For nearly 90 years, Caterpillar Inc. has been making sustainable progress possible and driving
positive change on every continent. With 2013 sales and revenues of $55.656 billion, Caterpillar
is the world’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 – Resource Industries, Construction Industries and Power
Systems – and also provides ﬁnancing and related services through its Financial Products segment.
Caterpillar is a global leader, a worldwide enabler of sustainable progress. Caterpillar operates
hundreds of ofﬁces and facilities around the world and has more than 118,000 employees. We
serve customers in more than 180 countries. Caterpillar’s global presence, product breadth andﬁnancial strength enable us to win in today’s competitive marketplaces.

FORWARD-LOOKING STATEMENTS Certain statements in this 2013
Sustainability 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 other similar 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 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 economic conditions and economic
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 orsigniﬁcant shortages of component products; (iv) disruptions or volatility
in global ﬁnancial markets limiting our sources of liquidity or the liquidityof our customers, dealers and suppliers; (v) political and economic risks,commercial instability and events beyond our control in the countries
in which we operate; (vi) failure to maintain our credit ratings could
increase our cost of borrowing and adversely affect 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
could adversely affect Cat Financial’s and our earnings and /or cash

ﬂow; (ix) an increase in delinquencies, repossessions or net losses of
Cat Financials customers could adversely affect its results; (x) new regulations or changes in ﬁnancial services regulations; (xi) we may notrealize all of the anticipated beneﬁ ts of our acquisitions, joint ventures
or divestitures, or these beneﬁts may take longer to realize than expected;(xii) international trade policies may impact demand for our products
and our competitive position; (xiii) our ability to develop, produce andmarket quality products that meet our customers’ needs; (xiv) the highly
competitive environment in which we operate could adversely affect oursales and pricing; (xv) we may not realize all of the anticipated beneﬁts
from a number of initiatives to increase our productivity, efﬁciency andcash ﬂow and to reduce costs; (xvi) we could incur additional restructuring
charges and may not realize anticipated savings or beneﬁ ts from pastor future cost reduction actions; (xvii) inventory management decisions
and sourcing practices of our dealers and our OEM customers; (xviii)
compliance with environmental laws and regulation; (xix) alleged or
actual violations of trade or anti-corruption laws and regulations; (xx)additional tax expense or exposure; (xxi) currency ﬂuctuations; (xxii) ouror 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 investigations; (xxvi) compliance requirements imposed if additional
carbon emissions legislation and/or regulations are adopted; (xxvii)
changes in accounting standards; (xxviii) failure or breach of IT security;(xxix) adverse effects of unexpected events including natural disasters;and (xxx) other factors described in more detail under “Item 1A. Risk
Factors” in our Form 10-K ﬁled with the SEC on February 18, 2014 for theyear ended December 31, 2013.

TABLE OF CONTENTS

4CHAIRMAN’S MESSAGE Chairman
and Chief Executive Ofﬁcer Doug Oberhelman offers
his thoughts on Caterpillar’s sustainability commitment
and its relationship to Our Values in Action.

6

OUR APPROACH An overview ofCaterpillar’s approach to sustainability, which iscentered on principles and practices that prevent
waste, improve quality and develop better systems.

12

FOCUS AREAS A discussion of the
major focus areas around Caterpillar’s sustainability
goals, plus areas impacting our business long-term
and which are important to stakeholders.

49

GOALS & PROGRESS A look atCaterpillar’s goals and progress on reducing thecompany’s impact on water, energy, materials
and GHG emissions.

60

BUSINESS CASE STUDIES Examples ofCaterpillar sustainability all along the product life cycle,
from product development to remanufacturing.

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2013 SUSTAINABILITY REPORTCHAIRMAN’S MESSAGE

Chairman’s
Message
The world’s resources support seven billion people
today, and will need to support nine billion by 2050. As
the world’s population increases, demand for resources
and infrastructure will increase, too. Sustainable progress
to meet these needs and support economic growth willremain absolutely necessary.
Caterpillar is uniquely positioned to be a leader in making thissustainable progress possible. Our commitment is longstanding
because we know we can be proﬁ table while also best serving
our planet and its people by promoting the common good.
This is not something we discovered recently; it can be traced
back to the Caterpillar Worldwide Code of Conduct ﬁrst publishedin 1974. For 40 years, our Code has provided a common groundfor our business life values. Since 2005, these have been Our
Values in Action:• Integrity: The Power of Honesty• Excellence: The Power of Quality• Teamwork: The Power of Working Together• Commitment: The Power of Responsibility
I’m proud that in early 2014 we honored our longstanding
commitment and recognized sustainability as another value:• Sustainability: The Power of Endurance.
Sustainability has been included for years as a part of our valueof Commitment, clearly stating our responsibility to produce
sustainable solutions. Raising sustainability to a stand-alone
value acknowledges both what we have done in the past and will
do in the future.
For Caterpillar, sustainability is an enterprise-wide approach weapply to our own operations, as well as a guide for our suppliers,
dealers and customers.

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2013 SUSTAINABILITY REPORTCHAIRMAN’S MESSAGE

Chairman’s Message (continued)
We make sustainable progress possible by:• Leveraging innovation and technology,• Increasing productivity,• Using resources more efﬁciently,• Reducing environmental impacts and• Contributing to the communities where we live and work.
We know that to endure, our company and operations must
operate in a sustainable manner. What does this mean toour stakeholders?
To our customers, it means enduring products, services andsolutions. Our brands represent long-lasting quality, and our
products and solutions help our customers operate more efﬁciently. Through innovation, we focus on providing productsthat are more fuel-efﬁcient and require less oil and ﬂuids tooperate. Our customers build the infrastructure, supply thepower and transport the goods that support economic growth indeveloping and developed nations alike, and support Caterpillar’sefforts to help make that growth sustainable.

To our people, it means working for a company they can beproud of, for many reasons. We have a robust risk management
process that includes anti-bribery, anti-corruption and otherprograms and training designed to support Our Values in Action.
We’ve reduced our Recordable Injury Frequency to a worldclass 0.78 level in 2013. We have strong employee training anddevelopment programs, intentional efforts to ﬁnd and retain themost qualiﬁed and diverse employees, and are dedicated todiversity and inclusion.
We also invest in and support the communities where we live
and work through the United Way, and generous nonproﬁ t gift
matching and volunteer programs at our facilities worldwide.
We support the Caterpillar Foundation, which has invested
more than $550 million since 1952 to boost economic growthand quality of life around the world.
I encourage you to take the time to read the details presented
in this report. I believe Caterpillar is second to none in ourcommitment to sustainable progress.

To our stockholders, it means sustainable development strategies
and leading-edge products that promote customer loyalty andensure Caterpillar prospers for another 90 years, and longer.
Doug Oberhelman
Chairman & CEO
Caterpillar Inc.

5

CATERPILLAR INC.

2013 SUSTAINABILITY REPORTOUR APPROACH

About this Report
At Caterpillar, our sustainability practices are focused on ways to maximize the life cycle beneﬁ ts of our products while
minimizing the economic, social and environmental costs of ownership. Our recent results are reﬂected in this 2013
Sustainability Report, and build on the themes and results described in our 2012 report.
New this year is a Focus Area section that discusses and documents how selected issues related to environmental andsocial responsibility intersect with our business on a daily basis and affect our decision-making process. Many of these
focus areas are tied to Caterpillar’s long-term sustainability goals, while others represent areas where we have anorganizational impact or are important to our various stakeholders.
In preparing the content for this report, Caterpillar consulted the Global Reporting Initiative G4 reporting framework to serveas an informal guideline. The reporting period is the 2013 calendar year, which is also Caterpillar’s ﬁscal year. Caterpillar’senvironmental metrics for operations are consolidated based on the Greenhouse Gas Protocol (GHG Protocol) “operational
control” approach. The content represents the products and operations of Caterpillar Inc. and its subsidiaries where we havea controlling ﬁnancial interest. Where noted, Caterpillar’s independent dealer network and supply chain are also represented.
The Caterpillar brands are provided here: http://www.caterpillar.com/brands.

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2013 SUSTAINABILITY REPORTOUR APPROACH

Vision and Mission
Our vision is a world in which all people’s basic needs – suchas shelter, clean water, sanitation, food and reliable power –are fulﬁlled in an environmentally sustainable way and acompany that improves the quality of the environment andthe communities where we live and work.
Our mission is to enable economic growth through infrastructureand energy development, and to provide solutions that support
communities and protect the planet.
Our strategy is to provide work environments, products, services
and solutions that make productive and efﬁcient use of resources
as we strive to achieve our vision.
We apply innovation and technology to improve the sustainability
performance of Caterpillar’s products, services, solutions andoperations. We believe sustainable progress is made 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.

CRITICAL SUCCESS FACTORS
Culture. Create a culture of sustainability in all our business
units and in all our daily work.
Progress: We promote our employees’ awareness andunderstanding of sustainability. We continue to foster a corporate
culture of transparency, disclosure and engagement.
Operations. Champion our sustainability principles and contributeto 2020 aspirational sustainable development goals.
Progress: The Caterpillar Production System provides the recipe
for efﬁciency and excellence in our facilities. We actively encourage
employees to conserve resources and be more efﬁcient. Operating
in a more efﬁcient and sustainable manner will reduce impacts
on people and the environment, and help us and our customers
save money.
Business Opportunities. Identify and pursue business growth
opportunities created by sustainable development.
Progress: We are actively embedding sustainability throughout
our Caterpillar brand portfolio, our new product development
process and our technologies. Our business leaders continue todrive growth in sales of products, services and solutions that help
customers meet their sustainability challenges. We utilize 6 Sigma
methodologies to focus our work and drive measurable beneﬁ ts.
We will execute our strategy by working to meet our aspirationalsustainable development goals.

7

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2013 SUSTAINABILITY REPORTOUR APPROACH

The Value of Sustainability
It also reﬂects the priorities of the next generation of leaders andthe heightened focus being placed on sustainability around theworld. Sustainability will no longer simply be a series of important
things that we do to beneﬁ t communities, the environment andthe enterprise. Sustainability will now become a major part of who
we are.

In 2013, Caterpillar began a transformational journey with respect
to sustainability. From February through November, a “Powering
the Future” team, one of our Leadership Excellence in Accountability
and Development (L.E.A.D.) leadership development programs,
performed an in-depth analysis of our existing sustainability capabilities and strategy. The team was comprised of Caterpillar leadersfrom a wide range of backgrounds and perspectives. They compared
Caterpillar sustainability commitments and achievements to thoseof our peers and competitors. They also examined a variety of global
trends and how they relate to the Caterpillar enterprise and our
employees. As the team dug deeper into the various challenges andopportunities, they all reached the same conclusion: It is time toofﬁcially recognize sustainability as a core value at Caterpillar. Theydeveloped a bold recommendation for this important shift during
the 2013 Strategic Planning Committee (SPC) review. Following
careful consideration and approval by the Executive Ofﬁce, sustainability will now be recognized as a core value at Caterpillar.
We captured some of the team’s perspectives and observations
from this project and they can be viewed in the online version ofCaterpillar’s 2013 Sustainability Report.
For many years, Sustainability has been a key element of ourstrategy and values. Numerous Caterpillar employees haveconsidered sustainability to be a value on a personal level, andit has been reﬂected in their contributions to their work, theircommunities and the environment. Signiﬁcant advances towardsustainable progress have resulted from these efforts. By formallyrecognizing it as a core value for the enterprise, we will further
embed it in our culture and make it an integral part of our DNA.

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CATERPILLAR INC.

2013 SUSTAINABILITY REPORT

We have a unique opportunity to lead in solving some of theworld’s most challenging issues associated with energy, water,
land, climate and quality of life. Our position as the global leader inproviding the products and services needed for carefully extracting resources and developing infrastructure places us at the apex
of many issues. As the population grows and migrates to urban
areas, needs for sanitation, water, transportation and housing will
escalate dramatically. Our capabilities associated with distributed
power generation using fuels from diverse sources ranging fromnatural gas to renewable fuels can contribute greatly to addressing
energy poverty problems around the globe. Up to 25 percent of
the world’s land is now highly degraded. Our machinery can playa major role in restoring these lands to improve ecosystem healthand increase land productivity.
As we work together to implement the measures needed to fully
embed the value of Sustainability, we have a great foundation
to build on. A strong moral compass and a strong set of values
have been at the core of Caterpillar’s culture from the very
beginning. The ways that Caterpillar can contribute to sustainable progress are limited only by our imaginations, and we will
unleash the human capital and talent that exists throughout theorganization to be effective leaders. More than ever, the world
needs sustainability leadership, and we are the right enterpriseat the right time to truly make a difference for the common goodas envisioned by former U.S. President John F. Kennedy when
he stated:“If not us, who? If not now, when?”

OUR APPROACH

Sustainability Principles
In 2012, Caterpillar launched three sustainability principles used to drive our commitment to make sustainable progresspossible. Preventing waste means improving the efﬁciency of products, processes, services and solutions, which not only
reduces cost, but also leads to environmental beneﬁts associated with reduced materials, energy, water and land utilization.
Improving quality applies to the quality of the processes, products, services, solutions and safety practices utilized
throughout the Caterpillar enterprise, as well as the quality of the communities and the environment in which Caterpillar
operates. Preventing waste and improving quality measures provide the key drivers for developing better systems.
Keeping resources in the value chain through a circular ﬂow of materials, energy and water is critical to maximizing totallife cycle beneﬁ ts while minimizing the cost of ownership.

• Materials, energy, water and land
• Impacts to people, communities andthe environment

Preventt
Waste• Circular ﬂow of materials and energy through the value chain• Maximum life cycle beneﬁts and minimum cost of ownership• Sustained progress for economy, environment and community

Develop
Better
Systems• Safety, processes, products, services and solutions• Life, workforce, environment and community

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CATERPILLAR INC.

2013 SUSTAINABILITY REPORT

Improvee
Improve
QualityyOUR APPROACH

External Sustainability Report
Advisors & Comments
Our thanks to the advisory council of experts, who provided their comments on Caterpillar’s sustainability report and progress.
Inclusion below indicates the provision of feedback; not the endorsement of the contents of the report. Comments below areadvisory 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
Stephanie Hanford-Hass
President, Connectivity Consulting, LLC“Articulating the Common Good, as Caterpillar is doing now, is a great
way of demonstrating that tackling environmental challenges throughtechnological solutions very often makes good sense, both economicallyas well as ecologically. It is impressive to see Caterpillar optimizing
existing products in this way. However, as global environmental andsocial challenges grow, primarily because of climate change, I would liketo see Caterpillar engage its talented workforce at a more strategic levelaround climate resilience, helping to secure our cities from the groundup. This would undoubtedly provide both investor and social returns.”

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“ 2013 marked the passing of an amazing freshwater ecologist, Ruth
Patrick, who left this world at the age of 105. Ruth demonstrated thatthe numbers and kinds of species in a watershed provide the best readout of a stream’s natural conditions as well as the stresses from humanactivity in the watershed. In other words, biodiversity is the best measureof sustainability in ecosystem management. So when the Australia
Wildlife Conservancy uses Caterpillar equipment to restore representative Australian ecosystems with their characteristic biodiversity, as
it is doing in the Wongalara Reserve on the edge of Australia’s Arnhem
Land, it is following what has become known as the Patrick Principle.”

10 CATERPILLAR INC.

2013 SUSTAINABILITY REPORTMark 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
Kevin Sweeney
Center for Responsible Business, Haas School of Business,
University of California, Berkeley
William A. Wallace
Lead Designer, Envision™ Sustainable Infrastructure Rating
System; Past President and Member of the Governing Board,
Engineers Without Borders – USA“Caterpillar is in an exceptional position to help their customers
conserve resources and build up resiliency in this new harsh andchanging environment. I’m curious to see what they come up with.”

Durwood Zaelke
President, Institute for Governance & Sustainable Development“Caterpillar’s technology genius can play a key role in addressing
climate change, while helping customers become more sustainable.
In addition to focusing on reducing carbon dioxide, it is importantto reduce the short-lived climate pollutants, including black carbon,
tropospheric ozone, methane and the hydroﬂuorocarbons.”

OUR APPROACH

Afﬁliations and Investments
Dow Jones Sustainability Indexes
Included 2000 through 2012; sector leader
2006-2007-2008-2010.
sustainability-index.com
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
and national security challenges.
Bcse.org
Business Roundtable
Caterpillar is a member of the Business
Roundtable, which supports sustainable
development through its member companies
in addressing a vast range of environmental,social and economic issues to help ensure asustainable future.
businessroundtable.org
Diesel Technology Forum
Caterpillar is a member of the Diesel Technology
Forum, a leading resource and educator on
the importance and unique value of diesel
engines, fuels, equipment and emissions
control technology.
dieselforum.org

11 CATERPILLAR INC.

Energy Technologies Institute
Caterpillar is a member of the Energy
Technologies Institute, a U.K.-based publicprivate organization focused on projects thatcreate affordable, reliable, clean energy forheat, power and transport.
energytechnologies.co.uk

U.S. Green Building Council
Caterpillar is a member of the U.S. Green
Building Council, a nonproﬁ t communityof leaders working to make cost-efﬁcientand energy-saving buildings available toeveryone within a generation.
usgbc.org

The Nature Conservancy
The Caterpillar Foundation and the Nature
Conservancy formed the Great Rivers Partnership project in 2005 aimed at preserving andprotecting the world’s great rivers.
nature.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
and funding for sustainable woody biomass
utilization and markets in the U.S.
woodybiomass.net

Opportunity International
The Caterpillar Foundation invests inOpportunity International to provide
microﬁ nance loans, savings, insurance
and training to over 4 million people
working their way out of poverty inthe developing world.
opportunity.org
Tropical Forest Foundation
The Caterpillar Foundation began investingin the Tropical Forest Foundation in 1990.
The Tropical Forest Foundation works toadvance environmental stewardship, economic prosperity and social responsibility
through sustainable forest management.
tropicalforestfoundation.org

2013 SUSTAINABILITY REPORTWorld Food Programme
The Caterpillar Foundation invests in theWorld Food Programme, the world’s largest
humanitarian agency, to ﬁght hunger worldwide, delivering food wherever 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 goesbeyond research to ﬁnd practical ways toprotect the earth and improve people’s lives.
The Caterpillar Foundation supports the World
Resources Institute to catalyze the development of smart cities, which promote infrastructure development that is economically andenvironmentally efﬁcient and serves as amodel for sustainable development.
wri.org

FOCUS AREAS

Focus Areas
Caterpillar currently operates in more than 180 countries worldwide, and generates more than half its annual sales outside theUnited States. Operating on a global scale requires us to work within a variety of different cultures, governmental systems andeconomic environments. We acknowledge and respect the diversity of cultures and customs wherever we operate, and maintaina ﬂexible business approach to best serve our customers, dealers and suppliers, while always adhering to Our Values in Action –Caterpillar’s Worldwide Code of Conduct.
As part of our work in sustainable development, we have identiﬁed a set of focus areas that intersect with our businesson a daily basis and that guide our thinking as we make day-to-day business decisions. Many of these areas are associatedwith our 2020 aspirational, operational and product stewardship goals, while others represent areas impacting our businesslong-term and which are important to our various stakeholders.
These areas include:• Workforce• Energy & Climate• Water Management• By-Product Materials• Product Stewardship• Supply Chain & Dealer Network• Governance & Ethics• Economic Development• Human Rights• Philanthropy

12 CATERPILLAR INC.

2013 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 workrequired for our businesses to be marketplace leaders. That is
why we are focused on providing a workplace that values safety,
talent, drive and diversity, and one in which our employees canbring a variety of skills, 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 to minimize safety risks. We understandand accept the uniqueness of individuals and welcome and value
differences, unique talents, skills, abilities, cultures and experiences. The safety of our operations and the unique capabilities ofour employees ensure the long-term sustainability of our enterprise.
To help create such an environment, we leverage our global
reach, values and transformational impact.

13 CATERPILLAR INC.

2013 SUSTAINABILITY REPORTOur Global Reach
Executing Caterpillar’s strategic vision requires hiring andretaining the best people, which is why we are focused onproviding employees with signiﬁcant and long-term career
opportunities. Our global reach provides employees with theability to move between different business units, locations
and product lines over the course of their careers. These
opportunities, coupled with career development resources,
make it possible to have a truly diverse and meaningful, longterm career within our organization. The long average tenure of
our employees speaks to their satisfaction with career growth.

Our Timeless Values
In 1974 Caterpillar became one of the ﬁrst companies to publish
a Worldwide Code of Conduct. Our Values in Action – Caterpillar’sWorldwide Code of Conduct – articulates our commitment toIntegrity, Excellence, Teamwork and Commitment. In early 2014,
we recognized Sustainability as another core value. We want tosurround 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 that helps bringour 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
and courtesy to every interaction between our employees, ourdealer network, our supply chain and our customers.

FOCUS AREA: WORKFORCE

Our Transformational Impact
Caterpillar provides the opportunity for employees to feel a partof products, 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 andour products play an indelible role in developing countries andcreating economic growth throughout the world. Our contributions
range from helping provide basic infrastructure like roads, sanitation, airports and power to developing societies; to powering
missions to outer space, widening the Panama Canal and building
the world’s superhighways. We play a part in some of the world’s
most important transformational projects.

6.22

1.18

2003

2010

0.78

SAFETY

1.03

1.02

2011

2012

0.78

0.6

2013

2020
Goal

Recordable Injury Frequency (RIF)(Recordable injuries per 200,000 hours worked)
1 Detailed information on this data can be found in theGoals & Progress section of this report.

We are dedicated to the safety of everyone at Caterpillar, including
our extended team of employees, contractors, dealers, suppliersand customers. Our commitment to safety begins with the engineering of our products and manufacturing processes, and extends
to operator training, job site solutions and the workplace culturesthat guide the way we work.
Caterpillar’s Global Health & Safety team plays a key role inproviding expertise and support to Caterpillar operations worldwide. Caterpillar Safety Services supports enterprise facilities,
dealers, suppliers and customers by leveraging cultural assessment tools, guiding continuous improvement processes andproviding a wealth of free, industry-speciﬁc safety resources.
The safety.cat.com site provides access to a wide range ofinteractive online training courses for safety, health and theenvironment – in full support of our vision: Safely home. Everyone.
Every day.™
From 2012 to 2013, we continued to build upon a trend toward
world-class standards in safety with a 24 percent reduction in
Recordable Injury Frequency (RIF) and a 3 percent reduction in
Lost-Time Case Frequency Rate (LTCFR).
Initiatives at many of our locations continue to drive our safety
results. At our Clayton Distribution Center in Clayton, Ohio, forexample, managers focused speciﬁcally on the injuries employees
were experiencing in 2012. A project team analyzed the facility’ssafety incidents, which revealed that more training and awareness was needed. The Clayton safety team began building aprocess focused on leading safety indicators and culturalchanges speciﬁcally tailored to their site.
14 CATERPILLAR INC.

RECORDABLE INJURY FREQUENCY1

2013 SUSTAINABILITY REPORTLOST-TIME CASE FREQUENCY RATE1
2.90

2003

0.35

0.28

0.30

0.29

0.15

2010

2011

2012

2013

2020
Goal

0.29

Lost-Time Case Frequency Rate (LTCFR)(Work-related injuries resulting in lost timeper 200,000 hours worked)
1 Detailed information on this data can be found in theGoals & Progress section of this report.

Clayton implemented a peer-to-peer recognition system andteam safety certiﬁcate program, versions of which had beensuccessfully employed at other Caterpillar sites to better
engage employees. Other safety improvements included thedevelopment of a revised matrix to document safety incidents andidentify preventive measures; targeted safety messages forcertain jobs and/or equipment; brief, frequent safety messaging
at team and management meetings; monthly ﬁrst aid/CPR
training; and a renewed emphasis on providing and using
employee personal protective equipment. This multifaceted
approach, driven by proactive engagement indicators, resulted
in the facility experiencing a 91 percent reduction in recordable
injuries by the second half of 2013, while decreasing the total
number of injury incidents by 36 percent over the same period.

FOCUS AREA: WORKFORCE

where ergonomic interventions could be implemented. Most of
the improvements centered on eliminating unnecessary bending
and lifting, redesigning workplaces to ease physical strain andproviding additional tools or transport methods to reduce push/
pull exposures.
These initiatives have resulted in more than an 87 percent reduction
in ergonomic risks, along with a 64 percent reduction in absentee
hours and 69 percent reduction in employee-reported discomfort
in 2013. Due to the success of this project, the Piracicaba facility
is currently replicating the ergonomic improvements in threeother work areas.
In 2013, Progress Rail’s Decoursey Car Shop, a full-service
freight railcar repair and modiﬁcation facility located in Covington,
Ky., noticed an increase in the number of injuries. In response,
the facility implemented a novel safety solution that targeted
new employees who were not experienced with equipment andprocesses. Management upgraded the training and onboarding
process for these employees by creating a “Training Pyramid” toprovide targeted, hands-on training for new hires. This pyramid
effectively replicates many of the common tasks and issues
encountered by Decoursey employees during railcar repair.
Built at a cost of less than $3,000, the pyramid was designed
to mimic tight spaces workers frequently must negotiate, andit includes a detailed review of tools and tool handling tips
to reinforce the importance of preinspecting tools prior tocommencing any repair work.
Tools were also a focus at Caterpillar’s Thiruvallur, India, facility
where off-highway trucks, large wheel loaders and hydraulicexcavators are manufactured. The facility determined that designand operational issues in one machining process exposed employees
to 12 separate potential injury risks. Through the process andequipment modiﬁcations, the facility reduced the identiﬁed safety
risks for its machining tools by almost 100 percent. In addition,
the implemented improvements reduced machining cycle time byalmost 40 percent, decreasing the cost for repair and maintenanceof existing equipment.
Finally, as part of a renewed safety and ergonomic emphasis
at Caterpillar Brasil Ltd. in Piracicaba, Brazil, an internal teamreviewed each area’s workplace ergonomics. Using a Rapid
Improvement Workshop, the team identiﬁed seven critical activities

15 CATERPILLAR INC.

2013 SUSTAINABILITY REPORTDIVERSITY AND INCLUSION
Diverse and inclusive work environments embrace the values
and unique talents, experiences and viewpoints of employees.
This approach is aligned with our strategic goal of Best Team.
To achieve the Best Team goal, our global Diversity and Inclusion
strategy includes:• Deﬁning a clear set of roles, responsibilities andaccountabilities for all employees.
• Holding management at all levels accountable for results
through deﬁned diversity and inclusion metrics.
• Building sustainability by embedding diversity andinclusion into key people processes.
In addition, Caterpillar’s Diversity and Inclusion initiatives arealso 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.
In June 2013, Caterpillar launched its ﬁrst inclusion survey,
designed to help us identify and understand opportunity areas
for building a more diverse and inclusive culture. The survey results
will be used to update and improve the metrics we use to drive
enhanced diversity and sustain an inclusive culture throughout
the company. This will be done by ensuring all segments of ouremployee population feel emotionally safe (or included) at work.

FOCUS AREA: WORKFORCETALENT DEVELOPMENT & BENEFITS
Caterpillar makes sustainable progress possible around theworld – a commitment that extends to every one of our employees.
As a single company with hundreds of global locations, andserving 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 inside and outside of Caterpillar, tuition
reimbursement programs, targeted leadership, skills or language
training, and formal beneﬁ ts such as medical plans that help
promote the long-term health and wellness of our employees
and their families.
Caterpillar’s diversity and inclusion progress has earned Caterpillar
several accolades. In 2013 alone:• DiversityInc magazine named Caterpillar to a pair ofprestigious lists – “25 Noteworthy Companies” and“Top 10 Companies for Veterans.”• CAREERS & the disABLED magazine named Caterpillar
as one of its “Top 50 Employers.”• The website HR Executive Online named Caterpillar to its
list of “Top 50 Most Admired Global Companies for HR.”

Employee Resource Groups
To help us embrace diversity and inclusion at Caterpillar, wehave established global Employee Resource Groups (ERGs) thatare 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 mentoring and networking opportunities. In
addition, ERG members frequently reach out as groups to serve
the communities where they live and work, demonstrating
their support of the U.S. Armed Forces, learning institutions,charitable organizations, crisis relief efforts, and cultural andartistic programs, to name a few. Members of an ERG also help
sustain an engaged workforce at Caterpillar – as evidenced bymembers having consistently higher responses to questions
related to engagement on the Employee Opinion Survey.

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 recently expanded its
offerings to our customers by launching 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 businessresults. The objective of the program is to ensure that leaders,at all levels, are ready to lead and hold themselves and othersaccountable for results.
For leaders with the potential to move to higher leadershiplevels within the organization, L.E.A.D. has offered additional
programs. The ﬂagship program, Digging Deep, developed with
Stanford University Graduate School of Business, provided
leaders an opportunity to travel to growth markets such as
China and Brazil, while receiving classroom instruction fromthe Stanford faculty.
Efforts such as the L.E.A.D. program produce graduates who
personify Our Values in Action, and in 2013 helped Caterpillar be named
the sixth best company for leaders by Chief Executive magazine.

16 CATERPILLAR INC.

2013 SUSTAINABILITY REPORTFOCUS AREA: WORKFORCE

Learning Management System
The 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 through Caterpillar’s intranet and allows
employees worldwide to browse the online course catalog,
register for information and courses in their local 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
also sustains the company’s talent pipeline. We encourage
employee development and provide ﬁ nancial assistance forthis purpose.

Beneﬁts
Healthy and engaged employees lead to a stronger, uniﬁed team.
Caterpillar is committed to investing in employee programs that
motivate, support and guide our workforce.
Compensation packages include a base salary plus incentive plans
for achieving speciﬁed corporate and business unit results. We
also provide employees with paid time off for vacation, holidays
and bereavement. These policies may vary by location.
Eligible Caterpillar employees participate in a health care beneﬁtplan with comprehensive, affordable coverage through a networkof physicians, hospitals and other providers. Generally, coverage
includes dental and vision beneﬁts for employees and their families, as well as access to a variety of wellness offerings such as
ﬁtness, nutrition and weight-management programs. In the U.S.,
we also offer beneﬁ ts such as the Employee Assistance Programand Flexible Spending Account program to help meet the needsof our diverse employees and their families.

17 CATERPILLAR INC.

2013 SUSTAINABILITY REPORTCOLLECTIVE BARGAINING
We support the right of union employees to engage Caterpillar on
matters of work hours, wages and employment conditions throughthe collective bargaining process. While the majority of Caterpillar’s
workforce is not subject to collective bargaining, we nonethelessparticipate in good faith negotiations to engage our unionizedemployee groups on their needs and concerns.
As of December 31, 2013, Caterpillar employed a total of 118,501
people, including 66,624 in international locations. In the UnitedStates, most of our 51,877 employees are at-will employees
who are not subject to any type of employment contract oragreement. At select business units, certain highly specialized
employees have been hired under employment contracts thatspecify a term of employment, pay and other beneﬁ ts.
In addition, as of December 31, 2013, there were 11,284 U.S.
hourly production employees covered by collective bargaining
agreements with various labor unions. These include:• The United Automobile, Aerospace and Agricultural Implement
Workers of America (UAW), representing 7,460 Caterpillar
employees under a six-year central labor agreement that expires
on March 1, 2017.
• The International Association of Machinists (IAM), representing
1,694 employees under labor agreements that will expire on
May 17, 2015 and April 30, 2018.
• The United Steelworkers (USW), representing 741 employees
under labor agreements that will expire on April 30, 2015,
August 19, 2018 and April 30, 2019.
Outside the United States, Caterpillar enters into employment
contracts and agreements and collaborates with local works
councils and unions in those countries where such relationships
are mandatory or customary. The provisions of these employment agreements correspond in each case with the required orcustomary terms in the subject jurisdiction.

FOCUS AREA: WORKFORCE

Improving, Sustaining and Growing Our Business through Lean
In 2013 Caterpillar created a new order-to-delivery organization,
the Caterpillar Enterprise System Group. The Caterpillar Enterprise System Group was formed to create a holistic approach,using a Lean methodology, to achieve our company’s end-toend vision of integrated supply and demand. The Caterpillar
Enterprise System Group advocates for collaboration acrossthe company to drive waste elimination and deliver products
and services based on our customer service promise.

Lean is built on ﬁve basic principles: Built in Quality; Right
Part, Right Time; Shorten Lead Time; Capital Utilization; andManpower Utilization. The ﬁrst Lean principle, Built in Quality,
reinforces that every person, every stage and every process
must guarantee zero defects and zero rework. From a sustainability perspective, better quality and less rework ultimately
results in the use of fewer materials, less energy consumption
and reduced waste.

A key focus moving forward is to build upon our 6 Sigma andCaterpillar Production System foundation and embed our Lean
methodology across all functions. Lean provides a more disciplined execution, from an end-to-end perspective, that will
help us achieve the next level of performance while driving
improved customer responsiveness throughout the enterprise.

Our Lean journey is not limited to manufacturing. All functional
areas within Caterpillar execute business processes on a daily
basis. Our overarching goal is simple; no matter the role, it isalways our priority to provide the highest-quality products,
services and solutions to our customers.

18 CATERPILLAR INC.

2013 SUSTAINABILITY REPORTFOCUS AREA: ENERGY & CLIMATE

Energy & Climate
Energy is a key requirement for sustainable progress anddevelopment 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 more energy-dependent technologies.
Global demand for energy is expected to increase signiﬁcantly
over the next 20 years.
As a global energy consumer and industrial manufacturer, and amajor manufacturer of energy conversion and power-generation
products, Caterpillar has a fundamental interest in, and understanding of, energy needs. We are one of the world’s leading
technology suppliers 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 becauseof the potential for these gases to affect climate patterns. As aresult, 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
through improved GHG management practices. Atmospheric GHG
accumulation can occur as a result of inefﬁcient or excessive
fossil fuel combustion, poor waste-management practices or

19 CATERPILLAR INC.

2013 SUSTAINABILITY REPORT

poor land-management practices. Caterpillar is a leader in thedevelopment and deployment of innovations and technologies
that, through our machines, assist in the prevention andmitigation of all three of these sources.
Caterpillar has established aggressive energy efﬁciency and
GHG-reduction goals for our facilities – goals which we areexceeding. 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 been achieved in the development and implementation of
innovations such as 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 anddevelopment around the world. As a global energy consumer
and industrial manufacturer, and a major manufacturer of energy
conversion and power-generation products, Caterpillar has afundamental interest in, and understanding of, energy needs.
We are one of the world’s leading technology suppliers to various
energy markets and leverage our technology and innovation
to meet the world’s growing energy needs. We believe:• Energy sources need to be developed and used in anenvironmentally responsible and sustainable manner.

FOCUS AREA: ENERGY & CLIMATE• There is no one single solution to providing abundant,
reliable, secure, clean and reasonably priced energy on
a global basis. Political and industry 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 iscritical for 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 ofenergy and expanded use of alternative energy technologies.
• When regulation is necessary, we support regulatory
structures that provide a technology-neutral and levelplaying ﬁeld that embraces competition and in which
Caterpillar, our independent dealers and our customers
can operate.
• We support the development and use of strategies andtechnologies to increase energy efﬁciency and reduce
emissions.

Our Operations
Caterpillar has set targets for energy efﬁciency in our operations
since 1998. We currently have a target for the use of alternativeand renewable energy in our operations, as well as a newly revised
target for reducing our energy intensity in operations. Our enterprise energy management team is instrumental in driving energyefﬁciency projects and encouraging use of alternative/renewableenergy options. Our current uses of renewable energy sources wereachieved through facilities’ installing renewable energy sources
such as biogas and photovoltaics (PV), as well as the purchaseof renewable energy certiﬁcates. Our largest contribution to alternative energy consumption is the operation of Combined Heat andPower (CHP) facilities to power several manufacturing facilities.
The energy management team is evaluating additional opportunities
for replication of CHP at other manufacturing 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 our equipment and an improved bottom line for

20 CATERPILLAR INC.

2013 SUSTAINABILITY REPORT

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
our talents on reducing emissions while increasing energy access.
Caterpillar leverages technology to create more efﬁcient powergeneration solutions. With distributed generation solutions
utilizing diesel and natural gas engines, as well as alternative
fuels, Caterpillar is well-positioned to get power where it needs
to be.
Further, Caterpillar built equipment helps meet the demands ofthe mining and resources industries to get raw materials where
they need to be to create increased access to power.
Caterpillar has implemented hundreds of distributed power
generation systems all over the world, which contribute toimproving energy access in the developing world while emitting
minimal greenhouse gas (GHG) emissions compared to traditional
power grid systems. We provide combined heat and power systems,
and combined-cycle power systems that can double the efﬁciencyof power generation when compared to the efﬁciency of conventional power grids. Additionally, our power systems utilize fuelsfrom diverse sources such as gas from landﬁlls, livestock operations,wastewater treatment operations, mine methane, ﬂare gas, syngas,
pyrolysis oil and biofuels. These systems provide energy diversity
from plentiful (and in many cases, renewable) energy sources.

FOCUS AREA: ENERGY & CLIMATE

CLIMATE POLICY
Caterpillar supports integrated carbon and climate policies thatare both environmentally effective and economically sustainable.
We understand that the most immediate and measureable beneﬁ ts will occur through energy-efﬁciency improvements andcorresponding greenhouse gas (GHG) emissions reductions.
In responding to the challenge of reducing our GHG emissions,
Caterpillar has formed cornerstone beliefs about carbon andenergy-efﬁciency issues. Caterpillar supports intelligent,
responsible public policies addressing these issues. We are:• Investing in efﬁciency and emissions-reduction technologies that are important to our stakeholders and represent
signiﬁcant areas of opportunity for our business.
• Committing to the development and deployment of advanced
technologies that capture and store GHG emissions.

Energy Poverty
Nearly 1.3 billion people, close to one-ﬁfth of the global population,
do not have access to electricity. Lack of access to modern
energy services hinders economic and social development,
making it more difﬁcult to provide water puriﬁcation, sanitationand education. Today, the technology and natural resources
exist to rapidly expand energy access, but the challenge isaccomplishing this in an effective and efﬁcient manner.
One of the biggest differences between a developing nation
and a developed nation is access to energy. We support and arecommitted to increasing that access, helping economies growand reducing energy poverty where it exists.
Energy diversiﬁcation – such as coal in combination with carbon
capture and storage, new nuclear buildouts, new natural gas
reserves, plus renewable energy sources like wind, PV, tidal andothers – will contribute 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 meet the primary energy needs ofthe world’s rising population and expected economic growth overthe next several decades. Natural gas production, in addition, has
increased 14 percent from 2006 through 2011, resulting in economic
growth for many communities with recoverable reserves. Products
capable of using alternative or blended fuels are also increasingly
available. Eliminating energy poverty is a vision that can be achieved.
21 CATERPILLAR INC.

2013 SUSTAINABILITY REPORT• Supporting policies and mechanisms that harness themarketplace to drive innovation, mobilize investment andfacilitate sharing these technologies.
• 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 keyrole in any successful strategic approach to emissions reduction. We believe that the private sector must take the lead indeveloping and deploying technology solutions to reduce GHG
emissions. Ideally, regulatory structures should provide atechnology-neutral and level playing ﬁeld in which competitive solutions can be developed.
Caterpillar believes in the importance of providing energyefﬁcient products and technologies for our customers and ourfacilities, and we advocate for policy solutions that are both
environmentally and economically sustainable. We work with
policymakers on developing economy-wide emissions-reduction
programs in the United States that work in conjunction withinternational efforts to reduce GHG emissions.

FOCUS AREA: ENERGY & CLIMATE

Business will struggle to ﬁnd solutions if vastly differing approaches
to greenhouse gas reduction are implemented around the world.
That is why we will continue to advocate for a comprehensive,international approach that encompasses 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, regionaland national levels through our Government Affairs teams andour memberships in trade and lobbying associations. At eachlevel, 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 and affordably 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 joining the voluntary U.S. EPA
Climate Leaders program in 2003. Through that program, we set
our ﬁrst reduction target – a GHG reduction of 20 percent per
dollar of revenue from 2002 to 2010. Achieving that goal wellahead of schedule, we worked with the Climate Leaders program
to establish an even more challenging goal – GHG reduction of
25 percent from our existing facilities by 2020. Because ourcompany grew signiﬁcantly since setting our last goal in 2006,
we have now established an intensity-based 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, weare further motivated to help our customers achieve theiremission-reduction goals. Their needs provide valuablebusiness opportunities to Caterpillar.
We continue to invest in research and development aimed
at developing products with fewer direct emissions and/or
improved efﬁciency or productivity. In doing so, we help ourcustomers to improve their own operations, while also driving
our competitors to improve.

22 CATERPILLAR INC.

2013 SUSTAINABILITY REPORTFor our products, the majority of GHG emissions occur in the
product use phase of the life cycle. Job site fuel efﬁciency isstrongly considered in our new-product development efforts,
which contributes to reductions of GHG emissions. As a result,
breakthroughs have been achieved in the development andimplementation of innovations such as combined diesel and electric drives, hybrid systems, continuously variable transmissions,job site optimization technologies and services and alternativefuel utilization. By developing products, services and solutions
that increase customer efﬁciency, we also are reducing theemissions that would otherwise have been generated from theuse of less efﬁcient products or solutions. In addition, our remanufacturing and rebuild businesses result in avoided emissions.

Carbon Research Investments
Up to 25 percent of the world’s land is now highly degraded due
to deforestation, desertiﬁcation, wetlands destruction and soil
erosion, among others. The health and productivity of these lands
must be restored to help feed and support the additional 2 billion
inhabitants who will occupy the planet by 2050. Carbon is a crucial
element for ensuring the health and productivity of vegetation,
ecosystems and soils. Consequently, removing carbon from theatmosphere and incorporating it into lands where it can help
restore health and productivity offers a signiﬁcant opportunity
for sequestering carbon. The Caterpillar Foundation supports
organizations such as the World Resources Institute, the Tropical
Forest Foundation and the Nature Conservancy to help improveland and ecosystem health.
Caterpillar invests in research aimed at carbon capture andstorage (CCS) with the U.K. Energy Technologies Institute (ETI).
We are a founding member and co-funder of the ETI, a collaboration between industry and the U.K. government to accelerate
the development of technologies that address the challenges ofclimate change and provide affordable energy access. The useof CCS technologies could reduce emissions from fossil fuelpower stations by as much as 90 percent. To accelerate thedeployment of new, low carbon energy technologies, ETI has
a $100 million per year portfolio of technology development anddemonstration projects across a wide energy spectrum, including
distributed energy; offshore wind power; marine power technologies; energy infrastructure; transport, including heavy-duty
vehicles; CCS; bio-energy and demand-side management forbuildings. The ETI carbon capture and storage work includes

FOCUS AREA: ENERGY & CLIMATE

research on power station-scale technology, evaluating a numberof 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 of new CCS
technologies are being evaluated as technology companies anduniversities develop them. In addition, Caterpillar supported ETI
research to look at mineralization, although energy consumptionof this technology is currently too high to justify its deployment
in the short term.

ENERGY PERFORMANCE
Operational energy intensity decreased 28 percent from 2006
to 2013. This progress represents a continued commitment toinvestment in more energy-efﬁcient equipment and processes,
as well as the implementation of best practices at our facilities
around the world.
Two projects focused on compressed air illustrate our approachto operational energy efﬁciency. At Caterpillar’s Thiruvallur, India
facility, compressed air accounted for a signiﬁcant amount of
the facility’s electrical consumption, but about 30 percent of thatenergy was being wasted through system inefﬁciencies. A project
team saw an opportunity to meter the use of compressed air andoptimize its distribution throughout the plant, allowing compressors
to run for less time while delivering the same results.
After conducting internal studies to identify user and business
requirements, the team focused on three areas of opportunity:
1) synchronizing compressor operations based on usage patterns
and bridging gaps between supply and demand; 2) rerouting air lines
to eliminate a pair of standalone compressors; and 3) reducing thepressure band in certain areas of the facility during nonworking
hours to help eliminate unnecessary power consumption.
With these three process improvements, power usage at thesite, typically supplied by diesel generators, was reduced by
920 kWh per day, which in turn reduced GHG emissions by morethan 200,000 kg per year.
Compressed air efﬁciency was also an improvement at our Perkins
facility in Peterborough, England, but the solution selected there
differed from the one used in India. Until recently, Perkins used

23 CATERPILLAR INC.

2013 SUSTAINABILITY REPORTOPERATIONAL ENTERPRISE ENERGY INTENSITY1
692
610
501

473
417

346

2006

2010

501

2011

2012

2013

2020
Goal

Absolute gigajoules energy use/
million dollars of revenue(Baseline: 2006)
1 Detailed information on this data can be foundin the Goals & Progress section of this report.

six air compressors, four of which were more than 45 years old.
In 2011, when two of the four older units needed to be replaced,
Perkins worked with its compressor manufacturer to demonstrate a heat-recovery system on new compressors that could
be used to heat process water – a resource Perkins needed aspart of the wash processes in its paint facility.
The process of obtaining the new compressors and bringing thesystem fully online took 18 months and required the installationof new pipework, pumps and control systems. Perkins replaced
two of the older units with new compressors equipped with heatrecovery systems and also retroﬁ tted two existing compressors
with heat exchangers.
In total, utilizing heat-recovery technology in the Perkins plant
has lowered gas and electricity usage by 2.4 million kWh andreduced operational costs by more than £77,000 (US$125,000)
and will realize a return on investment in less than two years.
This gas and energy savings also brought a corresponding drop in
Perkins’ CO2 emissions of about 478 metric tons in the same
period. In addition, the new system keeps wash water at a constant temperature, minimizing daily startup time and associatedpower use, and diverts surplus heat to a nearby paint storage
area where temperatures need to be held constant to maintain
paint viscosity and integrity.

FOCUS AREA: ENERGY & CLIMATE

Progress in Alternative/Renewable Energy
Caterpillar also had signiﬁcant achievements in alternative andrenewable energy projects in 2013. Renewable energy sources
increased from 2012 to 2013, and with the addition of alternative
energy sources, we have achieved 28 percent energy from alternative or renewable sources. One of our biggest achievements wasat the Building Construction Products (BCP) facility in Desford,
England. In 2011, with a general goal of reducing GHG emissions,the facility worked with their local energy provider on a large-scale
renewable energy project using wind turbine power. BCP worked
with their energy supplier to ensure that its power source would
reﬂect Renewable Energy Guarantees of Origin, a European certiﬁcation process, and to ensure that the electricity received isgenerated from renewable sources.
The project had been two years in the making, but by 2013 theDesford facility was receiving 100 percent of its electricity fromthree offshore and two onshore wind farms, in addition to one
photovoltaic source. The program’s overarching goal – to reduce
GHG emissions from the facility – saw signiﬁcant improvement asa result of the switch. Between 2011 and 2012, when the program
began in earnest, GHG emissions from the facility were loweredby 61.5 percent. The project has been so successful that theprocess is being replicated at 10 additional Caterpillar sites
throughout the U.K.
ENTERPRISE ALTERNATIVE/RENEWABLE ENERGY SOURCES1
28.0%
9.4%

Renewable
Alternative

18.2%

28%

13.8%

14.8%

2010

2011

18.6%

2012

2013

Alternative/Renewable energy(Sum of renewable and alternative electricalenergy use/total electrical energy use x 100)
1 Detailed information on this data can be foundin the Goals & Progress section of this report.

24 CATERPILLAR INC.

2013 SUSTAINABILITY REPORT

Another recently implemented renewable energy project is at
our Product Development & Global Technology technical center,located in Mossville, Ill. There, electric vehicle charging stations
were installed in the employee/visitor parking area to serve twovehicles simultaneously. In addition, electric vehicle charging
stations were installed inside the plant property that allow simultaneous charging of up to two ﬂeet vehicles. Each Level II ChargePoint station provides Caterpillar employees and site visitors witheasy charging access during work hours, supporting our employees’
individual sustainability decisions. Based on the success of thischarging station initiative, two Level II ChargePoint stations havebeen installed at our facility in Winston-Salem, N.C.

GHG EMISSIONS PERFORMANCE
Through 2013, Caterpillar has reduced GHG emissions intensityfrom our facilities by 39 percent over our 2006 baseline year.
Although our GHG intensity increased from 2012 to 2013, ourabsolute GHG emissions decreased in that time.
A good example of our commitment to GHG reduction was a heating
project undertaken at Caterpillar Global Mining in Ostrava, Czech
Republic, a facility we recently acquired. The facility’s outdated
heating source included a pair of gas steam boilers, pushingsteam through pipes that were nearly a half-century old. There
was considerable energy loss in this antiquated system and thefacility recognized this was not sustainable.
In mid-2012, the facility looked at ways not only to upgrade
the system, but to do it with the environment and sustainable
solutions in mind. The facility’s old natural gas boilers were
replaced with new heat condensing boilers, which offer a
35 percent fuel savings over the older versions. In addition,much of the old steam piping was replaced with a new hot water
heating system that provided more consistent heat distribution
throughout the facility with less energy loss. New automatedinfrared heaters were also installed. All together, these systems
keep the facility’s buildings at the required temperature, helping
to eliminate variations between locations and the need for
manual operation.

FOCUS AREA: ENERGY & CLIMATEOPERATIONAL ENTERPRISE GHG EMISSIONS INTENSITY1TOTAL ABSOLUTE GHG EMISSIONS1
1.02 Million Metric Tons
Scope 1 GHG Emissions(Direct emissions)

72.1
62.8
47.2
39.6

2006

2010

44.3

2011

2012

1.45 Million Metric Tons
Scope 2 GHG Emissions(Indirect emissions frompurchased electricity,heat or steam)

44.3
36.1

2013

2020
Goal

Absolute metric tons of CO2e/
million dollars of revenue

2.47

Million metric tons
Total absolute GHG emissions
1 Detailed information on this data can be foundin the Goals & Progress section of this report.

(Baseline: 2006)
1 Detailed information on this data can be foundin the Goals & Progress section of this report.

The results have been impressive to date. During the ﬁrst year ofoperation, the new system reduced greenhouse gas emissions byapproximately 500 metric tons of CO2e, thanks principally to lessconsumption of natural gas to power the boilers. Ostrava had apositive impact on their community and expanded its impact tothe entire Caterpillar enterprise by offering information to otherfacilities that had the potential to replicate this solution.
Another instance of GHG reduction came from the replication oflighting projects across Caterpillar facilities. Caterpillar (Xuzhou)
Ltd. in Xuzhou, China, recently replaced nearly 700 sets of metal
halide lamps with new T5 high bay light ﬁxtures. Environmental
beneﬁts of this project included energy savings of about 634,000 kWh
per year and approximately 450 metric tons of CO2e. Anotherimportant beneﬁ t is realized each time the lamps are serviced;
the new lamps are safer and more convenient to repair.

25 CATERPILLAR INC.

2013 SUSTAINABILITY REPORT

A similar project was undertaken at Caterpillar (Suzhou) Co., Ltd.
in Suzhou, China. Electricity consumption is one of the greater
contributors to GHG emissions at the facility. By analyzing electricity consumption, the facility developed reduction strategies
that included employee awareness and posting electricity-saving
tips, access control for electricity switches and the installationof lower-powered lamps in various areas within the facility.

FOCUS AREA: WATER MANAGEMENT

Water Management
The scarcity of water resources is an issue that crosses cultures,
geographies and industries. Today, water scarcity affects around
700 million people, and current trends indicate the problem will
escalate. By 2025, water security could be an issue for two-thirdsof the world’s population. The implications are so signiﬁcantthat 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 of other industries,
we nonetheless recognize the far-reaching economic, social andenvironmental implications that water scarcity may have in the
future – and have taken steps to mitigate our own consumption.
OPERATIONAL ENTERPRISE WATER CONSUMPTION INTENSITY
76.3
70.3

52.3
45.6

48.8
38.2

2006

48.8

2010

2011

2012

2013

2020
Goal

Absolute thousand gallons of water/
million dollars of revenue(Baseline: 2006)
1 Detailed information on this data can be foundin the Goals & Progress section of this report.

26 CATERPILLAR INC.

2013 SUSTAINABILITY REPORT

1

As we move closer to 2020, we continue to implement conservation
strategies that reduce water use, 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 2013, these types of efforts
have reduced water consumption intensity at our facilities bya total of 36 percent from our 2006 baseline intensity. Our 2013absolute water consumption, including noncontact cooling waterfrom foundry operations, is 4.14 billion gallons of water. While ourwater intensity increased from 2012 to 2013, our absolute water
consumption decreased in that time.
Several 2013 projects demonstrate this ongoing commitment
to water management. At the Prentiss Remanufacturing Facility
in Booneville, Miss., for example, the chemical operations team
identiﬁed an opportunity to decrease water usage by using a“cascading” washing system. Remanufactured products must
be thoroughly cleaned before work can begin, and the teamdiscovered that a washing process that splashed water over theparts in multiple waves consumed less water and required
fewer chemical cleaners. By implementing this process, thefacility was able to cut its annual water usage by 86,300 gallons.
At the Caterpillar Logistics Distribution Center in Grimbergen,
Belgium, a new wastewater treatment process was installedusing common reed plants for on-site sanitary wastewater
treatment, rather than discharging to the city sewer system
directly. The reed plants serve as a natural ﬁltration system toFOCUS AREA: WATER MANAGEMENT

dewater solids in a small, conﬁned area. Evaporation and theunderground ﬁltration system allow the sanitary wastewater to betreated without the addition of chemicals. Similar to constructedwetlands, water trickling through the reed bed is cleaned by
microorganisms living on the root system. Construction of thereed bed was completed in December 2012. Since then, thetreated wastewater has met permitted discharge limits, while
enabling the facility to use an efﬁcient method of on-sitewastewater treatment.
Water conservation initiatives were considered in the earliest
stages of construction planning for our new Caterpillar facility inAthens, Ga. One of the most difﬁcult challenges facing developmentof the Athens site was the quantity of water required for manufacturing operations. Caterpillar worked closely with local county
governments to form a solution to the facility’s water and wastewater needs. As a result, an extensive wastewater treatment
system was installed to treat and recycle water from the paintsystem wash line, the assembly wash bays and the productdistribution center wash bays. This system was designed and built
speciﬁcally for the new facility to treat and recycle or reuse theprocess water used to wash parts. In addition, water-consumption
reduction initiatives – such as water-efﬁcient landscaping andlow-ﬂow toilets in facility lavatories – have led to an increased
environmental awareness among the Athens employees.

Caterpillar Brasil Ltd. in Piracicaba, Brazil, has implemented
several projects that contributed to better water-management
results. Flow-controller devices were installed for taps; reusedwater is now utilized for ﬁre protection systems and the cooling
tower; the machine-washing process has been restructured
for water-management efﬁciencies; and sector metering was
installed for monitoring water consumption associated withspeciﬁc processes. In addition, the facility implemented a new,dry process for cleaning acrylic covers of kit boxes in the logistics
process that saves more than 50 thousand gallons of water per
month, generates zero efﬂuents and reduces cleaning time by
68 percent. The facility is continuing to look for opportunities
to replace consumption of potable water with reused water
sources. The water reuse program has increased eightfold fromintroduction in 2010 through 2013.

ABSOLUTE WATER CONSUMPTION1

1.42 Billion gallons non-contact
cooling water from foundry operations
2.72 Billion gallons enterprise water
consumption excluding non-contact
cooling water from foundry operations

4.14

Billion gallons
Total absolute water consumption
1 Detailed information on this data can be foundin the Goals & Progress section of this report.

27 CATERPILLAR INC.

2013 SUSTAINABILITY REPORTFOCUS AREA: BY-PRODUCT MATERIALS

By-Product Materials
Preventing 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 createsenvironmental beneﬁ ts by reducing our utilization of materials,
energy, water and land. Throughout the past few years, we havedemonstrated great improvements in recycling. Since 2009, ourenterprise recycling rate has been greater than 90 percent. We
are moving from a focus on percent recycled to a goal focused on
reduction of all by-product materials, or prevention of waste.
Caterpillar focuses on by-product material reduction strategies
that are associated with improved efﬁciency and quality measures,as these offer the greatest opportunity to enhance cost competitiveness and reduce the potential for unnecessary short- andlong-term impacts. Some of our by-product material reduction
strategies include:• Disposal/discharge of waste in an appropriate and lawfulmanner – although this is considered as a last resort.
We continue to make gains in our efforts to prevent waste. In
2013, our by-product material intensity decreased 9.4 percent
from our 2006 baseline. In 2013, we generated a total of 698,000
metric tons of by-product materials, and 93.7 percent of thosematerials were recycled.
OPERATIONAL ENTERPRISE BY-PRODUCT MATERIALS INTENSITY1
17.6
15.2
13.8

13.2

12.5

6.9

• Prevention of waste and emissions through improved
efﬁciency and quality measures.
• Remanufacture/rebuild options for our equipment andcomponents that preserve most of the embedded energy
and materials invested in the original production.
• Reuse/recycle strategies that keep valuable materials,
energy and/or water in the Caterpillar value chain and outof costly waste streams.
• Treatment/control options that reduce associatedenvironmental impacts and that may be necessary whenmore efﬁcient or cost-effective measures are not feasible.
28 CATERPILLAR INC.

2013 SUSTAINABILITY REPORT

2006

2010

12.5

2011

2012

2013

2020
Goal

Absolute metric tons of by-productmaterials/million dollars of revenue(Baseline: 2006)
1 Detailed information on this data can be foundin the Goals & Progress section of this report.

FOCUS AREA: BY-PRODUCT MATERIALS

Several Caterpillar facilities engaged in successful by-productmaterial reduction efforts in 2013. Caterpillar Financial Services
Corporation in Nashville, Tenn., launched an expanded waste
removal program that built upon its recycling program in placesince 2009. Although recycling eliminated the majority of building
waste, composting efforts were added to help close the gap toreaching the facility’s 2020 aspirational goal. Additionally, aninternal survey was deployed to help understand employee
resistance to additional recycling. The survey revealed that
employees needed a simpler waste-management process toboost results. Acting on this insight, a revised training program
was initiated; meal container packaging in the facility dining center was replaced with compostable packaging, and new signage
and sort bins for disposing recyclable, compostable and waste
items were placed throughout the building. These efforts paid off.
In the ﬁrst six months, the facility reduced waste by 50 percent,and Caterpillar earned the distinction of being the ﬁrst corporation in Nashville to have an all-building composting program – anachievement that was recognized with an award from the mayor
of Nashville.
Similar efforts have been undertaken elsewhere within Caterpillar.
At our Joliet, Ill., facility, a project with Waste Management led
to the discovery that additional wastes could be recycled. Extra
recycling bins were brought in, and a program was establishedto educate employees and help raise awareness. Two years later,
Joliet has reduced its waste by more than 50 percent. The Joliet
program went a step further by taking a comprehensive look at its
industrial hazardous and nonhazardous waste. The facility initiateda closed-loop recycling process for aluminum oxide, resulting
in more than 2,100 tons recycled to date. They also establishedon-site recycling for acetone and coolant liquids, and initiated a
Sustainable Development Week to raise employee awareness.
Caterpillar Precision Seals in Toccoa, Ga., had a very speciﬁc
waste problem: no feasible recycling process for more than
10 million pounds of sand core waste that comprised about
30 percent of the site’s waste each year. The sand cores were
too large for potential third-party recycle companies.
A year ago, the Toccoa plant learned that a nearby cement
manufacturer had purchased the necessary crushing equipment
for its own use. Caterpillar entered into an arrangement with thecement company to pick up, crush and recycle its sand cores.

29 CATERPILLAR INC.

2013 SUSTAINABILITY REPORT

Similar results were achieved at the Caterpillar facility in Reynosa,
Mexico. There, employees undertook a formal waste management
review, prompted by the need to improve storage for nonhazardous
solid waste. Using a 6 Sigma process, the Reynosa facility identiﬁed three main waste categories: hazardous, nonhazardous andpotentially recyclable. They also identiﬁed points of waste generation and handling ﬂows, and then installed waste control stations
at key points throughout the site. This targeted approach resulted
in a 39 percent drop in 2013 total waste over the prior year and a92 percent reduction in waste costs at the facility.
Caterpillar’s High Performance Extrusions group in Oxford, Miss.,
was able to implement a recycling process to reuse metal working
ﬂuids used in signiﬁcant quantities in the facility’s operations. Thisfacility manufactures high-pressure hydraulic hose couplings,
which involves a machining process with both water and oil-based
cutting ﬂuids that generate a large amount of liquid waste. Previously, this liquid was collected and trucked off-site to an industrial
wastewater treatment facility for further processing.

FOCUS AREA: BY-PRODUCT MATERIALSIn 2012, equipment was purchased and installed at the Oxford
facility for the recovery and processing of water- and oil-based
metal working ﬂuids. In its ﬁrst full year of operation, more than
237,000 pounds of metal working ﬂuid was reused rather than sent
to a treatment facility, which eliminated an estimated 5,700 miles oftruck transportation, or roughly 1,140 gallons of diesel fuel.
TOTAL BY-PRODUCT MATERIALS1

Recycled 93.7%
Disposed 6.3%

Total BPM =698

Thousand metric tons
93.7% was recycled and 6.3% disposed(sent to landﬁll or incineration)
1 Detailed information on this data can be foundin the Goals & Progress section of this report.

30 CATERPILLAR INC.

2013 SUSTAINABILITY REPORTFOCUS AREA: PRODUCT STEWARDSHIP

Product Stewardship
Product stewardship covers the full lifespan of our equipmentfrom the supply chain to the customer’s job site. This means taking
active steps to reduce 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 parts or rebuilt
machines. Caterpillar also works with customers and distributors
to ensure the proper disposal or recycling of end-of-life materials.
Wherever possible, we keep resources in the Caterpillar value
chain through a circular ﬂow of materials, energy and water. Our
focus on developing better systems reduces our need for resources,
maximizes the total life cycle of our products and minimizes thecost of ownership for our customers. Viewing our equipment
through a total life cycle lens allows us to make sustainable progress for communities, the environment and the economy.
We establish and adhere to policies and practices that direct
us to consider sustainability in product design, engineering andmanufacturing in all of our facilities worldwide. In our operations,
Caterpillar’s Environment, Health & Safety Assurance framework
helps ensure that we comply with applicable laws and regulations.
Successfully identifying and managing environmental issues
helps protect the environment we all live in and is a good business practice.

31 CATERPILLAR INC.

2013 SUSTAINABILITY REPORTStandards Harmonization
Industry consensus standards, including those for visibility,
rollover protection structures, braking and sustainability,
are needed for earthmoving 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 teamworks closely with organizations like the ISO to enhancemachine safety standards worldwide. Caterpillar also
provides input to regulatory agencies to help ensure thesmooth introduction of new technologies.

Caterpillar makes management and technical expertise available
to regulatory bodies in advisory roles and provides technicalassistance as 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 infederal advisory committees chartered under the Environmental
Protection Agency.

FOCUS AREA: PRODUCT STEWARDSHIPCUSTOMER SAFETY
Caterpillar’s safety culture extends beyond our internal operations
to include the safety and health of everyone in, on and aroundour products. This commitment encompasses the design andengineering of our products and extends to operator training
and certiﬁcation, solutions for the job site and the tools andresources to improve the workplace culture – all of which arecoordinated through Caterpillar Safety Services and its website,
safety.cat.com.
For example, in 2013 we introduced a working at heights package
for production and retroﬁ t on large mining trucks, providing stable,
secure handrails and ﬂat walk surfaces to protect technicians
while they perform certain service operations. These handrails
can then be removed when the vehicle is put back into use.
Another way Caterpillar promotes customer safety is throughthe development and facilitation of safety leadership and training
programs. Driven by a team of industry-experienced consultants,
Caterpillar Safety Services provides safety-related products andtraining for customers that leverage cultural assessment tools,
continuous improvement processes and a proven formula fordelivering a sustainable culture of safety excellence: the ZeroIncident Performance (ZIP™) Process.

In 2013 we rolled out Speak Up!/Listen Up! for Construction, asafety training tool customized for the construction industry.
Created in collaboration with 16 construction industry leaders,the program aims to strengthen communication on job sites byhelping employees overcome natural anxieties associated withgiving or receiving safety-related feedback. Program materials
include videos, presentation materials, handouts and a facilitator’s
guide. Construction-focused messaging makes the material morecompelling to employees in the industry, and the customization
process aligns with Caterpillar’s strategy to develop products
and services to meet the unique needs of the industries weserve. Speak Up!/Listen Up! for Construction can be deliveredby a customer’s own trainers or facilitated by a Caterpillar safety
consultant in a workshop setting.
Similarly, Caterpillar was instrumental in helping facilitate safety
training and an ongoing continuous improvement process forone of our mining customers, Blaschak Coal in Pennsylvania.
Although the Blaschak safety record, covering three mines andtwo processing sites, was better than the industry average,
Blaschak wanted to make zero-incident performance a corevalue. Leaning on Blaschak’s 30-year relationship with Caterpillar,
we helped the company deliver a one-day safety Leadership
Roundtable for the entire management team, from top leaders
to site managers. Attendees later participated in a Supervisor
Training in Accountability and Recognition Techniques (S.T.A.R.T.)
Workshop that focused on their role in implementing change inthe workplace. Blaschak’s journey to zero continues with Rapid
Improvement Workshops that empower employee-driven
continuous improvement teams to address weaknesses intheir safety culture by building systems that integrate safety
activities into everyday processes.
For full details about how Caterpillar Safety Services meets
customers at any point of need, visit safety.cat.com.

32 CATERPILLAR INC.

2013 SUSTAINABILITY REPORTFOCUS AREA: PRODUCT STEWARDSHIPMATERIAL USE
Caterpillar strives to provide customers with quality equipmentthat provides more value per dollar spent. Our remanufacture andrebuild 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 throughour remanufacturing and rebuild businesses. This starts withdurable products, many designed to be rebuilt two or threetimes. Through our reman and rebuild programs, components
and machines are overhauled, rather than completely replaced.
Reuse of parts reduces waste and minimizes the need for the
raw materials necessary to produce new parts. This system iswhere Caterpillar is making some of its greatest contributions
to sustainable development – keeping nonrenewable resourcesin circulation for multiple life cycles.
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 morethan 40 years, Caterpillar’s remanufactured products have provided
same-as-new performance, reliability and warranty at fraction-ofnew costs, as well as immediate availability that gives customers
more options at repair and overhaul time.

The reman and rebuild programs allow customers to maximize
the built-in value of their equipment by:• Ensuring maximum productivity• Increasing reliability and availability• Ensuring cost-effective performance• Receiving a like-new warranty• Increasing the customer’s return on their investment

The Cat Reman, Solar Turbines and Progress Rail Services
remanufacturing programs – operating around the world –provide customers with lower-cost products, shorter downtime
and quick, dependable service. Cat Reman alone operates
17 facilities in eight countries.
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 training
and data provide feedback to dealers on parts to replace or reuseto achieve expected longevity of rebuilt components. Reuse ofcomponents helps us use materials and energy more efﬁciently.

33 CATERPILLAR INC.

2013 SUSTAINABILITY REPORT• Providing the customer with a higher resale value• Providing the lowest total owning and operating
life cycle costs• Preserving the majority of energy and materials required
to make the original component or machine
Given the signiﬁcant role that reman and rebuild operations
play in our sustainability initiatives, we created a new customer
goal in 2013 around this area of the business. Using 2013 asa baseline year, our goal is to grow the reman and rebuild
business revenues by 20 percent by 2020.

FOCUS AREA: PRODUCT STEWARDSHIPREMAN BUSINESS GROWTH1

68%

64%

64%

REMAN END-OF-LIFE

REMAN END-OF-LIFE“TAKE BACK” PERCENT 1“TAKE BACK” BY WEIGHT 1

94%

91%

95%

94%

93%

161
122

45%

171

174

2012

2013

134

18%

2009

2010

2011

2012

2013

2009

64%

Revenue increase(Baseline: 2006; future reporting
will use 2013 as baseline.)

2010

93%

2011

2012

2013

Actual end-of-life returns/
eligible returns x 100

2009

2010

174

2011

Millions of poundsof end-of-lifematerial received

1 Detailed information on this data can be found in the Goals & Progress section of this report.

One of the ways we intend to meet that goal is through ourvarious retroﬁt kit offerings, available to customers through theCat ® dealer network. In 2013, for example, we expanded ouroffering of Dynamic Gas Blending (DGB) retroﬁ t kits to include
kits for Cat 3512C (HD) Engines used in well-stimulation
applications. Extensively tested earlier in the year, these
DGB kits allow for maximum substitution of diesel fuel withnatural gas during high-pressure pumping operations,
without compromising performance, safety and reliability.

REBUILD BUSINESS GROWTH1Our rebuild revenue decreased 13 percent from 2012 to 2013.
(Future reporting will use 2013 as baseline.)
1 Detailed information on this data can be found in the Goals & Progress sectionof this report.

Retroﬁ t kits such as DGB are ideal for customers looking to
upgrade existing equipment for fueling alternatives, or whocompete in markets where power density and engine response
are the primary purchasing considerations. Retroﬁ t kits are
not limited to fuel systems; in addition to fuel conversion kits,
Caterpillar provides customers with kits to upgrade many typesof engines, braking and hydraulic systems, emissions, lighting
and instrument/cab features.

34 CATERPILLAR INC.

2013 SUSTAINABILITY REPORT

Increasing Global Access to Reman Products
While global customers have driven demand for reman products,
not all customers can beneﬁ t 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 theirnational economy and place trade barriers around reman products.
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 aviable reman product. On the other hand, a nontariff barrier might
be customs ofﬁcials categorizing remanufactured goods as“used” goods, which cannot be imported under any circumstanceor can only be imported after complying with special inspection,
certiﬁcation, licensing or other onerous requirements. Similarbarriers are often faced when customers seek to export theircores and return them to Caterpillar in exchange for a remanufactured engine or component. With the durability, performance,
quality and a warranty equal to that of all other Caterpillar
engines and components, Cat Reman products should betreated like new, not “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 participatingin the global economy should treat reman products the same way
as new ﬁnished goods are treated.

FOCUS AREA: PRODUCT STEWARDSHIP

Caterpillar has worked with policymakers in several countries
to open markets and expand reman options for our global
customers, providing them with cost-effective, sustainableoptions for extending the life of their existing equipment.
Caterpillar teams, including Cat Reman and Global Governmental
Affairs, continue in ongoing efforts to inform and educate
government regulators around the world on the sustainable
beneﬁ ts of Cat Reman products.

CUSTOMER SUSTAINABILITY
Caterpillar helps our customers improve their sustainability
performance. As customers increasingly demand greater energy
efﬁciency, we are further motivated to help our customers reduce
their energy use and, as a result, greenhouse gas (GHG) emissions of our products. We collaborate with customers to delivercustomized solutions that help optimize energy use, and provide
training for customer operators on how to use our equipment
more efﬁciently.

18%

Reported revenue derived from products,
services and solutions that demonstrate
an improved sustainability beneﬁ t overexisting offerings.1
1 Detailed information on this data can be found in theGoals & Progress section of this report.

With our 320E L Hydraulic Excavator, for example, Caterpillar
is supplying customers with a C6.6 ACERT Engine that, alongwith the Cat Clean Emissions Module, meets U.S. Tier 4 Interim,
EU Stage IIIB and Japan MLIT Step 4 emission standards.
Even when operating in high-horsepower and high-production
applications, the 320E L performs a similar amount of work as
our D Series model with signiﬁcantly reduced fuel consumption.
The achievement is delivered through improved engine speed
management, integrated engine and hydraulic electronic control
strategies, introduction of advanced pump and valve technologies
and optimized component selection that deliver customer value
and machine efﬁciency. These strategies deliver class-leading
efﬁciency in the highly competitive 20-ton market.

35 CATERPILLAR INC.

2013 SUSTAINABILITY REPORT

Customers in China are receiving similar beneﬁts from our E Seriesmini hydraulic excavators, such as the 306E, which combinesa higher-efﬁciency engine with a higher-efﬁciency hydraulicsystem. The new Cat C2.6 Turbo Engine has high-altitude capability
and provides 15 percent more engine efﬁciency – allowing themachine to run at a lower engine speed while delivering the same
productivity. In addition, a “ﬂow sharing” high-efﬁciency hydraulicsystem provides maximum balance between machine movement,
speed and engine power. A standard/power duo switch allows
the engine to run with higher fuel efﬁciency while in standard
mode, with the capability of ramping up with additional power
when needed for harder applications.
Our motor grader product group is delivering efﬁciencies for ourcustomers by making the Integrated Cross Slope System standard
for our new 16M and 24M motor graders. The Integrated Cross
Slope System helps operators easily maintain the desired slopeby automating the control of one end of the blade. Field testing
indicates that Cross Slope allows operators to spend up to
12.5 percent less time to achieve grade. The testing results also
demonstrate up to 35 percent increase in average cross slope
accuracy and up to 91 percent increase in cross slope consistency. These efﬁciencies translate directly into more sustainable
operations. Depending on the model used and frequency of usageof the Integrated Cross Slope System, we estimate customers
could save between approximately 350 to 700 gallons of fuel permonth, resulting in reduced CO2 emissions.
Helping customers reduce their energy and emissions is not limited
to advances in our equipment – it also extends to servicing that
equipment as well. Our Filters and Fluids Group in Mossville, Ill.,has developed a pair of exclusive and innovative products that
address a common equipment touch point: oil and ﬁlter changes.
Fluid and ﬁlter replacement is an essential part of equipment
maintenance and by its very nature generates waste, increases
the carbon footprint of the machine and is energy intensive. With
the introduction of HYDO Advanced hydraulic oil, we now canprovide a high-performance, exclusive formulation that triples theuseful life of the hydraulic oil, thus reducing waste oil associatedwith recurring customer maintenance. In addition, a line of Cat ®
proprietary ﬁlters changes the entire dynamic of ﬁlter serviceability: only a ﬁlter element needs to be changed while the housing
is reused, signiﬁcantly reducing the amount of waste generated
by ﬁlter changes. These two products provide customers with
substantial savings and sustainability beneﬁ ts, including reducing

FOCUS AREA: PRODUCT STEWARDSHIP

an estimated 31,000 tons of CO2 for 2013, reducing overall maintenance cost for customers by as much as 40 percent and preventing
the landﬁlling of as many as 14 million ﬁlters, projected through 2018.

JOB SITE EFFICIENCY
Several years ago, Caterpillar recognized that our customers arelooking for us to do more to help them capture full value from theirassets. We developed a new business model for delivering thisvalue to our customers. We call this proprietary business model
Collaborative Solutions by Caterpillar. This solutions businessmodel, currently delivered by our Job Site Solutions (JSS) team,helps customers ﬁnd new and innovative ways to improve theiroperations and be more competitive in the marketplace. 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. JSS leverages Caterpillar’s ﬁnancial, technological and management expertise to tailor solutions
based on the customer’s own needs, typically in the areas ofsafety, sustainability, equipment, productivity and ﬁnancials. As
a result, every solution is different and can range from a shortterm consulting engagement to a multiyear ﬂeet ownership andmaintenance solution.

75%
27%

Increase in number of machines coveredby services agreements from 2012 to 2013.1
Increase in managed ﬂeet hours from 2012 to2013.1 (Future reporting will use 2013 baseline.)
1 Detailed information on this data can be found in theGoals & Progress section of this report.

Historically, customers in the mining and construction industries
have been the primary focus of JSS. In recent years, the team has
increasingly been applying the processes, technology and bestpractices learned in these industries to a broader scope of industries, including agriculture, waste, forestry and transportationand distribution centers. For example, agriculture, primarily forcustomers with large dairy and feedlot operations, now accounts
for approximately 15 percent of total JSS volume.

36 CATERPILLAR INC.

2013 SUSTAINABILITY REPORTThe results for our agricultural customers have been signiﬁcant.
New machines have delivered increased efﬁciency and reduced
emissions through the latest technologies. On average, thesecustomers have been able to reduce idle times by 20 percent, andoperator-caused events, such as equipment wear and tear andsafety issues, by 25 percent. Much of this success is based on theunique optimization process that JSS delivers. The JSS team does
more than simply develop a solution; it implements its recommendations jointly with the customer. As a result, responsibilities areallocated according to the respective core competencies of JSS
and the customer, thereby maximizing results and developing
more sustainable systems.

FOCUS AREA: SUPPLY CHAIN & DEALER NETWORK

Supply Chain & Dealer Network
Our independent dealers and suppliers serve as a critical link
between our company and our customers. We rely on them tocollaborate with us in building and maintaining the long-standing
customer relationships that have made 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 maintainwith suppliers and dealers through trust, communication andshared rewards.
Our Cat ® brand of products and services are distributed througha worldwide network of Cat ® dealers (the Cat ® dealer network),
48 of which are located in the United States and 130 locatedinternationally. The large majority of our worldwide dealers are
independently owned and operated, and many of these businesses
have been in families for multiple generations. The Cat dealer
network brings value to customers through unmatched service,integrated solutions, after-sales support, fast and efﬁcient parts
fulﬁllment and world-class rebuild capabilities. We work with
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 brandvalue propositions.
We seek long-term business relationships with suppliers that
demonstrate strong values and ethics, in concert with those ofCaterpillar, and that conform to all local, federal and international

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2013 SUSTAINABILITY REPORT

laws. Caterpillar’s standard forms of agreement and purchaseorder terms require our suppliers to represent that they will comply
with all applicable laws and regulations. These include productregulatory standards, environmental and employee safety requirements, wage and labor laws, anti-corruption laws and various
export regulations.
Caterpillar has also developed an Assurance of Supply Center(ASC) to support 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 toclose gaps that may obstruct an end-to-end perspective of our
supply chain network. The ASC continues to develop the ability
to monitor and mitigate risks surrounding our suppliers’ capacity,
capability and ﬁnancial position, as well as monitoring the greater
geo-political environment, vulnerability to any natural disasters
and other risks to the source of supply. This is achieved throughadvanced visibility, analytics and supply chain case management
services. The ASC ensures that proper orders are delivered fromour supply network, enabling the enterprise to provide world-classdelivery performance, high quality and low total cost to meet ourcustomer commitments today and into the future.
In December 2013, Caterpillar launched the Supplier Code of
Conduct. It formally expresses the values we expect our
suppliers will adhere to, and was derived from Caterpillar’sWorldwide Code of Conduct.

FOCUS AREA: SUPPLY CHAIN & DEALER NETWORKIn 2013, Caterpillar’s intensive focus on supply chain management
earned it a prestigious spot on Gartner’s Supply Chain Top 25
list. Gartner, an information technology research and advisory
company, ranked several global supply chain networks onpeer opinion, return on assets, inventory returns and revenue
growth. It’s our second consecutive year on the Gartner list,
and Caterpillar is proud to have moved up two spots with our2013 ranking.

Supplier Diversity
Diversity within our supply base is important to Caterpillar and
we strive to mirror the varied markets in which we operate. Ourpassion for continuous improvement is the driving spirit behind
our Supplier Diversity Initiative as we strategically position

Helping Fund Shark Research
In February 2013, Caterpillar announced a multiyear partnershipwith OCEARCH, helping sponsor the organization’s researchon global shark populations. By capturing, tagging and monitoring sharks worldwide, OCEARCH is learning more about thelife and behavior patterns of these animals that play a criticalrole in the oceanic ecosystem.
Our global, independent dealer network is critical to helping
plan the expeditions and servicing the vessel. The work ourcustomers do are tough jobs and require equipment that canstand up to the needs of operators – from digging a mine thatwill produce the coal to fuel a community for years to come,to laying the foundation for the next great structure rising highabove a city’s skyline. Cat ® equipment can stand up to thechallenging needs of our customers. Along with the equipment,
our customers have the conﬁdence in knowing that the Cat ®
dealer network is never beyond their reach.
The group’s current research vessel, the M/V OCEARCH, is aﬂoating laboratory powered by two 3412 800HP turbocharged
Cat ® engines and three Cat ® generators. In 2012, the engines
were overhauled with Cat ® parts, resulting in decreased fuel38 CATERPILLAR INC.

2013 SUSTAINABILITY REPORT

diverse suppliers (minority-owned small businesses, veteranowned small businesses and many others) who can provide
quality products and services, innovation, cost competitivenessand volume ﬂexibility in support of our business goals.
Our goal is to provide sourcing opportunities to a wide range ofdiverse business types throughout our organization. Seamlessintegration of these businesses allows for synergies as we
assist them in growth and development. In the summer of 2013,
Caterpillar was recognized as one of the “Best of the Best” byBlack EOE Journal, which partnered with three other diversity
publications to evaluate U.S. companies on their outreach andaccessibility to the African-American, Hispanic/Latino, female
and veteran populations.

consumption. The generators
are energy efﬁcient and suited
to the ship’s purpose – which
includes powering a 55,000pound-capacity researchplatform with the ability tohandle 5,000-pound sharks.
With sponsorship from Caterpillar, OCEARCH is also providing
free educational materials designed to engage kindergarten
through high school students in the U.S. in subjects like physics, math, biology, chemistry, oceanography, social sciencesand geography. It’s based on the OCEARCH team’s research,
including data collected by the Global Shark Tracker poweredby Cat ® products.
With Caterpillar’s help, in 2013 OCEARCH led expeditions from
Jacksonville, Fla., and Cape Cod, Mass. During the Jacksonville mission, OCEARCH tagged and released Lydia, a 14 foot6 inch mature, female great white shark weighing 2,000 pounds.
In 2014, the organization plans research trips to Australia,
Indonesia and the Galapagos Islands.

FOCUS AREA: SUPPLY CHAIN & DEALER NETWORKCollaborating with Suppliers on Global Print Solutions
As Caterpillar has grown, the number of product offerings,
manufacturing facilities, dealers and customers also has
grown. Current, audience-speciﬁc and cost-effective productsupport and sales literature is essential to support all of thesebusinesses and stakeholders – and that adds up to a lot of paperand space. Customer Services Support collaborated with
Midland Information Resources (now Elanders Americas)
to establish a global printing solution that reduces the useof materials and resources.
Elanders’ solution was a regional print-on-demand service
for 90 percent of Caterpillar literature. This solution eliminated39 CATERPILLAR INC.

2013 SUSTAINABILITY REPORT

the need to store literature inventory in a 50,000-square-footwarehouse in Peoria, Ill., and then ship it to dealers aroundthe world. Regional printing, along with the development ofa streamlined automated process to combine multiple prints,
has reduced literature warehouse space by 90 percent, shipping
costs by an average of 80 percent for overseas facilities andhas eliminated the emission of more than 600,000 kg of CO2
into the atmosphere. In addition, by printing only the amountneeded “on-demand,” the amount of scrap paper generated
annually has decreased by 6.6 million sheets or the equivalentof two fully loaded 777F Cat ® trucks.

FOCUS AREA: GOVERNANCE & ETHICS

Governance & Ethics
Caterpillar’s governance structure provides leadership,
accountability and transparency to company business on behalfof our employees and our stockholders. Our corporate governanceframework serves the interests of stockholders with the highest standards of responsibility, integrity and commitment, andin compliance with all applicable laws. These standards aredeveloped and implemented by our Board of Directors and global
management team who oversee the company’s performanceand governance policies.
Caterpillar’s Board of Directors currently has 12 members. This
number permits 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 threestanding 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.
While not required by law, Caterpillar has established several
corporate governance policies that are meant to reﬂect thecompany’s emphasis on good corporate governance. These
include Guidelines on Corporate Governance Issues, a Worldwide
Code of Conduct, stock ownership requirements for ofﬁcers anddirectors, mandatory retirement ages for directors, and an ofﬁcer
compensation claw back policy. Caterpillar policy also requires

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2013 SUSTAINABILITY REPORT

1) former employees of its independent auditors who were senior
managers or higher to wait a minimum of three years before
becoming eligible for certain management-level positions atCaterpillar, and 2) the rotation of independent audit partners incompliance with the requirements of the 2002 Sarbanes-Oxley Act.

ETHICS
Caterpillar’s reputation is something we value as much as our
products and our customers. In 1974, Caterpillar ﬁrst introduced
a Worldwide Code of Conduct. Our current Code of Conduct, called
Our Values in Action, deﬁnes what Caterpillar stands for and what
we believe in, documenting the uncompromisingly high ethicalstandards 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 Valuesin Action – Integrity, Excellence, Teamwork and Commitment.
Through our Code of Conduct, we envision a work environment
all can take pride in, a company others respect and admire, anda world made better by our actions. In 2014, Sustainability becamea core value for Caterpillar.
Full details on the Caterpillar Code of Conduct can be found at
http://www.caterpillar.com/company/strategy/code-of-conduct.

FOCUS AREA: GOVERNANCE & ETHICS

Corruption & Bribery
Caterpillar believes that fair competition based on quality,
innovation and overall value is fundamental to free enterpriseand economic growth. Bribery and corruption can have serious
social, environmental and economic consequences – impeding
trade, competition, investment and economic growth; andlimiting a nation’s ability to reduce poverty and improve standardsof living.
In some areas of the world where Caterpillar does business,bribery and corruption are signiﬁcant issues. We ﬁrmly believethat fair competition is fundamental to free enterprise. For thisreason, we observe bribery, antitrust and competition laws
wherever we do business, and we reinforce these messages
through advocacy and periodic employee training throughout
our company. We have also made enforcement of thesestandards part of Our Values in Action.

RISK MANAGEMENT
Risk is an inherent part of conducting business, and especiallyso 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 a robust internal management system, and engages
in constructive regulation and public policy discussions that
beneﬁ t employees, customers and stockholders. We manage
operational, strategic, ﬁnancial and compliance risk throughtwo programs: the Business Risk Management (BRM) Program
and the Caterpillar Ethics & Compliance Program.
The BRM Program helps business units identify, track and mitigate
more than 50 discrete risks to the enterprise.

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2013 SUSTAINABILITY REPORT

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 the business unit and enterprise level.
The results of this BRM risk assessment are incorporated into
future action plans to mitigate the identiﬁed risk and to create
a “heat map” of key company risks. The heat map is shared withthe global management team and the Audit Committee/Board.
Compliance risks are reviewed as part of the BRM risk assessment
process and managed under Caterpillar’s Ethics & Compliance
Program. These risks are anti-bribery, antitrust/competition law,
conﬂicts of interest, customs, data protection and privacy, employee
rights, employee health and safety, environmental, export controls,ﬁnancial, government contracts, information security, productregulatory, product regulatory emissions, security of people andproperty, and technical information.
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 and their related discussions, Caterpillar
can better evaluate risk levels and gauge the potential impact ofvarious outcomes on our ability to achieve strategic goals. This
process also provides opportunities to leverage internal tools
in order to conduct scenario planning and stress testing of ourstrategy, goals and objectives.

FOCUS AREA: GOVERNANCE & ETHICS

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 sustainablebusiness conditions for our company, our suppliers and ourstockholders. 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 toour employees and other stakeholders, including dealers, suppliers and retirees. In some countries, we may encourage them toexpress their views to lawmakers – if this practice is consistent
with local custom and citizenship rights. Our leaders will alsoutilize opportunities to interact with government ofﬁcials directlyto advocate our legislative positions.
Finally, we support many organizations and associations thatchampion public policies that contribute to the success andgrowth of the business community and manufacturing industry
as a whole.
We:• Monitor state, federal and international government
affairs issues.
• Advocate and seek implementation of policies and legislationthat allow Caterpillar to succeed.
• Partner with elected ofﬁcials and policy makers to ensure
their understanding on the key issues that impact our business such as trade, tax, infrastructure, climate and energy.

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2013 SUSTAINABILITY REPORT

Where allowable by law, Caterpillar may make corporate
contributions to campaigns, individual candidates or politicalaction committees that support public policies that we believe
will have an impact on our business. As outlined in Our Valuesin Action, all corporate contributions are approved by the chief
executive ofﬁcer and are reported annually to the Board of
Directors Public Policy Committee. Full details on these contributions can be found at http://www.caterpillar.com/nl/company/
corp-overview/global-issues.html.
Where corporate contributions are not permitted, Caterpillar
employees also fund and administer the Caterpillar Political
Action Committee (CATPAC). CATPAC is entirely funded throughvoluntary contributions by eligible U.S. employees. A Steering
Committee comprised of Caterpillar nonofﬁcers oversees all
donations made by CATPAC. The Committee comprises sevento 12 U.S.-based employees who represent a diverse mix of U.S.
locations and business units. CATPAC contributions go to federal
and state political campaigns.

FOCUS AREA: ECONOMIC DEVELOPMENT

Economic Development
The Caterpillar organization and our products support economic
growth around the world, both in developed countries andemerging markets. The road to sustainable progress begins witha road, and Caterpillar’s products provide critical contributions tothe construction of that road. From growth economies, where
new infrastructure is required, to developed areas where aging
networks need improvement, our products help ensure thatinvestments in transportation, energy, telecommunications,waste and water infrastructure produce maximum beneﬁ ts.
We support these investments as key enablers for sustainable
development, economic growth, competitiveness and long-term
job creation.
In order to promote economic development, governments havea responsibility to maintain appropriate levels of productive
investment in infrastructure while providing a level playing ﬁeld
for suppliers. Leveraging private investment can bring additionalsources of funding, provided that investment is supported by fairand predictable policies to maximize the certainty and timelinessof ﬁnancial returns.
Growth-enhancing infrastructure investments, however, cannot
be fully delegated to the private sector, and public ﬁnancing
should continue to comprise the bulk of infrastructure investment.
Governments can inﬂuence the affordability of infrastructure
through the facilitation of permitting, the reduction of administrative burden and the simpliﬁcation of related requirements. The
role of government for infrastructure ﬁnancing should be basedon national needs, including urbanization, commerce and trade
43 CATERPILLAR INC.

2013 SUSTAINABILITY REPORT

policy, transportation, disaster prevention and mitigation, defense
and global competitiveness.

Promoting Development through Advocacy
Caterpillar believes that the best means of economic
development and the efficient distribution of goods andservices is the pursuit of business excellence and proﬁ t ina climate of free enterprise, free trade and unencumberedcompetition. Further, such international exchange promotes
better understanding across borders and cultures, leading to amore peaceful world. These beneﬁ ts have been demonstrated
by the enormous rise in post-World War II gross domestic
product and living standards in countries participating ininternational commerce. By contrast, many isolated countries
have frequently not experienced such advantages.
Economic growth through international trade is essential forpoverty reduction, but also comes with challenges. Chief among
them is the need to balance economic, environmental and social
policies to achieve sustainable development. When this balanceis achieved, sustainable development becomes a shared objective
and provides a common framework for allowing environmental
and trade policymakers to engage stakeholders, analyze issues
and evaluate policy more efﬁciently.
Caterpillar has a long history of advocating for free trade. Ourinterest comes not from the perspective of any one country,
but from our global perspective. We believe that companies
compete best in a free trade environment. When trade barriers

FOCUS AREA: ECONOMIC DEVELOPMENT

are removed, we can better meet our global customer needs andgrow more efﬁciently. Our suppliers, in turn, also have an easiertime satisfying our global sourcing requirements. Our employees
around the world, and their respective communities, beneﬁt froma higher standard of living, as they have access to more productchoices at lower prices. Free trade also allows us to provide
more and better job opportunities because open markets leadto improved competitiveness.
Caterpillar will continue to promote policies that reduce trade andinvestment barriers. At the same time, we will continue to speakout against protectionist policies. We believe that developed
countries should adopt policies that allow the beneﬁts of the global
economy to be extended to developing countries. To this end,
Caterpillar also recognizes that humanitarian and developmental
assistance is necessary to ﬁght disease, improve living conditions
and combat corruption – all of which can be barriers to free tradeand economic growth in the world’s poorest countries.

Promoting Development
through Job Creation
Our facilities in more than 180 countries provide quality jobs andopportunities for the people in those locations – not to mention thejobs also created within our extended dealer network and supply
chain. The importance of manufacturing jobs to the economy – notjust in the United States, but worldwide – cannot be overstated.
According to the Bureau of Economic Analysis, manufacturingcontributed $1.87 trillion to the United States economy in 2012, an
8 percent increase from the year before. For every dollar spent in
the manufacturing industry, another $1.48 is added back into theeconomy – 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 tocommunities varies by site, and they often vary according toeconomic cycles. However, jobs at Caterpillar make a signiﬁcant
contribution to local employment and economic development. For
example, in 2013 Caterpillar announced plans to begin manufacturing Cat ® material handlers in Northern Ireland. The machines
are used for moving scrap and bulk materials, as well as in forestry
applications. The new operations will require 100 positions.
44 CATERPILLAR INC.

2013 SUSTAINABILITY REPORTNorthern Ireland First Minister Peter Robinson said, “The projectis especially important as it has the potential to help attract additional projects from the wider Caterpillar family. This new project
for Northern Ireland will also offer our local workforce the opportunity to develop key transferable skills that will add value to ourmanufacturing sector, bringing further economic beneﬁ t.”
Beneﬁts from new Caterpillar operations are also being felt in
Dubai, United Arab Emirates, where the new Caterpillar Middle
East Parts Distribution Center opened in March 2013. This
500,000-square-meter facility plans to employ 130 people andprovides aftermarket parts support in the East Africa and Middle
East regions. This opening followed two recently opened parts
distribution centers, one each in Spokane, Wash., and Arvin,
Calif., that will bring 150 new jobs between those two communities. In Athens, Ga., our new manufacturing and assembly facility
is projected to create 1,400 new Caterpillar jobs and an estimated additional 2,800 positions in the supply base. Also in 2013,
Caterpillar announced the opening of two new facilities in the
Jiangsu Province of China, as well as a new powertrain facility
in Wuxi – coupled with a 17,000-square-meter expansion of ourexisting Wuxi facility.

Promoting Development
through Microﬁnancing
The Caterpillar Foundation aids local economic development,
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 inOpportunity International for more than 20 years, supporting
various development efforts in more than 20 countries aroundthe world.
The Caterpillar Foundation’s investment has helped Opportunity
International provide life-changing micro loans to more than
75,000 small entrepreneurs, creating 30,000 jobs and giving morethan 60,000 rural families access to basic banking services. The
majority of Opportunity International’s clients are women, whoreinvest their earnings into health care, education and theircommunities – helping to break the cycle of generational poverty.

FOCUS AREA: HUMAN RIGHTSHuman Rights
We believe that Our Values in Action – Caterpillar’s Worldwide
Code of Conduct – effectively articulates our long-standing
support for, and commitment to, human rights and the dignity of all
people. These values create a work environment that recognizes
the rights of our employees around the globe. Caterpillar employees
and management receive regular training and participate in annual
assessments to ensure that they are aware of and able to apply

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2013 SUSTAINABILITY REPORT

the principles contained in Our Values in Action. We also maintaininternal reporting mechanisms to hold employees and management
accountable for failing to comply with Our Values in Action. Externally, we seek suppliers and business allies who also demonstratestrong values and ethical principles and avoid those who violate thelaw or fail to comply with the sound business practices we promote.

FOCUS AREA: PHILANTHROPY

Philanthropy
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:“As individuals and as a company, we contribute signiﬁcant timeand resources to promoting the health, welfare and economic
stability of our communities around the world. We encourage all
employees to participate in community activities that promote
the common good. We believe that our success should also
contribute to the quality of life in, and the prosperity and sustainability of, communities where we work and live.”
Through strategic investments and collaborations, we leverage
our unique 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.
In addition, our employees volunteer their time, talents and otherresources to efforts that help communities.

46 CATERPILLAR INC.

2013 SUSTAINABILITY REPORTThe Caterpillar Foundation
Founded in 1952, the Caterpillar Foundation has contributed morethan $550 million to help make sustainable progress possiblearound the world. The Caterpillar Foundation mission is to turnthe spiral of poverty into a path to prosperity by investing in thoseproven to yield the best results – women and girls. We champion
programs that support:• Environment: natural resource management• Education: early childhood, STEM (Science, Technology,
Engineering and Math), leadership and workforce readiness• Emergency: food, shelter, water, disaster relief

FOCUS AREA: PHILANTHROPY

Volunteer Hours
IN 2013 WE LAUNCHED A VOLUNTEER TIMETRACKING SYSTEM IN THE U.S.
In this ﬁrst year of collecting self-reported data
our U.S. employees logged 17,435 hours
to 343 organizations.
In 2013, the Foundation also continued its support of the World
Resources Institute (WRI) project to promote the developmentof sustainable cities in China, India and Brazil. Through thissmart-cities initiative, WRI will partner with up to ﬁ ve cities
on strategies to increase energy efﬁciency, curb greenhousegas emissions and improve water quality, urban mobility andland use. Speciﬁc project goals include solutions that will reach
1 billion people with new public transportation options; avoid
617,000 metric tons of CO2 emissions in the transportation area;
reduce nitrogen, phosphorus and ammonia water levels by
15 percent; and provide more reliable energy to 11 million industrial, corporate and residential consumers. In total, the Caterpillar
Foundation expects to support this project with $12.5 million overﬁve years.

2013 CATERPILLAR FOUNDATION INVESTMENTS

International 55%
U.S. 45%$57.6

47 CATERPILLAR INC.

Million invested in 2013.

2013 SUSTAINABILITY REPORTThe volunteer efforts of our employees distinguish our people
and demonstrate that they are leaders not only in the workplace,but also in the community. Just this year, for example, Caterpillar
employees earned the Bronze U.S. President’s Volunteer Service
Award for logging more than 6,000 volunteer hours with the
Junior Achievement (JA) program. Our people volunteeredin more than 400 classrooms across seven U.S. states, withmore than 2,700 volunteer hours logged with JA programs ininternational locations like Brazil, Indonesia, Mexico, Panama,
Singapore and the United Kingdom.
To help provide us with a comprehensive view of our volunteer
activities, the Caterpillar Foundation launched a Volunteer Tracking
System in June 2013 to capture the time employees and retirees
spend supporting their communities. Hours volunteered for any
501(c)(3) U.S. nonproﬁ t are eligible for tracking purposes. With
the insights gained from collecting this data, we will be better
positioned to design future programming and maximize our volunteer impact.

FOCUS AREA: PHILANTHROPY

U.S. Voluntary Contributions
Our employees not only volunteer their time to worthy causes, theyalso contribute their ﬁnancial resources. Caterpillar has joinedwith our employees to support giving in two ways – through ourCaterpillar 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
to employees – the Caterpillar Employee United Way Appeal. All
employee contributions raised through this solicitation are distributed back to the United Way of their choice, along with a dollarfor-dollar match from the Caterpillar Foundation. The individual
United Way then invests in programs in the community. This isa 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 2013,
a total of $12.6 million was donated to the United Way – $6.3 million in employee contributions, and a $6.3 million match from theCaterpillar Foundation.
The Caterpillar Foundation is proud to offer the Matching Gifts
Program to support the monetary contributions that U.S. employees, retirees and directors make to worthy causes in the areasof arts and culture, two- and four-year colleges and universities,
environment and public policy. The program provides a dollarfor-dollar match on contributions between $50 and $2,000 per
organization with no limit to the number of organizations perperson. Last year the Foundation matched $4.3 million throughthis program. For more details on the Matching Gifts Program,
visit http://www.caterpillar.com/en/caterpillar-foundation.html.

Caterpillar Foundation Grantee Chad Pregracke
Named CNN Hero of the Year
CNN honors 10 heroes each year at the “CNN Heroes:
An All-Star Tribute” award show. This year, Caterpillar
Foundation grantee, Living Lands & Waters Founder Chad
Pregracke, was named the 2013 CNN Hero of the Year for
his work with the environment. Pregracke was awarded$250,000, in addition to the $50,000 for being named a Top
10 Hero, to continue his work, and he pledged a portionof that for each of the other Top 10 Heroes.
Pregracke and his 12-person crew live on a barge fornine months out of the year, traveling around the country
cleaning up America’s rivers. About 90 percent of thegarbage found is recycled. The rest is disposed of properly.
The barge is also used as a “ﬂoating classroom,” where
Pregracke and the rest of the staff educate visiting students
on the harm of polluting the ecosystem. In addition, thegroup is also halfway to their goal of planting 1 million
trees along the country’s shorelines.
The Caterpillar Foundation has invested in Living Lands& Waters for many years, and Pregracke has worked
with Caterpillar volunteers through river cleanups, tree
giveaways and tree planting events. About 70,000 total
volunteers have helped Pregracke collect more than
7 million pounds of trash in the past 15 years.

48 CATERPILLAR INC.

2013 SUSTAINABILITY REPORTGOALS & PROGRESS

Goals & Progress
Doing More with Less
We announced our current 2020 aspirational sustainable
development goals for operations, products, services and solutions in 2006, using that same year as a baseline. A midpoint
review in 2013 revealed that we are not only on track to meetthese goals, but also are exceeding our expected performancefor several environmental goals related to operations, while
delivering signiﬁcantly higher revenues, compared to the 2006
baseline year. Simply put, we are doing more, with less water,energy, material consumption and GHG emissions. As a result,
we have decided to revise our 2020 goals to better align withwhat we project for our business going forward.

Looking Forward
For those areas where we are on track to exceed our existing
aspirational goal, we are raising the bar to challenge ourselvesto achieve better year-over year-comparisons. We also arerevising several of our 2020 goals to reﬂect our business growth
as an additional measure of progress. Absolute measures arehelpful to quantify data over an extended time period. However,absolute measures are problematic when evaluating our progresson environmental improvement while also growing the businessto meet customer demand. Intensity measures, deﬁned as theenvironmental impact divided by the total reported sales and revenue,
more accurately convey our effort to operate more efﬁciently
while signiﬁcantly growing the company and are particularly
useful for business planning purposes. Put another way, we
aspire to increasing proﬁ table growth, while reducing environmental intensity.
49 CATERPILLAR INC.

2013 SUSTAINABILITY REPORT

Similarly, we are revising our product stewardship goals to betteralign with our customers needs. We are focusing on enhanced
customer safety; improving the sustainability of our products,
services and solutions offerings; leveraging technology andinnovation to improve customer job site efﬁciency; and increasing the availability of remanufactured or rebuilt products. Thischange will concentrate our efforts on helping customers maximize life cycle beneﬁts while minimizing resource consumption
and cost of ownership.

Key Considerations in our Revised Goals
Among the considerations taken into account in revising our 2020
goals was better alignment with our Sustainability Principles andStrategy, launched in 2012. These principles state: when we
prevent waste, improve quality and develop better systems, wenecessarily improve the environmental performance of operations
through the execution of our business plan.
In addition, the execution of our business plan has signiﬁcantly
changed our company’s footprint since 2006. Today, we havemore facilities, a wider product breadth and an unprecedented
global footprint that continues to evolve. Therefore, we are
maturing our metrics by better integrating environmental operations performance with business performance. In doing so,sustainability is not simply something we do; rather, it is a majorpart of who we are and how we make progress possible.

GOALS & 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.

2020 GOALS FOR OPERATIONS

50%
Reduce our recordable
workplace injury rate to
0.6 and lost-time case rate
due to injury to 0.15.

Reduce energy intensity by
50 percent. (Baseline: 2006)

50%

50%

Reduce water consumption
intensity by 50 percent.

Reduce by-product materials
intensity by 50 percent.

(Baseline: 2006)(Baseline: 2006)20%
Use alternative/renewablesources to meet 20 percent
of our energy needs.

50%
Reduce greenhouse gas
emissions intensity by
50 percent. (Baseline: 2006)

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

2020 GOALS FOR PRODUCT STEWARDSHIP

100%
SafetyGoal: Provide leadershipin the safety of people in,on and around our products.

50 CATERPILLAR INC.

Products, Services
and Solutions
Goal: Leverage technology
and innovation to improvesustainability of our products,
services and solutions forour customers.

2013 SUSTAINABILITY REPORT

Systems Optimization
Goal: Increase managed
ﬂeet hours by 100 percent.
(Baseline: 2013)20%
Reman and Rebuild
Goal: Increase
remanufactured andrebuild businessrevenues by 20 percent.
(Baseline: 2013)

GOALS & PROGRESSSAFETY GOALS & PROGRESS

Vision ZeroGoal:

is our commitment to creating a zero-injury workplace. We continue to maintaina strong focus on personal safety and strive for zero injuries. It’s not about the
metrics, but about our people!

Reduce our recordable workplace injury rate
to 0.6 and lost-time injury case rate to 0.15.1

6.22

We have improved our Recordable Injury
Frequency rate by 87 percent from our 2003
baseline year and 24 percent from our lastreporting period.

1.18

2003

2010

0.78

1.03

2011

1.02

2012

0.78

0.6

2013

2020
Goal

Recordable Injury Frequency (RIF)(Recordable injuries per 200,000 hours worked)
1 Data prior to 2013 has been restated due to a) acquisitions,b) data updates realized from improved accuracy, c) divestituresand d) updates to goal reporting format.

51 CATERPILLAR INC.

2013 SUSTAINABILITY REPORT

2.90

2003

We have improved our Lost-Time Case
Frequency Rate by 90 percent from our2003 baseline year and 3 percent fromour last reporting period.

0.35

0.28

0.30

0.29

0.15

2010

2011

2012

2013

2020
Goal

0.29

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

GOALS & PROGRESSENERGY GOALS & PROGRESS

Goal:

Reduce energy intensity by 50 percent.1

692
610
501

473
417

346

2006

2010

501

2011

2012

2013

2020
Goal

Since 2006, Caterpillar has been working to increase its operationalenergy efﬁciency by 25 percent by 2020. Our efforts have been so
successful that we actually exceeded that goal by 22 percent in 2012.
This performance clearly indicated that it was time for a more ambitious
goal. To this end, we have revised our 2020 aspirational goal fromrequiring a 25 percent increase of operational energy efﬁciency torequiring a 50 percent decrease of operational energy intensity fromour 2006 baseline. The change in our goal structure from “efﬁciency”
to “intensity” better aligns with our other operational intensity goals,
and further embeds environmental metrics and targets in our businessplanning and performance processes. Operational energy intensity
decreased 28 percent from 2006 to 2013.
1 Data prior to 2013 has been restated due to a) acquisitions, b) data updates realized from
improved accuracy, c) divestitures and d) updates to goal reporting format.

Absolute gigajoules energy use/million
dollars of revenue(Baseline: 2006)

Goal:

Use alternative/renewable sources tomeet 20 percent of our energy needs.
28.0%
9.4%

Renewable
Alternative

18.2%
13.8%

14.8%

2010

2011

28%

18.6%
Renewable Energy: Caterpillar deﬁnes renewable energy as energy resources that are naturally
replenishing over a short period of time and virtually inexhaustible. Power generation examples
include wind, solar, hydro, geothermal, tidal, wave, biomass and anaerobic digestion.

2012

2013

Alternative/renewable energy(Sum of renewable and alternative electricalenergy use/total electrical energy use x 100)

52 CATERPILLAR INC.

Renewable energy sources increased from 2012 to 2013. In 2012,
Caterpillar deﬁned alternative energy and began internally collecting
progress data for alternative energy sources. Alternative energy,
per the deﬁnition below, is included for 2013. With the addition ofalternative energy sources, we have achieved 28 percent energy
from alternative or renewable sources.

2013 SUSTAINABILITY REPORT

Alternative Energy: Caterpillar deﬁnes alternative energy as any source of usable energy thatoffers substantial environmental beneﬁts compared to the conventional sources of energy that it
replaces. Power generation examples include renewable sources listed above, plus landﬁll gas,coal mine and abandoned mine methane, combined heat and power (cogen, trigen and quadgen),coal with carbon sequestration and localized power generation. Transportation fuel examples
include renewable sources listed above, plus pure methanol, ethanol blends of 85 percent ormore with gasoline, pure natural gas, natural gas blends of 85 percent or more with diesel fuel,liquid fuels domestically produced from natural gas (compressed natural gas, liqueﬁed natural
gas and gas to liquid fuels), propane, coal-derived liquid fuels, hydrogen and electricity.

GOALS & PROGRESSGHG EMISSIONS GOALS & PROGRESS

Goal:

Reduce greenhouse gas emissions intensity
by 50 percent.1

72.1

Through 2013, Caterpillar has reduced GHG emissions intensity by
39 percent over our 2006 baseline year. While our intensity increased,
our absolute GHG emissions decreased from 2012 to 2013. Our total
absolute GHG emissions equaled 2.47 million metric tons for the year.

62.8
47.2
39.6

2006

2010

44.3

2011

2012

TOTAL ABSOLUTE GHG EMISSIONS

44.3
36.1

2013

1.02 Million Metric Tons
Scope 1 GHG Emissions(Direct emissions)1.45 Million Metric Tons
Scope 2 GHG Emissions(Indirect emissions frompurchased electricity,heat or steam)

2020
Goal

Absolute metric tons of CO2e/
million dollars of revenue(Baseline: 2006)

2.47

Million metric tons
Total absolute GHG emissions

1 Data prior to 2013 has been restated due to a) acquisitions, b) data updates realized from improved accuracy, c) divestituresand d) updates to goal reporting format.

WATER GOALS & PROGRESS

Goal:

Reduce water consumption intensity
by 50 percent.1,2

76.3

Through 2013, we have reduced water consumption intensity at ourfacilities by a total of 36 percent from our 2006 baseline intensity. Our
2013 absolute water consumption, including noncontact cooling waterfrom foundry operations, is 4.14 billion gallons of water.

70.3

52.3
45.6

ABSOLUTE WATER CONSUMPTION

48.8
38.2

1.42 Billion gallons non-contact
cooling water from foundry operations

2006

2010

48.8

2011

2012

2013

2.72 Billion gallons enterprise water
consumption excluding non-contact
cooling water from foundry operations

2020
Goal

Absolute thousand gallons of water/
million dollars of revenue(Baseline: 2006)

4.14

Billion gallons
Total absolute water consumption

1 Water consumption intensity does not include noncontact cooling water from foundry operations.
2 Data prior to 2013 has been restated due to a) acquisitions, b) data updates realized from improved accuracy, c) divestituresand d) updates to goal reporting format.

53 CATERPILLAR INC.

2013 SUSTAINABILITY REPORTGOALS & PROGRESSBY-PRODUCT MATERIALS GOALS & PROGRESS

Goal:

Reduce by-product materials intensity
by 50 percent.1

17.6
15.2
13.8

13.2

12.5

6.9

2006

2010

12.5

2011

2012

2013

2020
Goal

Absolute metric tons of by-productmaterials/million dollars of revenue(Baseline: 2006)

1 Data prior to 2013 has been restated due to a) acquisitions, b) data
updates realized from improved accuracy, c) divestitures and d) updates
to goal reporting format.

Recycled 93.7%
Disposed 6.3%

Total BPM =698

Thousand metric tons
93.7% was recycled and 6.3% disposed(sent to landﬁll or incineration)

54 CATERPILLAR INC.

2013 SUSTAINABILITY REPORT

Caterpillar is transitioning away from our zero-waste aspirational goal
to a goal focused on reduction of all by-product materials, or preventionof waste. Preventing waste means improving the efﬁciency of products,
processes, services and solutions, which not only reduces cost, butalso leads to environmental beneﬁ ts associated with reduced materials,
energy, water and land utilization. Where by-product materials are
generated, we focus on remanufacturing and rebuilding and reuse andrecycling. When more efﬁcient measures are not feasible, treatment/
control options can reduce associated environmental impacts and, as alast resort, disposal/discharge in an appropriate and lawful manner may
be considered acceptable. The use of the term by-product materials in
our updated 2020 aspirational goal reﬂects our focus on preventing
waste, and effectively managing all that remains.
In 2013, our by-product material intensity decreased 9.4 percent fromour 2006 baseline. In 2013, we generated a total of 698,000 metrictons of by-product materials, and 93.7 percent of those materials
were recycled.

GOALS & PROGRESSLEED GOALS & PROGRESS

Goal:

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

In 2013, the following Caterpillar facilities received certiﬁcationin accordance with the U.S. Green Building Council’s LEED-NC(New Construction) certiﬁcation process or comparable criteria:

Facilities completing construction in 2013 that
met LEED or comparable green building criteria.

For example,

LEED Gold• Caterpillar Visitors Center, Peoria, Ill.
LEED Certiﬁed• Zatec Solar Turbines Reman Facility, Czech Republic
The following facilities were designed and constructed following
LEED-NC or comparable criteria, but were not certiﬁed:• Caterpillar Tianjin Ltd., Tianjin, China• China Proving Ground, Tongzhou, China• Large Mining Truck Facility, Batam, Indonesia• Logistics, Arvin, Calif.
• Logistics, San Luis Potosí, Mexico• Mini Hydraulic Excavator & Small Track Type Tractor
Facility, Athens, Ga.
• Shot Blast Facility, Victoria, Texas

55 CATERPILLAR INC.

64%

2013 SUSTAINABILITY REPORT• GOLD – Peoria, Ill., Caterpillar Visitors Center
Opened in 2012, the Caterpillar Visitors Center incorporates avariety of energy and water conservation features that reducewater use by as much as 45 percent compared to a typicalbuilding and energy use by 35 percent.
• Certiﬁed – Zatec, Czech Republic, Remanufacturing Center
In 2013, this Solar Turbines Remanufacturing Center became
the second manufacturing facility to achieve LEED certiﬁcation
status in the Czech Republic. The facility successfully incorporated a high-efﬁciency lighting scheme, thermal insulationand low-water plumbing ﬁxtures in order to reduce water andenergy usage. The facility also utilized construction materials
with up to 20 percent recycled content and recycled 75 percentof the waste generated during construction.

GOALS & 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:
18%

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

Reported revenue derived from products, services and solutions that
demonstrate an improved sustainability beneﬁt over existing offerings.

Progress: In 2013, 18 percent of Caterpillar’s reported revenue was from products, services
and solutions that demonstrated an improved sustainability beneﬁt over existing offerings. This
revenue includes remanufacturing, component overhauls at Cat ® dealers, power generation
using alternative energy sources, customer job site optimization and innovative new products.
While the enterprise revenue decreased from 2012 to 2013, the percentage of those revenues
from these products, services and solutions increased in that time.

SYSTEMS OPTIMIZATION

Goal:

Increase managed ﬂeet hours by 100 percent.
(Baseline: 2013)

Progress: Caterpillar’s Job Site Solutions (JSS) team was formed in2005 and has grown signiﬁcantly since that time. JSS offers customers
complete solutions that are designed to improve performance on thejob site and to increase the sustainable beneﬁ ts of the work performed.
Future reporting on this goal will be conducted using 2013 results asa baseline.

56 CATERPILLAR INC.

2013 SUSTAINABILITY REPORT

27%

Increase in managed ﬂeet hours from 2012 to 2013.

75%

Increase in number of machines coveredby services agreements from 2012 to 2013.

(Future reporting will use 2013 baseline.)GOALS & PROGRESSPRODUCT STEWARDSHIP GOALS & PROGRESSREMAN AND REBUILD

Goal:

Increase remanufactured and rebuild business revenues by 20 percent.
(Baseline: 2013)

Progress: Our reman and rebuild businesses reduce waste and minimize
the need for the raw materials necessary to produce new parts. Thissystem is where Caterpillar is making some of its greatest contributions
to sustainable development – keeping nonrenewable resources incirculation for multiple life cycles. Future reporting on this goal will be
conducted using 2013 results as a baseline.

REMAN BUSINESS GROWTH1,2

68%

64%

64%

REBUILD BUSINESS GROWTH1,2

Our rebuild revenue decreased 13 percent from 2012 to 2013
(Future reporting will use 2013 as baseline.)

REMAN END-OF-LIFE

REMAN END-OF-LIFE“TAKE BACK” PERCENT 1“TAKE BACK” BY WEIGHT 1

94%

91%

95%

94%

93%

161
122

45%

171

174

2012

2013

134

18%

2009

2010

64%

2011

2012

2013

Revenue increase(Baseline: 2006; future reporting
will use 2013 as baseline.)

2009

2010

93%

2011

2012

2013

Actual end-of-life returns/
eligible returns x 100

2009

2010

174

2011

Millions of poundsof end-of-lifematerial received

1 Data does not include Progress Rail, Electro-Motive or Solar Turbines.
2 Data prior to 2013 has been restated due to a) acquisitions, b) data updates realized from improved accuracy, c) divestitures and d) updates to goal reporting format.

57 CATERPILLAR INC.

2013 SUSTAINABILITY REPORTGOALS & PROGRESSPERFORMANCE AT-A-GLANCEWORKPLACE SAFETY
Recordable Injury Frequency (RIF)1

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

6.22

2.90

1 Data prior to 2013 has been restated due to a) acquisitions,b) data updates realized from improved accuracy,c) divestitures and d) updates to goal reporting format.
2 Data does not include Progress Rail, Electro-Motive or
Solar Turbines.
3 Water consumption intensity does not include noncontact
cooling water from foundry operations.

1.18

2003

2010

1.03

2011

1.02

2012

0.78

2013

0.35

0.60

2003

2020
Goal

2010

0.28

0.30

0.29

2011

2012

2013

0.15
2020
Goal

ENVIRONMENTAL IMPACT
Energy Intensity1

Alternative/Renewable Energy(Absolute gigajoules energy use/
million dollars of revenue)(Baseline 2006)(Sum of renewable and alternative electricalenergy use/total electrical energy use x 100)
Renewable
Alternative

692

28.0%
9.4%

610

GHG Emissions Intensity1(Absolute metric tons of CO2e/
million dollars of revenue)(Baseline 2006)
72.1
62.8

501

473

18.2%

417
346

2006

2010

2011

2012

2013

2020
Goal

13.8%

2010

18.6%

47.2

14.8%

2011

2012

2013

2006

Water Consumption Intensity1,3

By-Product Materials Intensity1(Absolute thousand gallons of water/
million dollars of revenue)(Baseline 2006)(Absolute metric tons of by-product materials/
million dollars of revenue)(Baseline 2006)
17.6

76.3
70.3

15.2
13.8
52.3
45.6

13.2

12.5

48.8
38.0
6.9

2006

2010

2011

2012

2013

2020
Goal

58 CATERPILLAR INC.

2006

2010

44.3
39.6

2011

2012

2013

2020
Goal

2013 SUSTAINABILITY REPORT

2010

2011

2012

36.0

2013

2020
Goal

GOALS & PROGRESSPERFORMANCE AT-A-GLANCE
REMAN
Reman Business Growth1,2
Revenue increase(Baseline 2006; future reporting
will use 2013 as baseline.)

Reman End-of-Life”Take Back” Percent2

Reman End-of-Life”Take Back” by Weight2

Actual end-of-life returns/
eligible returns x 100

Millions of pounds of end-of-lifematerial received

68%
64%

64%

91%

94%

95%

94%

93%

171

174

2012

2013

161
134
122

45%

18%

2009

2010

2011

2012

2013

2009

2010

2011

2012

2013

1 Data prior to 2013 has been restated due to a) acquisitions,b) data updates realized from improved accuracy,c) divestitures and d) updates to goal reporting format.
2 Data does not include Progress Rail, Electro-Motive or
Solar Turbines.

59 CATERPILLAR INC.

2013 SUSTAINABILITY REPORT

2009

2010

2011

BUSINESS CASE STUDIESOUR PRODUCT LIFE CYCLE

Sustainable at Every StepPRODUCT DEVELOPMENT

SUPPLY CHAIN/LOGISTICS

Optimizing the product life cycle begins We move thousands of supplies andparts around the world to manufactureon the drawing boards, where ourand service our equipment during
development and engineering teams
the course of its life cycle.
focus constantly on designing productsthat deliver an improved, more
efﬁcient performance.

Section Title

REMANUFACTURING

CUSTOMER APPLICATIONAt Caterpillar, at the end of acomponent or product’s useful life,that component or product is still
valuable. Instead of disposing of worn
components and machines, Caterpillar
has developed remanufacturing andrebuild businesses focused on
restoring them to like-new condition
to achieve another productive life
cycle with minimal need for
additional resources.

There is no better way to appreciate
the ability of our products to makesustainable progress possible thanwhen they are at work for ourcustomers.

60 CATERPILLAR INC.

2013 SUSTAINABILITY REPORTMANUFACTURING
In the product life cycle, ourmanufacturing process puts
a high premium on quality,
environmental responsibility
and workforce safety.

CUSTOMER OPERATIONSDEALERSHIP SUSTAINABILITY

Our global network of dealers plays
At Caterpillar, a sustainable producta pivotal role in our sustainability
life cycle includes one that provides
efﬁcient and safe equipment operation success. They provide comprehensive
knowledge and service capabilities
for our customers – and one in which
for our products and have deep
technology is increasingly theunderstanding of our customers’ needs
common enabler of improved
and opportunities. They work daily tosustainability performance.
improve efﬁciency and performance,
ensuring life cycle beneﬁts are
maximized while resource use
and costs are minimized.

BUSINESS CASE STUDIES: PRODUCT DEVELOPMENT

Product Development
Optimizing the product life cycle begins on the drawing boards,
where our development and engineering teams focus constantly
on designing products that deliver an improved, more efﬁcientperformance.
The 988 family of wheel loaders celebrated a big milestone
in 2013, but that doesn’t mean we’re resting on its 50 years ofsuccess. With more than 20,000 machines produced to date,members of Caterpillar’s Advanced Components & Systems
Division (ACSD), collaborating closely with the product group,
are still ﬁnding ways to improve the Cat ® 988 Wheel Loader.
The ACSD team collaborates with machine groups to help design
or reengineer Cat ® products to become more fuel efﬁcient.
Together, their work has resulted in energy savings by as muchas 40 percent, simply by ﬁnding ways to put power to the groundmore efﬁciently.
To further improve their effectiveness, the ACSD team recently
adopted a new work model – a product-speciﬁc, cross-functional
structure through which improved design is driven largely bycustomer input.
In particular, the new structure impacts how the ACSD teamlooks at Systems and Vertical Integration (VI) – optimizing theperformance of components working together in systems. Basedin part on customer feedback, ACSD prioritizes components andsystems by their level of VI, which indicates the level of productdifferentiation. Components with a high VI are where the ACSD
team now focuses the majority of their design efforts.
61 CATERPILLAR INC.

2013 SUSTAINABILITY REPORTThe ACSD team believes that efﬁcient power systems offer
Caterpillar a competitive advantage, and they are demonstratingthat with the new 988K Wheel Loader. “After hearing feedback
from our customers, one thing stood clear,” said Todd Tuntland,
product application specialist. “They wanted a more efﬁcientmachine, especially when it comes to fuel consumption.”
ACSD and our Large Wheel Loader team decided to address fuelsavings in several ways. First, they focused on how to reduceengine speed, or revolutions per minute (rpm). The introductionof Economy Mode, for example, allows operators to lock thethrottle – automatically reducing engine speed without sacriﬁcing performance. Similarly, an engine kickdown feature lowers rpms
during idle operation, while a new type of hydraulic ﬂow sharing
produces maximum hydraulic ﬂow at lower rpms. The capability tolock the throttle was maintained in the 988K for operator comfort
and ease of use. Additional 988K improvements include a programmable engine idle shutdown feature and a quieter cab.
The 988K ofﬁcially debuted in April 2013. The machine’s fuelefﬁciency is impressive – a 15 percent reduction over comparable models, with certain operations providing a 20 percent
reduction. In addition, an interior redesign allows operators tomonitor fuel efﬁciency in real time, right in the cab. In total, theintegrated machines developed by ACSD, including the 988K, areprojected to conserve 5.8 million gallons of diesel fuel in 2013.
Overall, it is an impressive performance – one that makes thework of our ACSD and product teams a worthwhile investmentthat beneﬁts both our customers and the environment.

BUSINESS CASE STUDIES: SUPPLY CHAIN/LOGISTICS

Supply Chain/Logistics
We move thousands of supplies and parts around the world tomanufacture and service our equipment during the course of
its life cycle. As a pair of projects in 2013 demonstrates, these
add up to a signiﬁcant opportunity to minimize the overall impactof our products’ environmental footprint.
At the Caterpillar Ground Transportation Operations Center –Americas (GTOC-A) in Morton, Ill., new freight optimization
software has cut our CO2 emissions by 4,700 metric tons in 2013.
The new software allows the GTOC-A to optimize ground shipping through dynamic load planning that determines optimaltransportation modes and consolidates existing transportation
movements. Through these simple methods, facilities currently
managed by the GTOC-A have seen a 6 to 10 percent monthly
reduction in transportation spend, fewer travel miles throughload consolidation, plus improved trailer utilization costs. These
improvements result in fewer trips, lower fuel consumption andfewer CO2 emissions.
Through 2013, the freight optimization program has allowed the
GTOC-A to achieve some impressive results, which we expect
to get even better. The GTOC-A’s managed network is only half
implemented; it will eventually track all inbound and outboundground transportation in North America.

62 CATERPILLAR INC.

2013 SUSTAINABILITY REPORTOur shipping needs, however, aren’t limited to groundtransportation, nor are they limited to North America. We’ve
seen similar improvements with our management of sea
containers through the new Container Cross Dock (CCD) model.
Our Logistics team noticed that Caterpillar historically focused
most of its overseas transport on point-to-point shipping, with
an emphasis on getting materials from one location to anotherby a specified date. This resulted in some sea containers
shipping underweighted or underutilized, since the primary
driver was the delivery date.
To create a more efficient process that optimizes shipping
utilization and delivery date requirements, the Logistics teamcreated the CCD model to combine sea freight by type for betterload optimization and to better coordinate the reuse of importcontainers for exports. The team also began better managing
truck carrier usage by creating a strategic “hub and spoke”
network to minimize transportation requirements between
CCDs and destination facilities.
Two examples of the new model include the United Kingdom
CCD in Chesterﬁeld, Derbyshire and the Kobe CCD in Japan. In
Chesterﬁeld, Caterpillar created a CCD hub by installing automated processes such as receipt scanning, freight dimensioning,
and load planning and data transmission. Similarly, in Kobe the
new CCD hub installed a new management system, hired a special
on-site logistics manager and redesigned internal and external
processes with our logistics and supply chain teams.

BUSINESS CASE STUDIES: SUPPLY CHAIN/LOGISTICS

The advantages of the CCD model were immediately apparent.
In its ﬁrst year, the average sea container weight for the U.K.
CCD increased by more than 65 percent, resulting in 30 percent
fewer containers being shipped and removing about 170 tons of
CO2 emissions per month from the atmosphere. The results
were also impressive in Japan. There, the Kobe CCD increased
the average container weight by more than 17 percent, shipped
17 percent fewer containers and prevented about 140 tons of CO2
emissions from the atmosphere per month.
The CCD model has proven so successful that we are planning
to replicate it at four new facilities in 2014: Savannah, Ga.;
Antwerp, Belgium; Chicago, Ill.; and Shanghai, China.

Collaborating with Suppliers
In 2013, Caterpillar collaborated with several suppliers toinvestigate options for eliminating lead from sleeve-bearing
coatings and reducing volatile organic compounds (VOCs)
from our production process. These sleeve bearings, used
for Cat ® large wheel loaders, have a coating that traditionallycontains lead. By working with suppliers, Caterpillar engineers have identiﬁed alternate coatings that are lead-free,
improve on our high-performance quality requirements andresult in a reduction in solvent use in the application process –thereby reducing the VOC emissions during production.
Our suppliers in the United States and Europe have alreadytransitioned to the new coating, and we are currently working with suppliers in the Asia-Paciﬁc region to do the same.
By changing to a lead-free requirement of sleeve-bearing
coatings for our suppliers, we are able to drive procurement
globally and meet the most stringent EU Restriction ofHazardous Substances (RoHS) directives ahead of schedule.

63 CATERPILLAR INC.

2013 SUSTAINABILITY REPORTBUSINESS CASE STUDIES: MANUFACTURING

Manufacturing
In the product life cycle, our manufacturing process puts a highpremium on quality, environmental responsibility and workforce
safety. Our focus on preventing waste, improving quality anddeveloping better systems, improves the efﬁciency of our manufacturing processes and reduces utilization of materials, energy,
water and land.
In 2013, Caterpillar Work Tools in Waco, Texas, implemented the
Zero-Incident Performance (ZIP™) Process to begin improving
its safety culture systematically. Facility Manager John Vizner
said the ZIP Process was a change from his team’s previous
approach to safety management, in which dozens of concurrent
initiatives failed to deliver desired results.
Between 2009 and 2012 the facility’s employee base rose nearly
450 percent, from 54 employees to 237, and its recordable injury
frequency (RIF) grew at an even faster rate. Going into 2013 withthe challenge of reducing a 9.51 RIF rate, leaders decided it wastime to take a different approach to safety management, a journey
to zero-incident performance.
A safety steering team was formed and tasked with guiding
the improvement process. The team had representation frommanagement, the safety department and front-line leadership.
With guidance from Caterpillar Safety Services, the Waco Safety
Steering Team agreed to focus on three speciﬁc areas for improvement in 2013 – start-up meetings, safety observations and incident
analysis. For each, a continuous improvement team comprised of
64 CATERPILLAR INC.

2013 SUSTAINABILITY REPORT

front-line employees developed a new or improved process during
a three- to four-day Rapid Improvement Workshop.
A member of the safety steering team and foreman on ﬁrst shift,
Randy McLaughlin, is tasked with making sure employees havethe resources needed to operate safely and efﬁciently. “We justlike to get stuff done as fast as we can,” McLaughlin said. “Now
we’re encouraging people to slow down, think about what could
happen if you don’t do things the right way. It might take a little
longer, but it’ll be worth it in the long run.”
One by one, the solutions were deployed facility-wide, andpositive results quickly followed. In just one year, the facility’s
Recordable Injury Frequency dropped by 60 percent, an astoundingachievement. The numbers tell only part of the story, however.
Behind the impressive data is an invigorated, dedicated workforce paying greater attention to hazards, communicating more
openly and building workable, ﬂexible solutions that error-proof
processes; a culture of personal accountability for safety has
developed.
“The metrics demonstrate obvious success, but what I reallylike to see is the increased interaction and engagement about
safety,” Vizner said. “I won’t be satisﬁed until we get to zero,
but with a rapidly growing workforce I recognize that we’ve
made solid improvement.”
Additional examples of Caterpillar’s commitment to improving
manufacturing sustainability can be found in the Focus Areas –Energy & Climate, Water Management and By-Product Materials.

BUSINESS CASE STUDIES: DEALERSHIP SUSTAINABILITY

Dealership Sustainability
Our global network of dealers plays a pivotal role in oursustainability success. They provide comprehensive knowledge and service capabilities for our products and have deep
understanding of our customers’ needs and opportunities. They
work daily to improve efﬁciency and performance, ensuring
life cycle beneﬁts are maximized while resource use and costs
are minimized.

rate, with 2013 totals of 312,000 pounds of recycled lead, 35,000
pounds of recycled plastic and 17,000 gallons of recycled acid.
The program’s success is being recognized throughout our value
chain, and similar programs are now being explored in Australia,
China, Columbia and other countries.

Recycling Millions of Tons of Scrap
Caterpillar’s global dealer network has taken a signiﬁcant step
forward in materials management with the introduction of theCat ® Battery Recycling Program throughout North America. The
beneﬁts of recycling lead acid batteries are obvious. The process
harvests lead, acid and plastic for reuse. It minimizes our consumption of raw materials, reduces harmful waste, creates recycling
jobs and protects natural resources.

The Cat ® Battery Recycling Program is a great example of asustainable solution achieved by collaborating with one of our
suppliers; in addition, Caterpillar helps suppliers and customers
with their own sustainability goals. Through the work of Cat ®
dealer Quinn Company, SA Recycling LLC (SA Recycling) is one
such example.

Our program, together with our dealers and East Penn ManufacturingCo., is easy to administer and guarantees the proper recycling andreuse of spent lead acid batteries – safely, efﬁciently and properly –including the reprocessing of sulfur fumes during the smelting
process for use in fertilizer production. The program accepts any
type of lead acid battery – regardless of size or brand.

SA Recycling operates more than 50 recycling facilities in Southern
California, Nevada and Arizona, exporting 2.5 million tons of ferrous
and non-ferrous materials to markets in Asia each year. SA Recycling has established itself as a sustainability leader by offeringclients all types of recycling and scrap metal services and embracing sustainability throughout their operations.

To engage our North American dealers in the new program,
Caterpillar launched a recognition campaign and created a
dedicated customer website, including a video featuring Mike Roweof Discovery Channel’s Dirty Jobs. Our dealers have embraced thisprogram because it is a sustainable business that allows them toprovide a valuable service to their customers. Their commitment
and hard work resulted in recycling batteries at double the 2012

The solar panel installation at their Anaheim location – one of
the largest solar installations in the city – provides the facility
with a half-megawatt of energy, enough to power 120 homes.
SA Recycling also is one of the industry leaders in stormwater
management. Their on-site process involves reducing stormwater exposure where possible, and the ﬁltration and testingof stormwater runoff in order to conﬁrm it is managed properly

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2013 SUSTAINABILITY REPORTBUSINESS CASE STUDIES: DEALERSHIP SUSTAINABILITY

and acceptable to discharge into a catch basin. Finally, at SA
Recycling’s Terminal Island location they installed a regenerative
thermal oxidizer (RTO), which signiﬁcantly reduces volatileorganic compound (VOC) emissions from the facility’s material
shredders. That RTO, to the company’s knowledge, is the only
one of its kind being used on a material shredder – or it will be
until SA Recycling installs a similar unit at its Anaheim facility.
SA Recycling has embraced sustainability, and they also turnto Quinn Company, their longtime Cat ® dealer, for ways that they
can make even more of an impact. Since 2007 when the recycler
purchased 42 Cat ® products, Quinn Company has been supporting
SA Recycling growing their operations as well as reducing theirenvironmental footprint.
With the recent addition of two 988K Wheel Loaders and four
Material Handlers, including new 322D and 330D machines, Cat ®
products now comprise more than 95 percent of SA Recycling’s
400-plus equipment ﬂeet. What’s more, Quinn Company has
regularly collaborated with SA Recycling to help them selectnew equipment or rebuild existing equipment in ways that support
the company’s sustainability focus. The new D-Series Material
Handlers have high fuel efﬁciency, reduced engine emissions thatmeet EPA Tier 3 standards and the option of using biodegradable
hydraulic oil – innovative Caterpillar technology that allows theuse of oil that is fully decomposed by microorganisms. Even when
SA Recycling needed help at several locations meeting new
California Air Resources Board (CARB) emission standards, Quinn
Company stepped in to provide compliance support and equipment upgrades where needed to help the company meet the
CARB requirements.
But if you ask George Adams, CEO of SA Recycling, about his
company’s relationship with Caterpillar and Quinn Company, he’ll
tell you it simply comes down to quality, reliability and service.
“The difference is that we rebuild our Cat ® equipment andkeep on using it,” said Adams.

66 CATERPILLAR INC.

2013 SUSTAINABILITY REPORTA Sustainability Role Model for Dealers
When Caterpillar wanted to conduct a Facility Planningtraining/workshop at a Cat ® dealer facility in 2013, we
decided to add a day dedicated solely to sustainablefacility planning and construction. That decision made it
only natural that we would select Cat dealer Cashman
Equipment to host the event. In 2009, when Cashman’s new
corporate headquarters opened, it was the largest LEEDcertiﬁed industrial campus in the entire state of Nevada.
LEED stands for the U.S. Green Building Council’s Leadershipin Energy and Environmental Design, and requires thatcertiﬁed buildings meet a stringent set of construction,
sourcing and environmental standards. In achieving a LEEDGold certiﬁcation, Cashman set the standard for sustainability
in Cat ® dealerships.
At the workshop, representatives from eight dealerships
spent the day learning about planning processes and sustainable dealer practices. MaryKaye Cashman, chairmanof the board and CEO of Cashman Equipment, welcomed
the attendees and shared her commitment and passion forsustainability. Presentations and discussions were led by
Dr. Tim Lindsey, Caterpillar global director of sustainable
development; Curt Carlson, vice president of design, SH
Architecture, Las Vegas, Nev.; Jerry Zupancic, corporate
facilities manager, Cashman Equipment; and Mike Rabe,
Caterpillar market professional for dealer and customer
facility planning.
Though Cat dealerships have no obligation to pursue LEED
guidelines, we encourage them to explore this process andsupport their efforts to balance business and environmental concerns.

BUSINESS CASE STUDIES: CUSTOMER OPERATIONS

Customer Operations
At Caterpillar, a sustainable product life cycle includes one
that provides efﬁcient and safe equipment operation for ourcustomers – and one in which technology is increasingly thecommon enabler of improved sustainability performance.

Delivering Improvement through Fuel Efﬁciency
Our new 336E H is a hydraulic hybrid excavator system that
captures then reuses energy that would otherwise have been
wasted – lowering operating costs without sacriﬁcing poweror productivity. The 336E H takes fuel efﬁciency to an even higher
level through three technologies that 1) conserve fuel using engine
power management, 2) optimize performance using restriction
management via the patented Cat ® Adaptive Control System (ACS)
valve and 3) reuse captured energy via the hydraulic hybrid swing
system. S.T. Wooten Corporation, working in North Carolina, isbeneﬁting from cost reductions that are a result of fuel savingsas their hybrid purchase helps to widen the roads in preparation
for the 2014 U.S. Open Championships. Operators are impressedwith the machine’s cycle-time speed, power and how quietly themachine works in their truck loading application. They are also
realizing an approximate 27 percent reduction in fuel consumption versus what a standard 336E might experience in a similar
application. Strack, Inc. – another contracting ﬁrm – has reported
a fuel consumption savings of up to 40 percent in their undergroundutility application. Caterpillar’s hydraulic hybrid excavator systemtechnology is proving the value to diverse customers in diverse
sets of applications.

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Our investments in technology that meets U.S. EPA Tier 4emissions standards have been among the most signiﬁcant inCaterpillar history. This technology will soon make its initial
impact on passenger rail, thanks to an agreement between
Electro-Motive, our Progress Rail subsidiary; and Metrolink, theSouthern California Rail Authority, for up to 20 low-emission
F125 Series passenger locomotives. The purchase makes
Metrolink the ﬁrst passenger railroad in the U.S. to purchasenew transit locomotives that comply with Tier 4 standards.
Delivery is slated to begin in 2015.
The EMD F125 is a 4,700 horsepower locomotive that can travelat speeds of up to 125 mph using a turbocharged, 20-cylinder
Cat C175-20 Diesel Engine. By meeting Tier 4 standards, theEMD F125 reduces emissions over Tier 0 locomotives by up to
85 percent.

Delivering Improvement through Fuel Diversity
Delivering customer value through greater operational ﬂexibility
and lower fuel costs is at the heart of our Caterpillar natural gas
strategy. Dynamic Gas Blending™ technology, for example, has
led to the ﬁrst-ever dual-fuel engine – utilizing both diesel andnatural gas – for select Cat ® 3500 Series engines. In production
since July 2013 on land drilling, production and well-service
applications, the DGBTM system allows an engine to run on diesel
and natural gas simultaneously, with gas substitution rates of up
to 70 percent. In North America the DGBTM dual-fuel technology

BUSINESS CASE STUDIES: CUSTOMER OPERATIONS

is available as a retroﬁ t kit. Exported engines are available with
DGBTM dual-fuel capability from the factory, along with retroﬁ t
kit offerings. The customer beneﬁ ts are clear: DGBTM can lower
fuel costs by more than 50 percent compared to traditional diesel
operation, while providing equivalent performance, as well as
the ﬂexibility to run on a wide variety of fuels – from associated
gas to liquiﬁed natural gas (LNG).
In June 2013, we shipped our ﬁrst MaK dual-fuel engine, theM 46 DF, from our Rostock, Germany, facility. Building on its
marine engine legacy, Caterpillar Motoren designed the M 46 DF
to operate with up to 99 percent gas substitution, as well as 100
percent marine diesel oil (MDO) or heavy fuel oil (HFO), without
sacriﬁcing engine operational reliability, efﬁciency or serviceability, and still meeting IMO II emission standards. The M 46 DF
shares the same footprint as its predecessor M 43 C, providing
the opportunity to retroﬁ t M 43C engines without signiﬁcantchanges to engine room or the exhaust gas system.
The SEM branded 650B Wheel Loader from Caterpillar(Qingzhou) Ltd. operates on LNG, providing attractive value andalternate fuel options for our customers in this market. LNG
is not only less costly than many other forms of fuel, but has
a much higher storage density than compressed naturalgas – making it more suitable as an alternative to diesel fuelwithout sacriﬁcing durability or productivity. Following pilot
tests, the SEM branded 650B LNG-powered Wheel Loader
entered production during the second half of 2013.

Delivering Improvement throughBetter Environmental Performance
The Cemex Lyons limestone quarry, featured in our 2012 Sustainability Report, continues to reap the beneﬁ ts of a site-speciﬁc
ﬂeet and management services support system, developed incollaboration with the Caterpillar Job Site Solutions (JSS) team

68 CATERPILLAR INC.

2013 SUSTAINABILITY REPORTand Cat ® dealer Wagner Equipment Co. The solution was designed
to help the quarry meet challenging environmental regulations
while increasing the ﬂeet’s efﬁciency and productivity. To date,
Cemex has seen signiﬁcant increases in safety and reductionsin the site’s environmental impact.
The site is using nearly 8 percent less equipment while operating
at a signiﬁcantly higher level of productivity. In addition to meeting Tier 4 emissions standards, site equipment has improved fuelefﬁciency by more than 20 percent. The solution also has helped
the quarry reduce its dust emissions considerably. Finally,
less trafﬁc, more reliable equipment, ergonomic and safety
features and better operator training have contributed to overall
safety improvements.
For its contribution to projects like the one at Cemex, the
JSS team was awarded our 2012 Chairman’s SustainabilityAward in the Product/Service/Solution category. The award
recognizes excellence in three aspects of sustainability
performance: economic, environmental and social. The JSS
team was cited for taking a collaborative approach, working
directly with customers and dealers to provide solutions thatdeliver signiﬁcant improvements in fuel consumption, safety,
productivity and emissions beneﬁ ts.

Delivering Improvement through Safety Enhancement
Keeping people safe on the job site where our machines areused is a key priority for customers in every industry, and that
often depends upon an alert, focused equipment operator. This
is why we often prioritize the mitigation of operator fatigue by
incorporating features like ergonomic seating and controls,
and reduced vibration and sound. Now, technology is providing
us with another tool.

BUSINESS CASE STUDIES: CUSTOMER OPERATIONSIn 2013, we signed a multiphase strategic agreement with awardwinning Australian technology company Seeing Machines, which
specializes in vision-based operator interfaces for vehicles. The
two companies will work together to integrate the Driver Safety
System (DSS) with the existing Cat ® MineStar™ technology suite.
Using a powerful dashboard-mounted camera to track a driver’s
head and eyes for signs of distraction or drowsiness, DSS
detects distraction, drowsiness or microsleeps and alerts thedriver both with sound and seat vibration. It also tracks data on
distraction and fatigue, allowing sites to build a comprehensive
view of their operating team and make adjustments that canhelp make the entire operation safer.
“Going forward, we see even closer integration between what
in-cab fatigue monitoring can deliver in both intervention alerts
and analytics to improve safety and performance,” said David
Edwards, safety solutions manager in the Caterpillar Global
Mining organization.

Delivering Improvement throughAutonomous Technology
Fortescue Metals Group is experiencing the sustainability beneﬁts
of autonomy and technology at its Solomon iron ore operations in
the Pilbara region of Western Australia. For the last several years,
Fortescue, Caterpillar and Cat ® dealer WesTrac have worked
together to fully implement all the productivity-and safety-enhancing
capability sets of our Cat ® MineStar™, including the Commandfor hauling autonomous solution.
Twelve Command for hauling Cat 793F CMD Trucks began operationin 2013, with plans for up to 45 autonomous trucks over the next
few years. In addition, the remaining Cat ® MineStar™ capability
sets are being utilized across the equipment ﬂeet, including
support equipment and light vehicles. The Solomon mine is the ﬁrst
project of its kind for Caterpillar, using Cat ® MineStar™ for bothautonomous and manned machines.

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Autonomous technologies enable equipment to work without
human operators – a major advancement in keeping people out ofdanger zones and, in some cases, out of the job site environment
altogether. When complementing manned operations, autonomous
systems reduce the interaction between heavy equipment andpeople through collision avoidance technology. These precision
technologies also can deliver more efﬁciency, resulting in lessfuel, emissions and materials over the life of the machine.
The implementation of the system at Solomon was consistent with
Fortescue’s drive for greater productivity, lower costs and a safe
operating environment. It also helps contribute to the company’s
goal of providing new opportunities to local people with a variety
of skill sets.

BUSINESS CASE STUDIES: CUSTOMER OPERATIONS“Using connected data from technology-equipped machines,
customers now have the ability to get a true view of what’s goingon at their job site,” said Caterpillar Technology & Solutions
Manager John Carpenter. “They can monitor everything from theproductivity of their machines to fuel consumption and maintenance needs to the overall availability of their ﬂeet regardlessof brand or type.”

Delivering Improvement through Efﬁcient Operation
A powerful new web-based application that is an enabler todealer Condition Monitoring services is helping our customers
operate more efﬁciently and meet their production goals – andtheir sustainability goals as well.
Cat ® Equipment Care Advisor (Cat ECA) combines Caterpillar anddealer expertise with ﬁeld-tested best practices and ﬂeet performance data from around the world. This enables dealers to makedetailed, proven recommendations on how to ﬁnd and ﬁx equipment problems before they become costly failures.
Cat ECA is a game-changer in terms of efﬁciency and effectiveness.
It helps customers keep machines running, avoid repairs and failures, boost productivity and lower their costs.
This proactive approach to maintenance helps reduce waste
because ﬂuids, ﬁlters and components are changed only whennecessary. And well-maintained equipment runs more efﬁciently,
burns less fuel and lasts longer, so we’re helping to preserve theraw materials required to manufacture new machines.

Delivering Improvement throughMachine Monitoring
In mining, Cat ® MineStarTM is a recognized leader, offering
integrated technologies and services designed to meet theunique needs of mining customers. It helps customers deliveron the lowest cost per ton and provides value in the key areas ofequipment management, productivity, safety and sustainability.
Recently, Caterpillar introduced a new framework of technologies
and services – called Cat ® Connect – to help customers in otherindustries monitor, manage and enhance their operations, which
will, in turn, improve their bottom line.

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According to Carpenter, Cat Connect gives customers the
ﬂexibility to ﬁnd the right combination of technologies andservices to meet job site requirements. “With Cat Connect,
customers have the ability to choose just one solution or
multiple solutions to help monitor, manage and enhance
operations – regardless of the size and complexity of theiroperation and regardless of whether it’s a piece of Cat ®
equipment or one of our competitors.”
Cat Connect offers improvement in four areas – equipment
management, productivity, safety and sustainability.
Equipment Management helps customers increase uptime andreduce operating costs by monitoring fuel burn, location andutilization of machines, as well as health and maintenanceissues like hours and ﬂuid contamination.
Productivity monitors production and manages job site efﬁciency
by using technology to measure payloads and cycle times tooptimize production and reduce loading and hauling costs. It
also utilizes grade and compaction control technologies so
operations get done faster with more accuracy and less rework.
Safety increases job site awareness to keep people and equipment
safe. This includes on-board camera systems and object/proximity-detection systems that signiﬁcantly increase theoperator’s range of vision, contributing to a safer job site.
Sustainability means monitoring fuel-burn and carefully managing
resource consumption, customers can reduce operating costs
and improve job site efﬁciency while protecting the environment
in which they operate.
Currently, Cat Connect leverages connectivity to more than
250,000 Cat ® machines globally.

BUSINESS CASE STUDIES: CUSTOMER APPLICATION

Customer Application
There is no better way to appreciate the ability of our products
to make sustainable progress possible than when they are atwork for our customers. From helping to generate alternative
forms of energy to moving earth and other materials in a
responsible manner, our customers apply Caterpillar’s products
and services in a myriad ways to provide solutions that help
raise standards of living, conserve natural resources andprotect the environment. Here are a few examples from 2013.

Generating Energy Efﬁciently
Markham District Energy Inc. (MDE) is committed to deploying
a combined heat and power (CHP) strategy that is widely
recognized as a highly efﬁcient and socially responsible way tomeet local energy needs. With the help of two new Cat ® gas
generator sets, the energy company is delivering an additional
7 megawatts of electricity and 7 megawatts of thermal energy
to meet the needs of this Ontario community. The project has
been the ﬁrst in North America to employ the Cat CG260 Seriesof high-efﬁciency gas generator sets.

Turning Agricultural Waste into Biogas
Cattle manure and corncobs are the “power” behind an anaerobic
digester renewable energy project by AgriReNew in Stockton,
Iowa. The project, funded by Cat Financial, uses the manurefrom a 2,400-head feeding operation to produce biogas. The
biogas is combusted in a Cat ® 3516A+ Engine to produce up to
1.0 megawatts of electricity. Hot water is also recovered fromthe engine to support facility operations.

71 CATERPILLAR INC.

2013 SUSTAINABILITY REPORTBUSINESS CASE STUDIES: CUSTOMER APPLICATIONPowering Homes with Landﬁll Gas

Assessing the Potential of Biodiesel Fuel

Cat equipment plays a key role in Waste Management, Inc. using
landﬁll gas as a fuel source to power about 257,000 homes eachyear. Waste Management has designed, built and now operates
72 distributed power generation plants that use this renewable
form of energy. In each case, these plants rely on Cat ® products
to produce energy – currently totaling 281 Cat ® generators and
27 SolarTM Turbines gas turbines.

Sometimes, Caterpillar expertise is as invaluable as our equipment.
Glencore – a leading producer and marketer of commodities –
speciﬁcally sought out our engine and fuels expertise when their
Coal division set out to assess the potential of using biodiesel fuelfor their mobile Cat ® equipment ﬂeet in New South Wales andQueensland, Australia. Caterpillar employees worked with Glencore
Coal on a feasibility analysis that tapped our expertise in engine
performance using alternate fuels, as well as fuel characteristics,
handling, storage and contamination control. This collaboration
has led to a successful implementation in which some traditional
diesel fuel has been displaced with renewable biodiesel fuel. So
far, no measurable downtime for Glencore’s equipment can be
attributed to the use of biodiesel.

®

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2013 SUSTAINABILITY REPORTBUSINESS CASE STUDIES: REMANUFACTURING

Remanufacturing
At Caterpillar, at the end of a component or product’s useful life,that component or product is still valuable. Instead of disposingof worn components and machines, Caterpillar has developed
remanufacturing and rebuild businesses focused on restoringthem to like-new condition to achieve another productive life
cycle with minimal need for additional resources.
Remanufacturing returns an end-of-life product to like-new
condition or better and serves a dual purpose – keeping ourcustomer’s equipment in the value chain by extending operational life, while helping us reduce waste and the consumptionof raw materials necessary to manufacture new equipment andparts. As in most every part of our business today, technology
is serving as a means to enhance our performance, and Cat
Reman, Solar Turbines remanufacturing and Progress RailServices remanufacturing businesses are no exception.
Our Solar Turbines Remanufacturing Center in Zatec, Czech
Republic, was designed from the beginning to set a benchmark
for sustainable manufacturing. In fact, in February 2013, it became
the second manufacturing facility in the Czech Republic to receive
Leadership in Energy and Environmental Design (LEED) green
building certiﬁcation. But where the Zatec Remanufacturing Centerhas made real strides is in using cutting-edge technology to process materials. For example, the Zatec Remanufacturing Center
uses a specially designed, state-of-the-art cleaning and paintstripping system to minimize airborne pollutants and chemical
exposure, creating a safer work environment for our employees.

73 CATERPILLAR INC.

2013 SUSTAINABILITY REPORTIn addition, a new type of machining process allows the Zatec
Remanufacturing Center to reduce cycle times by 30 percent, yet
improve component quality. Other process improvements include
a twin-chamber coating furnace that improves operator safety
and cycle time, plus grinding operations that have been brought
in-house to utilize equipment that includes a safer, automateddeburring process.
Technology is also yielding process improvements at Cat
Reman in Mississippi. Here, we have greatly improved thecleaning process of components by adopting technology that

BUSINESS CASE STUDIES: REMANUFACTURING

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allows parts to be cleaned with laser light rather than chemicals.
Conventional cleaning involves chemical solvents that createa variety of environmental hazards and wastes and is subject tostrict regulation. The new laser cleaning technology is not only
cost effective but increases cleaning quality, cuts the cycle timeon products by as much as 50 percent, and allows Cat Reman
Salvage Development to clean certain parts without a full disassembly of the product. In addition, an air ﬁltration system installed
to extract the dust and fumes generated by laser cleaning improves
working conditions for employees.
Laser cleaning even allows Cat Reman Salvage Development
to resurrect parts from scrap. Certain cylinder heads used in oil
ﬁeld applications are made with a chemical-resistant paint that
can’t be cleaned using a traditional process. But effective laser
cleaning allows Caterpillar to put these components back into
the value chain and extend their product life cycles.

Cat ® Certiﬁed Rebuild Upgrade for 785, 785B, 789, 789B
Off-Highway Trucks
Caterpillar has expanded the Cat ® Certiﬁed Rebuild portfolio
to include Cat Certiﬁed Rebuild Upgrade (CCRU) for 785, 785B,
789 and 789B Large Off-Highway Trucks.
Cat Certiﬁed Rebuild is a program to extend the life of existing
equipment, taking older machines and rebuilding them intolike-new condition with a like-new warranty. With Caterpillar’s
newly developed CCRU, we’ve taken that process to the nextlevel by creating a program that upgrades the entire machine
to a next-generation model. This creates the same like-new
condition as the Cat Certiﬁed Rebuild, as well as incorporating
the technological advancements and productivity gains of
the later C-Series model of these trucks.
The CCRU uses the same Genuine Cat ® parts that were usedduring C-Series production, ensuring Genuine Cat quality
and reliability. In addition, Caterpillar’s Vital Information
Management System (VIMS) technology increases the efﬁciency of the truck, ensuring customers get the most out of
every load and saving them both time and money. This programprovides the customer an excellent option to maximize theuseful life of the machine, improve operational performanceand reduce emissions all at the same time.
Stan Bruner, Caterpillar Emissions Solutions says,“Incorporating modern technology into our popular Cat
Certiﬁed Rebuild program is a great way to modernize thecustomer’s asset, providing the operational, technologicaland emissions advancements of the next generation.”

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