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2019 | Sustainability Report
Caterpillar's Environmental,
Social and Governance Approach

SASB Code: RT-IG-440a.1

Caterpillar is the world’s leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. Across the world today, 1.8 million Caterpillar construction machines are active, and more than 20 million engines have been built. What goes into these machines matters. Caterpillar responsibly sources the raw materials used to build our products. And we keep those materials in circulation for as long as possible through remanufacturing and rebuild programs that reduce waste, extend equipment life and save customers money.

Equipment powerful enough to move and mine the earth must be built with durable materials. Caterpillar sources these materials from a network of more than 28,000 suppliers who ship more than 800,000 parts and components to Caterpillar every year. These purchases include a variety of unformed steel products, which are cut or formed to shape and machined in our facilities; steel and iron castings and forgings, which we machine to final specification levels; and finished components, which are made either to Caterpillar specifications or to supplier-developed specifications.

A key consideration is responsible sourcing of minerals used in our products. Tin, tungsten, tantalum and gold (3TG), collectively known as “conflict minerals,” have been associated with human rights violations in the Democratic Republic of the Congo and adjoining countries. With regard to the extraction and trade of conflict minerals, we will not knowingly provide support to, contribute to, assist with or facilitate armed conflict in the DRC. Our Conflict Minerals Position Statement contains clear expectations for our suppliers regarding their sourcing of these materials. We have established a process that identifies areas of risk on an ongoing basis and corrective action plans to mitigate or remediate such risks relating to conflict minerals. A supplier’s failure to take corrective actions when required may lead to additional actions, up to and including the termination of our business relationship.

Caterpillar supports the Responsible Minerals Initiative (RMI) to help influence smelters’ engagement to support supply chain transparency and leverage industry collaboration toward greater business intelligence. Year over year, we strive for an increased supplier response rate with an additional emphasis on 3TG priority suppliers. In 2018, we received a 100% response rate from these high-priority suppliers. We leverage industry standards for benchmarking and explore efficiencies and cost improvements on an ongoing basis. Caterpillar also publicly discloses the results of our Reasonable Country of Origin process and any necessary due diligence in our Form SD and Conflict Minerals Report as required by the SEC. This report discloses metrics and results relative to the number of inquiries we execute within our first-tier suppliers. In these reports, we describe our due diligence efforts, including risk mitigation, along with expectations relative to process improvements for the subsequent year.

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