2015 Sustainability Report

FOCUS AREAS

Caterpillar currently operates in more than 180 countries worldwide and in 2015, generated more than half its annual sales outside the United States. Operating on a global scale requires us to work within a variety of different cultures, governmental systems and economic environments. We acknowledge and respect the diversity of cultures and customs wherever we operate, and maintain a flexible business approach to best serve our customers, dealers and suppliers, while always adhering to Our Values in Action – Caterpillar’s Code of Conduct.

Materiality Assessment

With the recognition of Sustainability as one of our core Values, we reviewed and updated our sustainability priorities and strategies in 2014 through a “materiality assessment.” A total of 35 sustainability aspects were identified and defined, covering environmental, social and governance considerations. Sustainability aspects were selected based on our existing strategy and goals, peer reviews and criteria in external indices and frameworks, such as the Dow Jones Sustainability Index and the Global Reporting Initiative.

As part of our work in sustainable development, we have identified a set of focus areas that intersect with our business on a daily basis and that guide our thinking as we make day-to-day business decisions. Many of these areas are associated with our 2020 aspirational, operational and product stewardship goals, while others represent areas impacting our business long term and that are important to our various stakeholders. During 2014, these focus areas were validated as part of an assessment that we conducted with stakeholders. In 2015, this analysis was further refined to consider additional stakeholder input. Read more about the assessment below.

Assessment of Aspect Influence on Stakeholders and Business

The engagement process described below included a combination of surveys and a workshop to collect input from a wide range of Caterpillar leaders as well as both internal and external stakeholders.

  • An anonymous survey of our customers, employees, stockholders, dealers, suppliers, nongovernmental organizations, trade organizations and academia was conducted. Over 100 of our stakeholders participated, identifying the sustainability aspects most influential to them in their decisions about Caterpillar.
  • An anonymous survey was conducted of Caterpillar executive officers, vice presidents and other key directors and managers to obtain insight from our strategic leaders as to the sustainability aspects most important to the success of our business.
  • A matrix was developed that incorporated the information collected from both stakeholder surveys. The matrix provided a simple means to compare the perspectives and priorities of Caterpillar leaders with other stakeholders. It also facilitated the identification of aspects where the two groups were in agreement versus aspects where their opinions differed.

Evaluation of Assessment Results

Survey results were plotted on a matrix that was considered in a follow-up workshop to further inform our sustainability strategy and external reporting efforts. The workshop included our External Sustainability Advisory Board – a group representing NGOs, academics and trade organizations that, throughout the year, provides valuable insight to Caterpillar on external sustainability trends, expertise from their respective areas and feedback on strategic initiatives. In addition, the workshop included several Caterpillar vice presidents, selected Caterpillar leaders with sustainability responsibilities, our Sustainable Development team and our chairman and CEO. Insights gained from the workshop were combined with the survey results and matrix and used to refine and prioritize Caterpillar’s “material” aspects. These aspects will be used to inform and direct future activities for strategic improvements.

Prioritization of Focus Areas

While stakeholders universally agreed that all 35 aspects identified were important, the process enabled Caterpillar to identify some new and emerging areas of interest to our stakeholders. Specifically, the identified aspects were business ethics and core values, strategy, financial performance of the enterprise, product performance (customer safety, energy efficiency/greenhouse gas and other air emissions, and development for the life cycle), dealer network, innovation management, and employee occupational health and safety. In 2015, we reviewed the aspects identified in 2014 and considered additional feedback from stakeholders. Primarily, we reviewed requests that were submitted to Caterpillar and rating systems such as the Dow Jones Sustainability Index requirements. These stakeholder interactions identified expectations for our reporting that we are committed to reporting, such as inclusion of human rights and the environmental impacts of our manufacturing operations. Although these focus areas are specifically identified in this report, we recognize that priorities will vary by business unit and by region.

Focus Area “Material” aspects included within this focus area
Our People Employee occupational health & safety
Energy & Climate Energy and climate policy and programs
Operational Environmental Impact Energy efficiency, greenhouse gas, water and waste management
Product Stewardship Innovation management, customer safety, energy efficiency/GHG and other air emissions and life cycle product development
Value Chain Dealer network
Governance & Ethics Business ethics and core values, business strategy and financial performance of the enterprise
Community Impact Human rights