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2020 Sustainability Report Caterpillar’s Environmental,
Social and Governance Approach

CEO MESSAGE
BUILDING A
BETTER WORLD FOR 95 YEARS

Caterpillar’s long-standing commitment to sustainability inspires us to help our customers build a better world through products and services that help fulfill society’s basic needs – such as shelter, clean water, education and reliable energy – in a sustainable way.

We are committed to contributing to a reduced-carbon future and supporting global efforts to mitigate the impact of climate change. We demonstrate this through our significant progress in reducing greenhouse gas (GHG) emissions from our operations and our continued investment in new products, technologies and services to help customers achieve their climate-related objectives.

We establish and report our progress against ambitious environmental, social and governance (ESG) goals. This year we are introducing seven new goals for 2030 focused on our customers’, business’ and stakeholders’ most relevant issues; five are centered on climate and the environment, and two focus on employee and customer safety. You can read about our accomplishments to date and new ESG goals in this report.

Leveraging our Enterprise Strategy

We leverage all three elements of our corporate strategy – operational excellence, expanded offerings and services – to achieve our sustainability initiatives.

Continuous improvement of operational excellence principles such as safety, quality and Lean help eliminate waste and contribute to achieving our sustainability objectives. Safety is our number one priority, and we achieved our best safety performance on record in 2020 for the second consecutive year. Operational excellence also helps reduce emissions through efficiency initiatives and investment in alternative and renewable power sources in our operations. Since we first announced our 2020 sustainability goals in 2006, we have made significant progress, demonstrating our commitment to reducing our GHG emissions. By 2020, we reduced GHG emissions intensity from our operations by 51% from our 2006 baseline, exceeding our goal. We also obtained 33% of our electrical energy from renewables or alternative sources, exceeding our 2020 goal.

This year we are introducing seven new goals for 2030 focused on our customers’, business’ and stakeholders’ most relevant issues; five are centered on climate and the environment, and two focus on employee and customer safety.

We are helping our customers achieve their climate-related goals through expanded offerings by providing products that facilitate fuel transition, increased operational efficiency and reduced emissions. Our innovations include a battery-powered, zero-emissions switcher locomotive and underground loader, as well as reciprocating engines and gas turbines that burn hydrogen blends, landfill gas and other biogases. We are also developing a variety of alternative power solutions to support a lower-carbon future, including battery-powered construction machines.

I am confident Caterpillar is well-positioned to continue improving the quality of the environment and communities where we live and work.

Services represent the value our dealers and Caterpillar provide after the original equipment purchase to deliver a superior customer experience and positively impact the environment. We are investing in cutting-edge technology, new products and services to help customers improve fuel efficiency and reduce emissions.

Our remanufacturing and rebuild options deliver multiple sustainability benefits, returning components at the end of their initial serviceable lives to same-as-when-new condition, thereby reducing waste and minimizing the need for raw material, energy and water to produce new parts. The new Caterpillar Remanufacturing Division is accelerating our work with Cat dealers to expand our range of repair, rebuild and remanufacturing services for Cat products.

Building a Better World

The Caterpillar Foundation has been improving lives around the world for nearly 70 years, and the challenges of 2020 made this purpose particularly urgent. The Foundation’s exceptional level of support for worldwide COVID-19 relief efforts — a $10 million (USD) donation, including a 2:1 match on U.S. employee and retiree donations – speaks to our Caterpillar team’s generosity.

Events of the past year reminded us of the importance of living our Caterpillar Values every day and supporting the fight against racism and injustice. Caterpillar joined the OneTen coalition as a founding member, making an annual financial commitment of $1.5 million and an annual hiring commitment of at least 200 Black American employees. The Caterpillar Foundation reinforced our support of the fight for equal rights through its $1 million donation, split between the Equal Justice Initiative and the NAACP Legal Defense and Educational Fund, Inc.

In a year of unprecedented challenges, our global team rose to the occasion. With resilience, innovation and engagement, they supported customers, enabling them to perform the essential work of society. I am confident Caterpillar is well-positioned to continue improving the quality of the environment and communities around the world. We are steadfast in our commitment to attaining our ESG goals and helping our customers achieve their climate-related objectives as they build a better, more sustainable world.

Jim Umpleby
Chairman and CEO

Cat® generator sets installed at a landfill gas processing and power plant near Montreal, Canada, producing electricity from landfill gas.

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