Governance & Ethics
Caterpillar’s Code of Conduct – Our Values in Action – defines what Caterpillar stands for and what we believe in, documenting uncompromisingly high ethical standards for our company. The Code of Conduct helps Caterpillar employees every day by providing detailed guidance on the behaviors that support Our Values in Action – Integrity, Excellence, Teamwork, Commitment and Sustainability.
Our commitment to good corporate governance stems from our belief that a strong governance framework creates long-term value for our shareholders, strengthens Board and management accountability and builds trust in the company and its brand. Learn more about our governance framework at the following:
- Corporate Governance initiatives and Board composition in Caterpillar’s Proxy Statement
- Board and its committees
- Caterpillar Code of Conduct
Risk is an inherent part of conducting global business. Caterpillar regularly identifies and monitors business risks through a robust internal management system and engages in constructive regulation and public policy discussions that benefit employees, customers and shareholders. We manage operational, strategic, financial and compliance risk through two programs: the Enterprise Risk Management (ERM) Program and Caterpillar’s Compliance Program.
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 ERM risk assessment are incorporated into future action plans to mitigate the identified risks. Compliance risks are also reviewed as part of the ERM risk assessment process and are managed as part of Caterpillar’s Compliance Program. These risks cover a broad range of issues, including legal and regulatory compliance.
Every risk identified under the Compliance program has an Enterprise Risk Advisor who provides counsel to the efforts to mitigate the risk for Caterpillar. They help drive risk management through governance, evaluation, controls, communication and training, and compliance audits throughout the world. Through these programs, Caterpillar can better manage risk and gauge the potential impact of various outcomes on our ability to achieve strategic goals.
Government decisions with regard to laws and regulations around the world can have a significant impact —both positive and negative—on Caterpillar, our employees, customers and stockholders. Learn more about Caterpillar’s political advocacy and contributions.
Energy & Climate Policy
As a global energy consumer and industrial manufacturer, as well as a major manufacturer of energy conversion and power-generation products, Caterpillar has a fundamental interest in, and understanding of, energy needs around the world. We are providing products with leading integrated technology to various energy markets and leveraging our technology and innovation to meet the world’s growing energy needs.
Greenhouse gas (GHG) accumulation in the atmosphere is a major concern in both the public and private sectors because of the potential for these gases to affect climate patterns. As a result, many governmental and intergovernmental organizations are implementing mechanisms in an attempt to reduce GHG emissions.
Caterpillar supports integrated carbon and climate policies that effectively balance environmental and economic considerations. We understand that the most immediate and measurable benefits will occur through energy-efficiency improvements and corresponding GHG emissions reductions.
In response to the challenge of reducing GHG emissions, we are:
- Setting aggressive energy-efficiency and GHG-reduction goals for our operations.
- Investing in energy-efficiency and GHG-reduction technologies for our products 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.
- Supporting policies and mechanisms that harness the marketplace to drive innovation, mobilize investment and facilitate 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.
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 poor land management practices. Caterpillar is a leader in the development and deployment of innovations and technologies that, through our products, assist in the mitigation of all three of these sources.
Despite divergent proposals under discussion worldwide, technology and innovation play a key role in any successful strategic approach to emissions reduction. Further, the private sector must take the lead in developing and deploying technology solutions to reduce GHG emissions. Ideally, regulatory structures should provide a technology-neutral and level playing field in which competitive solutions can be developed.
Businesses will struggle to find solutions if vastly differing approaches to GHG reduction are implemented around the world. That is why we continue to endorse a comprehensive, international approach that encompasses GHG-reduction commitments from all major economies. 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.
Carbon Research Investments
Carbon can offer productive uses in a variety of applications. We are investing in research and advocating for policies that support these developments in diverse areas such as improved land management, restoration of degraded lands, and carbon capture and storage technologies.
For example, we are a founding member and co-funder of the Energy Technologies Institute (ETI), a collaboration between industry and the U.K. government to accelerate the development of technologies that address the challenges of climate change and provide affordable energy access. Additionally, Caterpillar is a member of the project advisory group for the Midwest Geological Sequestration Consortium. With the objective to safely demonstrate the viability of this CO2 emission reduction technology, the Consortium is currently gathering scientific data and monitoring the 1 million metric ton (1.1 million U.S. ton) CO2 storage site in Decatur, Illinois.
Governments have a responsibility to maintain appropriate levels of productive investment in infrastructure while providing a level playing field for suppliers. Leveraging private investment can bring additional sources of funding, provided that investment is supported by fair and predictable policies to maximize the certainty and timeliness of financial returns.
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 based on national needs, including urbanization, commerce and trade policy, transportation, disaster prevention and mitigation, defense and global competitiveness.
The best means of economic development and the efficient distribution of goods and services is the pursuit of business excellence in a climate of free enterprise, free trade and global competition. Further, such international exchange promotes better understanding across borders and cultures, leading to a more peaceful world. These benefits have been demonstrated by the rise in post-World War II gross domestic product and living standards in countries participating in international commerce. By contrast, many isolated countries have frequently not experienced such advantages.
Increased commercial engagement leads to economic gains that raise standards of living, improve the quality of life and promote sustainable development. More importantly, trade liberalization can promote peace and understanding and can be an important contributor to solving the global problems of hunger, poverty and disease. Economic growth through international trade is essential for poverty reduction, but also comes with challenges. Chief among them is the need to balance economic, environmental and social policies to achieve sustainable development. Balanced economic, environmental and social policies provide a common framework for allowing environmental and trade policymakers to engage stakeholders, analyze issues and evaluate policy more efficiently.
Caterpillar has a long history of advocating for free trade. Our interest comes not from the perspective of any one country, but from our global perspective and with the foundational belief that companies compete best in a free trade environment. Free trade requires us to continually improve our global competitiveness and creates an environment that allows us to better respond to our customers’ needs and to grow our business. It offers us the opportunity to source globally and thus compete effectively while providing maximum value to users. Our suppliers, in turn, also have an easier time satisfying our global sourcing requirements. Our employees around the world, and their respective communities, benefit from a higher standard of living, as they have access to more product choices at lower prices. Free trade also allows us to provide more and better job opportunities, because open markets lead to improved competitiveness.
Caterpillar will continue to support policies that enhance competition in the global marketplace and reduce – or better yet, eliminate – trade and investment barriers. 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 trade and economic growth in the world’s poorest countries.
Our Human Rights Policy is informed by the international human rights principles described in the Universal Declaration of Human Rights (UDHR) and the International Labour Organization’s (ILO) Declaration on Fundamental Principles and Rights at Work. Our Human Rights Program is aligned with the UN Guiding Principles on Business and Human Rights (UNGP) and is governed by leadership with accountability across the enterprise, led by our Global Human Rights Manager, focused on awareness-raising, information sharing, external reporting, monitoring and mitigation of impacts on an ongoing basis. When the company receives an inquiry or grievance regarding human rights (which come in through various channels including via the OBP Helpline), our Global Human Rights Manager is responsible to engage and consult with relevant parties, both internal and external stakeholders, and experts in the human rights field. These teams review and work towards an appropriate resolution.
Caterpillar has conducted a human rights impact assessment (HRIA) to identify actual and potential human rights issues and impacts on vulnerable groups along our value chain. In addition to the HRIA, Caterpillar has introduced mechanisms to understand our human rights impacts across our value chain with our partners. Our Supplier Code of Conduct self- assessment process includes human rights questions focused on whether our suppliers have policies and procedures to manage the issues determined to be salient for Caterpillar’s supply network. This assessment process supports Caterpillar’s understanding and locating the areas of risk in our supply base.
As we continue to advance our human rights program, we will look to engage with our suppliers on these topics, as well as consider the use of on-the-ground human rights impact assessments or audits in high risk regions or facilities to improve understanding of human rights issues and impacts.
In alignment with the UN Guiding Principles, Caterpillar has identified potential human rights impacts associated with our business activities and relationships. These salient human rights issues were determined as part of a comprehensive human rights impact assessment that considered feedback from shareholders, non-governmental organizations, third-party consultants and internal stakeholders. We recognize that our salient issues may change as our business grows and evolves over time. We will regularly review our priority areas and are committed to engaging in constructive dialogue with others regarding these issues.
As a values-based company, Caterpillar has deep respect and compassion for all persons affected by human rights issues. We are committed to engaging in dialogue with internal and external stakeholders to understand human rights related issues and concerns. We also want to be transparent about Caterpillar’s position on these issues. Caterpillar’s on-going commitment with respect to each salient issue is described below:
- Child Labor: We are committed to compliance with all applicable laws and regulations governing age requirements for employment, and we do not condone the use of child labor.
- Wages and working hours: We are committed to compliance with all applicable laws and regulations governing wages and hours.
- Discrimination and harassment: We are committed to a workplace free of harassment and unlawful discrimination without regard to race, religion, natural origin, color, gender, gender identity, sexual orientation, age or physical or mental disability. We also commit to support and obey laws that prohibit discrimination everywhere we do business.
- Health and safety: We are committed to putting safety first, with an aspirational goal to prevent all injuries, occupational illnesses and safety incidents. We actively promote the health and safety of everyone on our property with policies and practical programs that help individuals safeguard themselves and their co-workers.
- Forced labor and human trafficking: We do not condone the unlawful use of forced labor, bonded or indentured labor, involuntary prison labor, slavery or the trafficking of persons.
- Impacts on local communities: We establish and adhere to sound environmental, social, and economic policies and practices in product design engineering and manufacturing that have minimal impact on local communities.
- Use of Cat® equipment: Caterpillar products have many different applications and play an important role in advancing sustainable global economic development in communities where we operate. While we expect our products to be used safely and lawfully, we simply cannot control or monitor the use of every piece of Caterpillar equipment around the world.
- Doing business in conflict-affected areas: We will act responsibly and within the framework of applicable laws and regulations when conducting business in conflict-affected areas. We utilize reporting from Verisk Maplecroft to identify those countries that have experienced, are experiencing, or are at risk of experiencing, violent conflict.
- Freedom of association and the right to collective bargaining: We respect the rights of our employees to join, form, or not to join an employee association or trade union of their choice without fear of reprisal, interference, intimidation, or harassment, and in a manner consistent with national law and practice. Recognizing that exercising the right to choose whether to join or not to join a trade union is an important decision that requires thoughtful consideration, we believe it is critical that our employees exercise that right with the benefit of available information.
We value the direct relationship we share with our employees and are committed to a constructive social dialogue with them and their representatives in accordance with applicable employment legislation or local level custom and practice. Where employees are represented by an employee association or trade union in accordance with applicable national laws, we commit to seeking a constructive dialogue, or where appropriate, to bargain collectively and in good faith. We expect the same of those employee associations or trade unions seeking dialogue with us.
Training and communications
We provide training to increase the capacity of our employees to effectively identify and respond to concerns. In 2017, caterpillar made human rights training in local language available for those employees in job roles where human rights risks were deemed to be highest.
The extraction and trade of tin, tungsten, tantalum and gold, collectively known as conflict minerals, are associated with human rights violations in the Democratic Republic of the Congo and adjoining countries. Caterpillar is committed to the responsible sourcing of these minerals used in our products. We will not knowingly provide any direct or indirect support to non-state armed groups or security forces that illegally control or tax mine sites, transport routes, trade points, or any upstream actors in the supply chain. Caterpillar also has a policy that prohibits its employees from engaging in corruption and bribery and expects our suppliers to adopt similar policies with respect to their own supply chains.
For Reporting Year 2016, 247 of the 265 smelters identified by suppliers (approximately 93%) were validated as conflict-free under the Responsible Minerals Assurance Process (RMAP). This is an improvement of 27 points over 2015.
Caterpillar refreshed its strategy regarding conflict minerals in 2017 to incorporate deeper involvement with the Responsible Minerals Initiative (RMI), greater business intelligence through industry collaboration and an increased priority supplier response rate. We leverage industry standards for benchmarking and explore efficiencies and cost improvements on an ongoing basis.
Learn more about our commitment to the responsible sources of conflict minerals here.