the process. With new Cat ® machines for a range of applications, they don’t
have to compromise.
THE NEW 320 NEXT GENERATION HYDRAULICEXCAVATOR reduces fuel consumption to levels
comparable to our full hybrid system, without ahybrid system’s complexity. The system optimizes
lever commands, reducing fuel consumption by
up to 25 percent compared to previous models
without compromising the machine’s performanceor cost. Once the technology is deployed acrossour entire excavator product line as planned, it
could lead to carbon dioxide emission reductionsof up to 2.2 million metric tons per year.
THE C9.3B DIESEL ENGINE is used to power
applications from agriculture and forestry to
excavation. Designed to be a worldwide platform,
it is certified to U.S. EPA Tier 4 Final and EU
Stage V emission standards and is prepared toachieve emerging new standards like China
NonRoad Stage IV. This platform update offers
up to 4 percent fuel economy improvement and
up to 18 percent increased power density whencompared to the C9.3 ACERT, allowing original
equipment manufacturers to downsize theirengine platforms, lower installation costs andmaximize uptime.
ROTECHBOOSTER FROM SOLAR TURBINES
addresses a concern we hear frequently from
customers: the need for compressor dry gas
seals to provide a clean and consistent supply
7of gas, without frequent depressurization,
which releases methane. With input from amultidisciplinary team, Solar Turbines designed
a new system that needs to be depressurized only
once per month on average, rather than every few
hours. The new compressor will reduce methane
emissions by roughly 13.5 tons a year per unit sold.

Scooping Up Production GainsAt the Argos Roberta limestone quarry in
Alabama, our Job Site Solutions (JSS) team,working closely with the Cat dealer andcustomer, developed a high-performanceplan for the site to address productivity
improvements in the operation. New
insights from JSS’s site-specific analysis
allowed the quarry to increase production
over 10 percent with 359 fewer machine
hours in just over six months.

2018

SUSTAINABILITY PROGRESS REPORTSETTING SAIL
WITH LOWER EMISSIONS
An even more sustainable cruise isn’t far off in the future –it’s here today, and Caterpillar is helping find ways to reduce
the emissions footprint of marine transport, which has
historically depended on heavy fuel oil for power.
As natural gas has become more affordable andthe shipping industry takes steps to further reduce
emissions, the marine transport sector has begun toembrace liquefied natural gas (LNG) as a fuel source.
Ports for LNG refueling are growing in number worldwide, and Caterpillar is meeting
this demand with our MaK™ brand dual-fuel engines. The dual-fuel engines aredesigned for continuous operation on LNG, marine diesel oil and heavy fuel oil.
These engines have been at sea for several years aboard cargo vessels and are
now being used inside a wider variety of ships. In 2018, the AIDAnova of Carnival
Corporation’s German cruise line AIDA Cruises set sail as the world’s first cruise shipenabled to operate at sea and in port on LNG, which burns cleaner than heavy fuel oil.
Inside the ship, which is longer than three football fields set end-to-end, are four ofCaterpillar’s MaK 16 M 46 dual-fuel engines and a complete LNG handling system.
The ship’s maiden voyage lasted for seven days with more than 7,000 passengers
and crew aboard, releasing minimal soot or sulfur oxides and less nitrogen oxides
or carbon dioxide than oil-burning ships. Caterpillar will supply Carnival Corporation
with dual-fuel engines for additional ships as part of its new class of cruise vessels
spanning multiple Carnival brands.
The milestone is good news for the cruise industry. Companies are under pressure
to further reduce their impact, particularly as they travel through environmentallysensitive areas. Increasingly, ship owners are placing orders for new ships to beequipped with engines that can use LNG as the primary fuel. And, the cruise industry
utilization of LNG will help extend the infrastructure for distribution of LNG as amarine fuel, enabling other ship owners to consider use of LNG and helping theshipping industry progress toward their emissions reduction goals.

8

2018

SUSTAINABILITY PROGRESS REPORTPROCESSWORKING TO REDUCEOUR OPERATIONAL IMPACT

33%*

Operational energy intensity
2006–2018

Before Cat ® machines get to work on customer sites,
many are assembled in our manufacturing facilities.
Caterpillar is committed to doing this work in a waythat minimizes our environmental footprint, including
conserving energy and water, reducing greenhouse gas(GHG) emissions and reducing the amount of waste wesend to landfills.

44%*

GHG emissions intensity
2006–201838%*

We have established global performance standards forenvironment, health and safety at our facilities that extend
beyond compliance with laws and regulations. Our 2020
sustainability goals include targets for energy, water andwaste in our operations. These goals provide focus forour efforts to reduce our footprint while maintaining or
improving performance and customer satisfaction.

Water consumption intensity
2006–201816%

We encourage all employees to actively participate in
improving our operational performance. Caterpillar alsocollaborates with our suppliers to assess sustainability
performance and identify opportunities for improvement.

Waste generation intensity
2006–2018*Data assurance details provided in our
ESG Priorities & Approach.

9

2018

SUSTAINABILITY PROGRESS REPORTSun-Powered
Solutions in
MexicoThree Caterpillar buildings in
Mexico are now offsetting
100 percent of their powerusage with energy backed
by solar power sources andclean energy certificates,
thanks to a new five-year
agreement with Ammper,
a local renewable energy
company. An additional
two buildings run on a
combination of solar powerfrom Ammper and electricity
produced by Caterpillar
Mexico Energy Center
natural gas-powered
generators. Caterpillar
Mexico plans to expand
renewable and alternative
energy use to more facilities.

EMPLOYEES INSPIREENERGY SAVINGS
The Perkins facility in Aurangabad, Maharashtra, India, produces
engines for customers primarily in India and elsewhere in the
Asia/Pacific region. At the facility, 4000 Series engines undergo
end-to-end machining, assembly and testing, following rigorous
manufacturing processes.
While the facility has only been in operation for a few years, plant
managers saw an opportunity to improve processes to conserve
energy. They invited employees to identify ways to reduce energy
and resource consumption in their daily operations. Then they
selected the best ideas for implementation.
Projects ranged from use of more efficient light fixtures to reusable
pallets that cut down on packaging waste. In many cases, smallchanges led to significant energy and emissions reductions. One
employee observed that the facility’s 90-kilowatt air compressor
was more powerful than the facility needed and required substantial
energy to operate. Replacing it with a 25-kilowatt compressor saved
more than 249 MWh per year while meeting the facility’s needs.
Another project involved diesel fuel consumed during engine
testing. Team members identified process improvements toincrease efficiency of testing, thereby reducing the fuel used.
The team also found a way to recover and repurpose diesel fuelpreviously earmarked for the testing process. Improvements
to the test process lowered emissions by about 130 metric tons
CO2-equivalents.
The facility team was proud to implement solar water heaters
for use in the employee canteen area. Previously, six individual
hot water heaters were used to provide heated water for foodpreparation and dish washing. Now, rooftop units use solar
power to heat the water, saving about 57 MWh per year.

10

2018

SUSTAINABILITY PROGRESS REPORTA SUSTAINABLE PLAN
FOR EVERY PARTThe remanufacturing process is built on the concept of reusing
raw materials and starts when a component reaches the end of its
serviceable life. Dealers return the used iron (core) to Caterpillar
where it is cleaned, inspected, salvaged and remanufactured tooriginal factory specifications using state-of-the-art salvage
techniques, strict reuse guidelines, advanced remanufacturing
processes and unequalled quality control. Cat Reman customers
receive remanufactured products with same-as-when-new
performance and durability at a lower cost than buying new.
Cat Reman also obtains limited amounts of nonconforming
material (NCM) – parts that are defective or do not meetrequirements, and would otherwise be scrapped – from ourfacilities that are producing new products. Cat Reman salvage
technology and processes can transform this NCM from a
conventional loss into an enterprise and customer win.

It is often taken for granted that facilities simply transfer the rightscrap material to Reman, but until recently, this process has been
manual and inconsistent. A Caterpillar team in Fargo, North Dakota,
discovered an opportunity to strengthen collaboration andstandardize transfer of NCM. The team organized a Kaizen event,a Lean manufacturing approach that brings multidisciplinary teams
together to brainstorm solutions. Based on this work, they developed
standard processes and a database of NCM products that can beused by Cat Reman.

THE RESULT: In 2018, the new standard procedures saved

11

approximately $1.7 million in production costs across five
facilities and established increased collaboration between
Cat Reman and new product teams. The procedures also
led to decreased energy consumption and raw material use.
Rather than melting down NCM as scrap, 240 tons of material
was salvaged for Cat Reman products.
2018

SUSTAINABILITY PROGRESS REPORTPROCESS IMPROVEMENTS
LEAD TO A SAFER WORKPLACE
Sometimes one solution can be the answer to multiple problems. It was true at oneof our engine facilities in Seguin, Texas, where the system for unloading and packing
finished engines onto shipping pallets presented a host of opportunities to improve
employee safety and ergonomics. The engines had to be moved using a manuallyoperated bridge crane. But the crane’s controls were not ergonomically adjustablefor operators who were unable to comfortably reach the controls, such that they had
to stoop to install brackets. These conditions also regularly put operators behind
cycle time. To top it off, human and forklift traffic occupied the same area.
A team of engineers at the facility worked ona solution, using 3D modeling, simulations
and interviews of fellow team members tounderstand the scope of the need. They
determined a multipurpose robot, nicknamed
BRUTUS (Broader Robotic Utilization ThroughUnmatched Strength) would be an effective
solution, working alongside operators to makeengine loading smoother. BRUTUS functions asboth a robot, unloading engines and moving
them to a skidding table, and as a jib arm,
giving operators the leverage they need tomove engines into position. The team gained
leadership approval for their proposal, andoperators are already seeing positive results.
The Seguin facility utilized safety tools to measure
the elements of the process. The safety risk of
two elements was eliminated completely, andthe third element saw a signifcant safety risk
reduction. In addition, teams are meeting cycle
times due to less congestion in the process. And,because teams are working more efficiently, thefacility is saving approximately $45,000 per monthdue to improved efficiency.

12

2018

SUSTAINABILITY PROGRESS REPORTPEOPLE
WORKING TO INVEST
IN OUR PEOPLE
There’s more to work at Caterpillar than the work itself.
We’re a workforce made up of smart, diverse, committed
people who work together to help build a better world, fromsupporting our customers through groundbreaking solutions
to giving back in our local communities.

2018 Awards
and Recognition• America’s Best
Employers for
Diversity, Forbes

To continue to innovate and maintain our global leadership,
we must attract, retain and develop the top talent. We do so
by giving our people opportunities to explore different career
paths within Caterpillar – using their skills and capabilities bymoving between business units, locations and job functions.
Employees can also learn through a variety of formal andinformal programs. We cultivate a workplace where teammembers feel supported and that reflects the diverse baseof customers we serve worldwide.

• Best Employers for
Women, Forbes• Human Rights
Campaign Corporate
Equality Index• Top 50 Employers,
CAREERS & thedisABLED Magazine

We are dedicated to the safety of employees at Caterpillar,
as well as our extended team of contractors, dealers, suppliersand customers. This commitment to safety begins with theengineering of our products and manufacturing processes,
and extends to operator training, job site solutions andpromoting a culture of safety that guides the way we work.

• Top 50 Employers,
Minority Engineer
Magazine• Top 50 Employers,
Woman Engineer
Magazine

Given Caterpillar’s role in sustainable development projects
across the world, we have a stake in making scalable progresspossible for all. We encourage employees to engage in activities
that contribute to society by volunteering or investing financial
resources in worthwhile community projects.

13

2018

SUSTAINABILITY PROGRESS REPORT

Solar Turbines
Welcomes an
Untapped Sourceof Talent

INCLUDING EVERYONE
IN WOMEN’S
ADVANCEMENTAt Caterpillar, we believe diverse ideas and experiences
lead to deeper understanding. Our Women’s Initiative
Network (WIN) employee resource group in Singapore
demonstrated this in a big way.
WIN surveyed female employees to learn how to improve
Caterpillar’s culture and create opportunities for growth.
The top answer: get more men involved. While men
make up 85 percent of Caterpillar’s Singapore workforce,
they comprise a small percentage of WIN membershipand participants in the group’s events. WIN members
wanted to develop men as allies and advocates for theirfemale colleagues. They made progress with a number of
initiatives, including a celebration of International Women’sDay, promotional videos and professional development
discussions on best practices for supporting women in
leadership. A series of mentoring sessions organized incollaboration with other Fortune 500 companies provided
mentees – both men and women – with access to new rolemodels and networking opportunities.
As a result of these initiatives, the WIN Singapore chapter’score membership grew from 10 percent to 35 percent male,while its advisory board is now split evenly between men
and women. In addition, men now make up nearly 40 percent
of participants at WIN Singapore events. Overall participationin these events has doubled over the past year, showing that
this work is relevant to both women and men.

14

The National Foundation for
Autism Research (NFAR)
Tech program teaches young
adults with autism software
testing skills to prepare themfor jobs in the tech industry.
When employees from Solar
Turbines’ Package and Systems
Engineering (PSE) team toured
NFAR’s facility, they quickly
realized that the students could
be an excellent fit for Solar.
The PSE team worked with NFAR
to develop a software testing
internship program for individuals
with autism. The first wave ofinterns immediately exceeded
expectations. They quickly
ran through quality gates andtest cases and brought a newperspective to the testing, evendiscovering software issues thatexisting testers had never noticed.
In under a year, the team saw analmost 90 percent reduction in
its issue backlog. To date, theteam has hired nine NFAR Techinterns, and Solar is grateful tohave discovered this special
source of talent.

2018

SUSTAINABILITY PROGRESS REPORTCREATING PATHWAYS TO
CAT® DEALER CAREERS
For a global company like Caterpillar, we depend
on talented people to run dealerships, repair ourequipment and launch businesses that use Cat®
machines. We know there are people across theworld eager to take on these roles – they just needtraining and mentorship to help them get started.
This training gap inspired us to create Technicians
for the World, an online program sponsored byCaterpillar that meets the growing need for skilledservice technicians. The program began withTechnicians for Africa, which launched in Nigeria,
Mozambique and the Democratic Republic of theCongo. It has since expanded to 12 countries.
We also launced Technicians for Arabia in 2018 andwill start Technicians for the Caribbean in 2019.

1,642

have earned
certification ofcompletion2015 through year-end 201815

The Technicians for the World curriculum is basedon the Caterpillar University Global Service
Technician training program and takes between
three and six months to complete. It is appropriate
for those considering a career as a service
technician, as well as existing technicians whowant to improve their skills. Over 18 courses,
students learn about the Cat product line, as
well as the basics of electricity, hydraulics,
drivetrains and more. After students complete
their coursework, Caterpillar notifies a local Cat
dealer, helping put them on the path to employment.
Building this new skill base will benefit not only
Caterpillar, but also our industry, as program
graduates take jobs with our dealers, customers
and peers. With this program, we are proud tohelp raise the bar for technical skills worldwide.

2018

SUSTAINABILITY PROGRESS REPORTSHARING THE VALUE OF WATER
Water is a fundamental human need – essential for drinking,cooking, washing, growing crops and much more. Yet across theworld, according to the World Health Organization, one in ninepeople lacks access to clean and safe water. As a result, a childdies from a water-related disease every 90 seconds. Safe, readily
available water is critical to the future of the developing world,
not only because it can improve health, but because it frees
individuals, particularly girls and women, to spend time on othertasks, like earning an education or running a business.
That’s why in 2018, the Caterpillar Foundation turned its focus
toward examining the most pressing water challenges of ourtime, declaring 2018 the Year of Water and launching the Valueof Water campaign.
Through this campaign, we highlighted our work with grant partners such as charity:
water, Ducks Unlimited, Global Citizen, Living Lands & Waters, Opportunity International,
The Nature Conservancy and Water.org, which includes:• BRINGING CLEAN WATER
to rural communities
in Africa through theconstruction of new
wells and innovative
pipe systems• RESTORING CRITICALWETLAND habitats thatprovide flood protection
and water filtration• REDUCING RIVER
POLLUTION throughout
the United States• STRENGTHENING THE
HEALTH of the world’s
vital rivers• DELIVERING RUNNING
WATER to homes in Africa,
Asia and South America

In addition, through our longtime partnership with Water.org, the Caterpillar Foundation
supports WaterCredit, which provides small loans to connect families living in poverty withwater and sanitation access. With safe water and a toilet at home, individuals gain time andreduce health risks, important steps toward breaking the cycle of poverty. These locallymanaged projects can create a domino effect within communities as one generation teaches
the next. Through this and other grants over the past several years, the Caterpillar Foundation
has reached an estimated 2 million people with access to water – a significant contribution
toward the Foundation’s goal to help 50 million rise out of poverty by 2020.

844 M

people worldwide
lack access tosafe water

16

$1
$4

invested in waterand sanitation yields
in economic
return~2 Mpeople have gained access towater through the Caterpillar
Foundation’s support
2018

SUSTAINABILITY PROGRESS REPORTGOALS & PROGRESS
Caterpillar has set aspirational, long-term goals for its operations and product stewardship. We believe thesestandards affirm our determination to lead our industry to a more sustainable future.
We focus on efficiency improvements, and these efforts contributed to year-over-year performance gains inmost areas in 2018. Improved sales and revenue, in addition to efficiency gains made in the last several years,
are reflected in the improved performance toward our 2020 intensity targets.

GOAL/KPIBASELINE

2015

2016

2017

2018

2020
GOAL

PERSPECTIVE

OPERATIONSGOAL: Reduce recordable workplace injury rate to 0.6 and lost-time injury case rate to 0.15 by 2020.
RECORDABLE INJURYFREQUENCY (RIF)
Recordable injuries per
200,000 hours worked

6.22(2003)

0.59

0.50

0.49

0.53

0.60

LOST-TIME
CASE FREQUENCYRATE (LTCFR)
Work-related injuries
resulting in lost time per
200,000 hours worked

2.97(2003)

0.20

0.19

0.17

0.16

0.15

We have improved our Recordable Injury
Frequency rate by 91.5 percent from our2003 base year. However, our RIF increasedby 8 percent from 2017 to 2018. Relentless
focus on safety is important for our teammembers in all work areas. Our vision has
always been, and continues to be, zero
injuries. Our safety goals represent
expected progress on our path to zero.
While we acknowledge that our current
RIF has surpassed our long-establishedgoals, we will continue to strive for
improvement until we reach our ultimate
goal of zero.
We have improved our Lost-Time Case
Frequency Rate by 94.6 percent from our2003 base year. We are encouraged that our
LTCFR declined by approximately 6 percent
from 2017 to 2018, even when our RIF
increased modestly. We strive for all teammembers to go home safe, every day.

GOAL: Reduce energy intensity by 50 percent from 2006 to 2020.
ENERGY INTENSITY1
Absolute gigajoules
energy use/million
dollars of revenue

692(2006)

525

598

521

466

346

Operational energy intensity has decreased
33% from the base year, while absoluteenergy consumption decreased 11% during
the same period.

End notes providing additional details regarding the data presented are available in the ESG Priorities and Approach, see About this Report.

17

2018

SUSTAINABILITY PROGRESS REPORTGOAL/KPIBASELINE

2015

2016

2017

2018

2020
GOAL

PERSPECTIVE

OPERATIONSGOAL: Use alternative/renewable sources to meet 20 percent of our energy needs by 2020.
ALTERNATIVE/
RENEWABLE ENERGY4,5,6
Alternative andrenewable electricalenergy use/total
electrical use x 100

N/A*

27.1%

27.9%

31.2%

32.5%

20%

In 2018, 32.5% of our electrical energy
was from renewable or alternative
sources. In 2018, 17.4% of our electricalenergy was from renewable sources.

GOAL: Reduce greenhouse gas emissions intensity by 50 percent from 2006 to 2020.
GHG EMISSIONS1,2
INTENSITY
Absolute metric tonsof CO2e/million dollarsof revenue

72.1(2006)

48.6

54.2

46.4

40.3

36.0

GHG intensity has decreased 44% since
the base year. In addition, our absolute
GHG emissions decreased by 26% fromthe base year; however, they increased
4.7% from 2017 to 2018.

38.2

Water consumption intensity has
decreased 38% since the base year
and 19% from 2017 to 2018. In addition,
absolute water consumption has
decreased by 35% since 2006 andreduced 5% from 2017 to 2018.

6.9

By-product materials intensity has
decreased 16% since the base year.

GOAL: Reduce water consumption intensity by 50 percent from 2006 to 2020.
WATER CONSUMPTIONINTENSITY1,7
Absolute thousand
gallons of water/million
dollars of revenue

76.3(2006)

58.9

66.0

58.1

47.2

GOAL: Reduce by-product materials intensity by 50 percent from 2006 to 2020.
BY-PRODUCTMATERIALS INTENSITY
Absolute metric tons of
by-product materials/
million dollars of revenue

13.8(2006)

14.3

14.5

13.2

11.6

*NA=not applicableEnd notes providing additional details regarding the data presented are available in the ESG Priorities and Approach, see About this Report.

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SUSTAINABILITY PROGRESS REPORTGOAL/KPIBASELINE

2015

2016

2017

2018

2020
GOAL

PERSPECTIVE

GOAL: Design all new facility construction to meet Leadership in Energy and Environmental Design (LEED) or comparable
green building criteria.
BUILDINGS DESIGNEDin accordance with the
U.S. Green Building
Council’s LEED BD+C
(Building Design
and Construction)
certification process orcomparable criteria

Facilities designed to the LEED criteria
are more energy- and resource-efficientthan traditional construction.

N/A*

33%

100%

100%

100%

100%

In 2018, our Zebrak, Czech Republic, facility
met the requirements of certification inaccordance with the U.S. Green Building
Council’s LEED BD+C (Building Design andConstruction) process.

PRODUCT STEWARDSHIPGOAL: Provide leadership in the safety of people in, on and around our products.
SEE PAGES 6, 12-13

GOAL: Increase managed fleet hours by 100 percent from 2013 to 2020.
FLEET HOURS
Percent increase
from 2013

N/A*

68%

98%

124%

249%

100%

Demand from our customers continues
to grow for solutions provided by our Job
Site Solutions team in partnership with
our Cat® dealers.

GOAL: Increase remanufactured and rebuild business sales by 20 percent from 2013 to 2020.
REMAN
Percent business sales
growth since 20138

N/A*

REBUILD
Percent business sales
growth since 20138

N/A*

-15%

-13%

2%

7%
20%

-3%

-10%

14%

17%

Our remanufacturing and rebuild
businesses provide customers withimmediate cost savings, help extend
product life cycles and use materials
more efficiently. We seek to continue
to grow these businesses.

GOAL: Leverage technology and innovation to improve sustainability of our products, services and solutions for our customers.
REPORTED SALESAND REVENUES
derived from products,
services and solutions that
demonstrate an improved
sustainability benefit overprior offerings10

N/A*

18%

21%

21%

19%

NA*

Caterpillar has a long history of and astrong process for innovation in the
research and development of products
and solutions.

*NA=not applicableEnd notes providing additional details regarding the data presented are available in the ESG Priorities and Approach, see About this Report.

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SUSTAINABILITY PROGRESS REPORTAbout this Report
Caterpillar publishes an annual Sustainability Report that highlights our progress
and performance. This report is available in a digital format on our corporatewebsite, where we also make available discussions of our Environmental, Social andGovernance (ESG) priorities and a Global Reporting Initiative (GRI) Content Index.
Information regarding reporting boundaries, data assurance and details regarding
the data is available within our ESG Priorities & Approach content on our website.

Forward-looking Statements
Certain statements in this Sustainability Progress Report relate to future events and expectations and are forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “believe,”“estimate,” “will be,” “will,” “would,” “expect,” “anticipate,” “plan,” “project,” “intend,” “could,” “should” or othersimilar words or expressions often identify forward-looking statements. All statements other than statements ofhistorical fact are forward-looking statements, including, without limitation, statements regarding our outlook,projections, forecasts or trend descriptions. These statements do not guarantee future performance and speak
only as of the date they are made, and we 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 and economic
conditions in the industries we serve; (ii) commodity price changes, material price increases, fluctuations in demandfor our products or significant shortages of material; (iii) government monetary or fiscal policies; (iv) political andeconomic risks, commercial instability and events beyond our control in the countries in which we operate; (v) our
ability to develop, produce and market quality products that meet our customers’ needs; (vi) the impact of the highly
competitive environment in which we operate on our sales and pricing; (vii) information technology security threats
and computer crime; (viii) additional restructuring costs or a failure to realize anticipated savings or benefits frompast or future cost reduction actions; (ix) failure to realize all of the anticipated benefits from initiatives to increase
our productivity, efficiency and cash flow and to reduce costs; (x) inventory management decisions and sourcing
practices of our dealers and our OEM customers; (xi) a failure to realize, or a delay in realizing, all of the anticipatedbenefits of our acquisitions, joint ventures or divestitures; (xii) union disputes or other employee relations issues;(xiii) adverse effects of unexpected events including natural disasters; (xiv) disruptions or volatility in global
financial markets limiting our sources of liquidity or the liquidity of our customers, dealers and suppliers; (xv) 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; (xvi) our Financial Products segment’s
risks associated with the financial services industry; (xvii) changes in interest rates or market liquidity conditions;(xviii) an increase in delinquencies, repossessions or net losses of Cat Financial’s customers; (xix) currency
fluctuations; (xx) our or Cat Financial’s compliance with financial and other restrictive covenants in debt agreements;(xxi) increased pension plan funding obligations; (xxii) alleged or actual violations of trade or anti-corruption laws
and regulations; (xxiii) international trade policies and their impact on demand for our products and our competitive
position; (xxiv) additional tax expense or exposure including the impact of U.S. tax reform; (xxv) significant legal
proceedings, claims, lawsuits or government investigations; (xxvi) new regulations or changes in financial services
regulations; (xxvii) compliance with environmental laws and regulations; and (xxviii) other factors described in
more detail in Caterpillar’s Forms 10-Q, 10-K and other filings with the Securities and Exchange Commission.

®

© 2019 Caterpillar. All Rights Reserved. CAT, CATERPILLAR, LET’S DO THE WORK, their respective logos,“Caterpillar Yellow”, the “Power Edge” and Cat “Modern Hex” trade dress as well as corporate andproduct identity used herein, are trademarks of Caterpillar and may not be used without permission.
Caterpillar: Nonconfidential

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SUSTAINABILITY PROGRESS REPORT