Operational Impact

In this section:

Environment, Health & Safety Management

In our own operations, Caterpillar employees have found ways to implement innovative solutions that improve safety and lower our energy, water and waste costs, as well as reduce our environmental impacts.

Our Values in Action – Caterpillar’s Code of Conduct states that we protect the health and safety of ourselves and others and focus on environmental responsibility and preventing waste. In Caterpillar facilities, our Environment, Health & Safety (EHS) Assurance Manual: A Practical Global Framework establishes fundamental EHS requirements that apply globally. We have established high performance standards for EHS that require compliance with, and at times extend beyond, laws and regulations. Proactive implementation of these standards demonstrates our commitment to sustainability leadership in our industry. Our EHS Management System, captured in our EHS Assurance Manual, helps us comply with various EHS requirements around the world.

The EHS Assurance Manual sets out mandatory standards consistent across the enterprise and annually assessed at the facility level to improve management of enterprise EHS compliance. The Manual applies to all Caterpillar facilities worldwide, including majority-owned subsidiaries and majority-owned joint ventures, and is designed to effectively implement an EHS enterprise wide management system.

In addition to these global expectations, our facilities implement innovative local initiatives to improve safety and reduce environmental impacts.

Energy Conservation & Greenhouse Gas Emissions Reduction

We have set energy efficiency targets in our operations since 1998 and greenhouse gas emission (GHG) reduction targets since 2003. We currently have operational targets for an increased reliance on alternative and renewable energy, and reductions in energy intensity and GHG intensity.

Our enterprise energy management team is instrumental in building awareness, encouraging action and developing solutions in the areas of energy efficiency and alternative/renewable power generation.

Examples of our increased reliance on renewable energy sources include facilities’ purchase of renewable energy certificates and the installation of renewable energy sources such as photovoltaics (PV), including an advanced microgrid installation that combines PV and battery storage to supplement and offset diesel generation at an off-grid location. Our largest contribution to alternative energy consumption is the operation of combined heat and power (CHP) systems to power several manufacturing facilities. The energy management team is evaluating additional opportunities for replication of CHP, PV and microgrids at other locations.

As we work to achieve our 2020 energy-related goals, one important facet of our efforts is to continually assess and improve the efficiency of our existing operations. Systems and facilities that were state-of-the-art for energy efficiency and performance when first installed can be fairly quickly eclipsed by new technologies and best practices.

Energy Goal

Reduce energy intensity by 50 percent from 2006 to 2020.

33% Operational energy intensity decreased 33 percent from 2006 to 2018, and nearly 11 percent from 2017 to 2018. While absolute energy increased 8 percent from 2017 to 2018, it decreased 11 percent overall from 2006 to 2018. These results reflect our increased productivity and efficiency.

Energy Intensity1 Absolute gigajoules energy use/million dollars of revenue

Total Electricity Consumption Sum of purchased and self-generated electricity in million MWh

GHG Emissions Goal

Reduce greenhouse gas emissions intensity by 50 percent from 2006 to 2020.

44% Our GHG emissions intensity decreased 44 percent from 2006 to 2018 and 13 percent from 2017 to 2018. In addition, while our absolute GHG emissions increased by 4.7 percent from 2017 to 2018, our absolute GHG emissions decreased by 26 percent from 2006 to 2018. These results reflect our increased productivity and efficiency.

2018 Total Absolute GHG Emissions2 Million metric tons

  • 0.93 million metric tons – Scope 1 (direct emissions)
  • 1.28 million metric tons – Scope 2 market-based (indirect emissions from purchased electricity, heat or steam)

1.32 million metric tons – Scope 2 location-based 3

GHG Emissions Intensity1,2 Absolute metric tons of CO2e/million dollars of revenue

Renewable Energy Goal

Use alternative/renewable sources to meet 20 percent of our energy needs by 2020.

Alternative/Renewable Energy4,5,6 Sum of alternative and renewable electrical energy use/total electrical use x 100

  • Alternative
  • Renewable

32.5% of our electrical energy was from renewable or alternative sources in 2018. In addition, our use of renewable energy increased from 2017 to 2018.

Water Management

The scarcity of water resources is an issue that crosses cultures, geographies and industries. Today, water scarcity affects four out of every 10 people, and current trends indicate the problem will escalate, according to the World Health Organization and the United Nations. By 2025, 66 percent of the world’s population could be living in water-stressed regions. While our manufacturing operations are not as water-intensive as those of other industries, we nonetheless recognize the far-reaching economic, social and environmental implications that water scarcity may have in the future – and have taken steps to reduce our consumption.

We continue to implement conservation strategies to:

  • Reduce water use in our operations
  • Explore water-treatment technologies
  • Introduce water-recycling processes
  • Train employees about water resources to raise their awareness of the issue

Around the world, Caterpillar facilities take water scarcity and water management seriously, with results that highlight the scale of positive impact that our operations can have.

Water Goal

Reduce water consumption intensity by 50 percent from 2006 to 2020.

Water Consumption1,7 Absolute thousand gallons of water/million dollars of revenue

38% Through 2018, we have reduced water consumption intensity at our facilities by a total of 38 percent from 2006, and 19 percent from 2017 to 2018. In addition, our absolute water consumption decreased by 35 percent from 2006 to 2018 and decreased by 5 percent from 2017 to 2018. This demonstrates significant improvements in the way we are using water in our processes, increasing efficiency and also increasing productivity.

2018 Total Absolute Water Consumption Billion gallons

  • 1.26 billion gallons – noncontact cooling water
  • 2.59 billion gallons – enterprise water consumption excluding noncontact cooling water

2018 Water Sources Percent

  • Noncontact cooling water
  • Municipal water
  • Groundwater
  • Surface water
  • Other water

Waste Minimization

Minimizing waste in our processes not only reduces costs, but also reduces our use of materials, energy, water and land. We are focused on a goal to reduce by-product materials (i.e., waste) generated by our production processes.

The use of the term “by-product materials” in our 2020 aspirational goal reflects our focus on minimizing our production waste and effectively managing the remaining waste through remanufacturing, rebuilding, reusing and recycling. We focus on by-product material reduction strategies associated with improved efficiency and quality measures, as these offer the greatest opportunity to enhance cost competitiveness and reduce the potential for environmental impacts.

By taking a critical look at every phase of our operations, teams have uncovered unexpected and high-impact methods to reduce waste while maintaining or improving performance and customer satisfaction.

By-Product Materials Goal

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

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

16% Our by-product materials intensity decreased 16 percent from 2006 to 2018, and decreased 12 percent from the previous year. Our generation of total absolute by-product materials increased 11 percent from 2006 to 2018 and increased 6 percent from 2017 to 2018.

2018 By-Product Materials Thousand metric tons

  • Recycled
  • Disposed (sent to landfill or incinerated)

Total BPM = 635 thousand metric tons

Value Chain

Caterpillar is building capabilities to engineer our value chains just like we engineer our products. The result is a synchronized system that maximizes quality, efficiency, value and speed to the customer.

Supplier Network

Our suppliers are an essential link within our value chain and help us uphold our commitment to quality. We look for suppliers who demonstrate strong values and commit to the ethical principles outlined in our Supplier Code of Conduct. This Code includes provisions on human rights, innovation, diversity and inclusion, as well as environmental responsibility and sustainability. We expect suppliers to comply with the sound business practices we embrace, follow the law and conduct activities in a manner that respects human rights.

To ensure impacted suppliers understand our expectations, we request that they respond to our self-assessment questionnaire to evaluate alignment to the Supplier Code of Conduct. In recent years, we have increased and expanded our scope of suppliers across the enterprise included in this self-assessment process. When the process reveals issues of concern, Caterpillar senior management is apprised, we request suppliers with issues of concern to take corrective action, and we track whether such suppliers remediate any deficiencies. To date, over 9,500 suppliers have completed a self-assessment. By 2020, our goal is to have responses from 95 percent of our priority suppliers.

Supplier Code of Conduct Assessment

Supplier Code of Conduct Self Assessments:
Percentage of Responses from Priority Suppliers (Cumulative)

We continue to expand the Assurance of Supply Center (ASC) to support our enterprise strategy to manage a world-class supply network. The ASC provides visibility into our network which involves thousands of suppliers shipping more than a million parts and components every year. It allows us to see orders from production to delivery by facility, business unit and cost, enabling us to reduce waste caused by trial and error or delayed decision-making.

Caterpillar expects its supply network to comply with applicable laws and regulations. Caterpillar also requires its suppliers to provide information on the source of certain minerals, with a goal of maximizing the quantity of such minerals that are sourced from conflict-free sources. These efforts continue to be important in creating transparency in the supply network.

Supplier Diversity

Caterpillar strives to provide sourcing opportunities to a wide range of diverse business types – minority-owned small businesses, veteran-owned small businesses, women-owned small businesses and many others – throughout our enterprise. Seamless integration of these businesses allows for synergies as we assist them in growth and development.

At Caterpillar, supplier diversity is a process of inclusion that enables us to leverage and connect with an historically underutilized supply base.

A More Sustainable Logistics Network

Sustainability has long been been a focal point of how to design shipping networks, optimize transportation modes and configure products for optimal shipping. Our transportation team manages movement of production material and service parts around the world to support Caterpillar manufacturing and dealers. The group seeks to identify optimal schedules to increase truckload utilization, which in turn reduces the number of trucks on the road. Transportation also works closely with packaging teams to determine the best way to stack material on a single truck or in an ocean container. Higher utilization of a single vehicle reduces the number of shipments overall.

Today we are leveraging the scale and expertise of Caterpillar’s supply network to help our dealers and customers receive products more efficiently. We now often transport product from the production yard to the dealership. Dealers can collaborate with us on when and where they want a machine shipped, check the shipping status online and instantly get information on location and estimated time of arrival. By including the “last mile” as part of our overall value chain design, we are delivering products with higher dealer satisfaction, improved delivery performance and visibility, and lower cost.

Dealer Network

Cat® branded products and services are primarily distributed and sold through a worldwide network of 168 Cat dealers. Our independent Cat dealers serve as a critical link between our company and our customers. We rely on them to build and maintain long-standing customer relationships, as well as to work on projects related to e-commerce, digital solutions, services strategy, rental and used equipment strategy and parts logistics. Many of our dealers have their own policies and practices which support working sustainably.

The vast majority of our worldwide Cat 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 Cat dealers to provide products, services and support solutions necessary to satisfy customer needs worldwide. Our distribution model, which has consistently delivered unmatched local support, is increasingly measured by global standards. Together, Caterpillar and our Cat dealers are focused on four objectives:

  • Strengthening the Cat dealer model
  • Enhancing customer focus through services
  • Achieving superior economics for Caterpillar and the dealer
  • Seizing opportunities while mitigating risks