THE POWER OF CUMMINS SUSTAINABILITY PROGRESS REPORT 2014-2015 ABOUT THE COVER One of the most visible signs of the “Power of Cummins” is the Company’s QSK95, the largest high-speed diesel engine Cummins has ever built. The engine was chosen by Siemens to power its Charger locomotive in the United States. Siemens won a multi-state, $225 million contract to build 35 diesel-electric locomotives. Cummins employees are shown pushing the QSK95 into a test cell at the Company’s Seymour Engine Plant in Seymour, Indiana (U.S.A.). You can learn more about the Company’s big year in passenger rail on page 18. The QSK95, by the way, is also powering a new line of generators. You can learn more about that on page 40. THE POWER OF CUMMINS SUSTAINABILITY PROGRESS REPORT 2014-2015 SUSTAINABILITY PROGRESS REPORT // INTRODUCTION ABOUT THIS REPORT CUMMINS DATA BOOK ABOUT OUR WEBSITE Cummins’ 2014-2015 Sustainability As we hope you’ll see from reading Cummins will introduce its first Cummins has a website dedicated Progress Report is presented in the this report, Cummins is a global Sustainability Data Book in June 2015. to its sustainability efforts at spirit of the Global Reporting Initiative company that wants to make a This report will include all of the data www.cummins.com/sustainability. (GRI). The GRI’s goal is to develop difference for all of its stakeholders, in our Sustainability Progress Report The site includes past reports dating a consistent way for companies today and in the future. plus additional data, especially as it back to 2003, sustainability-related across the globe to voluntarily report pertains to Cummins’ environmental videos and more. Cummins posts This report was posted in May on their environmental, social and performance. It is designed for those its answers to the Carbon Disclosure 2015 and is the Company’s economic performance. who want a complete statistical look Project there and the Company’s 12th annual edition. at the Company. The Data Book will new Sustainability Data Book will The report reflects Cummins’ broad EXECUTIVE SUMMARY be posted at www.cummins.com/ be posted there as well. If you have view of sustainability, including safety, sustainability where we will also suggestions for the site, please diversity, employee development Cummins has prepared an post Cummins’ submission to contact Blair Claflin, Director – and governance in addition to the Executive Summary of this report. the Carbon Disclosure Project. Sustainability Communications, Company’s environmental initiatives, The summary includes some of the at [email protected]. its community service programs and most important statistical material You can find more financial data Cummins’ financial performance. in the full report as well as a number about the Company’s performance of condensed versions of the in Cummins’ annual 10-K report. The theme of this year’s report stories within this report. It is available in the Investor is “The Power of Cummins.” Relations section at cummins.com. The Company’s power isn’t limited You can get the Executive You can find a link to that report at to its products or its record financial Summary by going to www.cummins.com/sustainability. year. The Company uses its strength www.cummins.com/sustainability. in many other ways, ranging from its Look on the left-hand menu push for environmental sustainability, for a link to “Past Reports.” to its efforts to build stronger communities, to its ability to serve customers in remote locations such as Myanmar and Madagascar. 2 SUSTAINABILITY PROGRESS REPORT // INTRODUCTION 2012 2013 2014 ECONOMIC Revenue $17.3 billion $17.3 billion $19.2 billion Earnings $1.65 billion $1.48 billion $1.65 billion KEY PERFORMANCE INDICATORS EBIT $2.35 billion $2.16 billion $2.5 billion Cummins takes a broad view of sustainability, 2012 2013 2014 including the environment, corporate responsibility, ENVIRONMENTAL safety, diversity, employee development and governance. The Company uses a number of GHG emissions (thousands of metric tons CO2e) 729 750 788 key performance indicators (KPIs) to evaluate Energy consumption1 how it’s doing. You will find them listed (thousands of MMBtu) 11,711 12,077 12,746 throughout this report. Water use (millions of gallons) 1,069 958 972 Water intensity reduction2 22% 30% 36% 1 Primary energy excludes sold electricity and associated fuel usage 2 Intensity defined as adjusted for sales (energy / GHG) or hours worked (water) Energy intensity reduction2,3 33% 30% 34% 3 Reduction includes consolidated entities only GHG intensity reduction2,3 35% 33% 35% Recycling rate 88% 89% 90% 2012 2013 2014 EMPLOYEES Major incidents / dangerous occurrences rate 0.056 0.047 0.057 Incidence rate 0.69 0.65 0.61 Women leaders in the workforce 19% 20% 20% Every Employee Every Community (EEEC) participation rate 63% 68% 73% Environmental Challenge employee participation 12,000 11,500 13,600 Greenhouse gas reduction as part of the Environmental Challenge (metric tons) 4.3 19 22.4 3 SUSTAINABILITY PROGRESS REPORT TABLE OF CONTENTS 6 INTRODUCTION 18 COVER STORY 45 62 INNOVATION A NOTE FROM INNOVATION’S KEY THE CHAIRMAN CUMMINS HELPS CUMMINS’ ROLE AT CUMMINS PASSENGER RAIL PRACTICES 8 PICK UP SPEED IN HELP PROTECT 64 NORTH AMERICA ENVIRONMENT JULIUS PERR AWARDS CUMMINS AROUND THE WORLD 65 CUMMINS GOES VIRTUAL IN LAUNCH OF QSK95 SERIES 66 IN MYANMAR, CUMMINS POWER GENERATION IS CONNECTING A NATION TO THE WORLD 24 ENVIRONMENT 68 CUMMINS ESTABLISHES 51 NEW SUSTAINABILITY GOALS 10 CUMMINS EMPLOYEES IN THE NEW NISSAN TRUCK U.K. ARE DETERMINED RECYCLERS INCLUDES CUMMINS’ OUR RECOGNITION 27 CUMMINS MAKES PROGRESS 52 INNOVATION, ON ENVIRONMENTAL GOALS 12 EMPLOYEE TEAMS RECOGNIZED COMMITMENT TO THROUGH FACILITIES WHO WE ARE EXCELLENCE 30 ENVIRONMENTAL AWARDS 13 CUMMINS PRODUCTS ALWAYS HAVE THE ENVIRONMENT IN MIND 54 VISION, MISSION, VALUES MAKING CONSERVATION WORK AND PRINCIPLES 35 AT CUMMINS’ MEGASITE 14 NEW PRODUCTS REFLECT CUMMINS’ COMMITMENT 56 HOW WE DO IT TO ENVIRONMENT CUMMINS’ PARTNERSHIPS 15 44 PRODUCE GREEN RESULTS OUR KEY TOOLS CUMMINS’ SMARTADVANTAGE 60 PROVIDES FUEL ECONOMY 70 FOR CUSTOMERS RESEARCH PARTNERSHIP ON 16 EMISSIONS HELPS PROTECT CUMMINS’ ETHOS ENGINE PUBLIC HEALTH SCORES BIG REDUCTIONS OUR HISTORY IN CARBON DIOXIDE 4 SUSTAINABILITY PROGRESS REPORT // TABLE OF CONTENTS 72 86 121 UPDATE: SUPERTRUCK’S NEW TRIP BUS PROJECT LOOKS TO HELP CUMMINS FOCUSING ON SCHOOLS LOWER COSTS EMPOWERING EMPLOYEES TO 73 REDUCE CYBER SECURITY THREATS 87 104 RIGHT ENVIRONMENT NEW INDIA TECH CENTER 122 NEARS COMPLETION SCHOOL CHILDREN IN INDIA BECOME ‘SUPER HEROES’ FOR CUMMINS GOVERNMENT RELATIONS THE ENVIRONMENT THROUGH STRENGTHENS AND POLITICAL ACTIVITY 74 CORPORATE RESPONSIBILITY EDUCATION PROJECT DIVERSITY 124 FINANCIAL & OPERATIONS EMPLOYEES TAKE 88 VALUE IN 2014 CUMMINS ACHIEVES RECORD CORPORATE CUMMINS’ ENGINE FOR GIVING BACK FINANCIAL YEAR IN 2014 RESPONSIBILITY 106 95 DIVERSITY HELPS 127 VALUE TO HEART SOLVE HARD PROBLEMS THE CUMMINS FOUNDATION CENTER’S GOAL IS A 109 HEALTHIER EMPLOYEE 96 HEALTH & SAFETY DIVERSITY AT WORK 128 CUMMINS REDOUBLES ITS HEALTH AND SAFETY EFFORTS IN 2015 CUMMINS’ SOUTHERN INDIANA 110 LOGISTICS CENTER SETS 99 DIVERSITY PROCUREMENT NEW STANDARD FOR CELEBRATES OUTSTANDING YEAR CUMMINS’ SUPPLY CHAIN CUMMINS WINS PRESTIGIOUS 77 HEALTH AND SAFETY AWARD 112 130 ENVIRONMENTAL CHALLENGE 100 CUMMINS ‘HIRE TO DEVELOP’ ENJOYS ANOTHER PHILOSOPHY CUMMINS TEAMS SUCCESSFUL YEAR SAFETY AT CUMMINS IS PART OF EVERYONE’S JOB UP TO DELIVER 114 GOVERNANCE 80 FOR CUSTOMERS 102 CUMMINS ENCOURAGES BROADER IN MADAGASCAR ENVIRONMENTAL ADOPTION OF ETHICAL PRINCIPLES CHALLENGE WINNERS ‘KNIGHT KNUCKLE’ 118 INVENTOR CREATES 82 BOARD LEADS CUMMINS TECHNICAL EDUCATION PROGRAM A SAFER CUMMINS INTO THE FUTURE INCREASES OPPORTUNITIES FOR WOMEN IN TURKEY 120 STRESS TESTS PUT CUMMINS 84 PLANTS IN THE MIDDLE OF 132 CUMMINS HELPS CITY SIMULATED DISASTERS CUMMINS HELPS PATIENTS TAKE GET WISE ABOUT WASTE FLIGHT IN FIGHT AGAINST CANCER 5 SUSTAINABILITY PROGRESS REPORT // INTRODUCTION A NOTE FROM THE CHAIRMAN I sometimes surprise people when I tell them deep underground. And it must be number of variables before an engine reliable. Cummins’ on-highway truck is ever placed in a test cell. Cummins is a high-tech company, rivaling anything engines regularly travel a million Cummins is probably best known for they might find in Silicon Valley. miles if properly maintained – almost diesel engines, but we also design and 10 times what most people expect The outside of our engines look much Cummins’ turbochargers, spinning at build engines that run on natural gas, from their cars. Cummins’ generators as they did when our founder Clessie 120,000 revolutions per minute (rpm), biofuels and diesel-electric hybrids. INTRODUCTION can power hospitals, data centers Cummins first experimented with boost engine power while providing We are experimenting with everything and other critical buildings for tens diesels more than 95 years ago. the heat necessary for chemical from 3-D printing to electrification and of thousands of hours. But the cutting-edge technology on reactions in our aftertreatment start-stop technology (page 70). the inside enables our customers to systems. The aftertreatment converts Like many Silicon Valley companies, Our mission demands that get the power they need with near oxides of nitrogen, a key contributor to Cummins has engineers developing “everything we do leads to a cleaner, zero emissions to do business in smog, into nitrogen and water that can smart and predictive technology for healthier, safer environment” and some of the most competitive, be safely emitted into the atmosphere. onboard diagnostics. They also help in 2014 Cummins adopted its first demanding applications in the world. ensure our fuel systems and other These advances have helped reduce comprehensive environmental components work well together. Our fuel injectors, for example, must diesel engine emissions in North sustainability plan. This plan introduced be in a near perfect cylindrical form America by nearly 100 percent over But we also have chemists exploring goals to further reduce our use of to precisely apply fuel at more than the past 20 years.