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ABB, Atlas Copco, Bharat Heavy Electricals, Caterpillar Inc., Cooper I n d u s201 t r2 i Sustainability e s , C u m Reporting m i n s , ofD the e e r e & Top 30 Global Capital Goods Companies Company, Eaton, Fanuc, Hyundai (*Industrial and Farm Equipment) HeavyPacific Sustainability Industries, Index Scores: IllinoisA benchmarking toolTool for online sustainability Works, reporting Komatsu, Kubota, LeGrand, MAN Group, Mitsubishi Electric, Mitsubishi Heavy Industries, Nidec, Paccar Inc., Parker Hannifin, Samsung Heavy Industries, Sandvik, Schindler Holding, Schneider Electric, Shanghai Electric Group, Sumitomo Electric Industries, Vallourec, Vestas Wind Systems, W ä r t s i l ä , a n d W W G r a i n g e r J. Emil Morhardt, Elgeritte Adidjaja, Gracie Beck, Simone Berkovitz, Carolyn Campbell, Jaclyn T. D'Arcy, Whitney Ellen Dawson, Karen de Wolski, Elizabeth Duckworth, Erin Franks, Hilary Haskell, Alan Hu, Bukola Jimoh, Quentin Jones, Sam Kahr, Eric Robert King, Jordan Lieberman, Danielle L. Manning, Stepha- nie Oehler, Daniel Olmsted, Ashley Scott, Michael Handler Shoemaker, and Sachi Singh. *This report is based on companies in the Forbes 2010 Capital Goods sector, roughly equivalent to the Fortune Magazine Industrial & Farm Equipment sector used in our previous reports. Contents Topics Page The Roberts Environmental Center has been the foremost Company Rankings 3 analyst of corporate sustainability reporting for over a PSI Overview 4 decade. We analyze corporate online disclosure using our PSI Scoring in a Nutshell 5 Pacific Sustainability Index (PSI) and publish the results Lead Analyst’s Commentary 6 online. Environmental Intent Topics 9 Industrial Sector** Environmental Reporting Topics 10 2 2 2 2 2 2 2 2 2 Social Intent Topics 11 0 0 0 0 0 0 0 0 0 Social Reporting Topics 12 0 0 0 0 0 0 1 1 1 4 5 6 7 8 9 0 1 2 Environmental Intent Element of the PSI Scores 13 Aerospace & Defense X X Environmental Reporting Element of the PSI 14 Airlines X X Scores X Social Intent Element of the PSI Scores 15 Banks, Insurance Chemicals X X X X Social Reporting Element of the PSI Scores 16 Colleges/Universities X X Environmental Intent Scores Ranking 17 Computer, Office Equipment, & X Environmental Reporting Scores Ranking 18 Services Environmental Performance Scores Ranking 19 Conglomerates X X X X Social Intent Scores Ranking 20 Food & Beverages Social Reporting Scores Ranking 21 Electronics & Semiconductors X X X X Social Performance Scores Ranking 22 Energy & Utilities X X X X Human Rights Reporting Element 23 Entertainment X Visual Cluster Analysis 24 Performance by Country 25 Federal Agencies X Relationship Between PSI Scores and Financial 26 Food Services X Variables Forest & Paper Products X X X Number of Explicit numerical goals Reported 29 General Merchandiser X Number of Topics Showing Performance 30 Homebuilders X Improvement over Previous Year Data Number of Topics in which Performance was 32 Household, Apparel, & Personal X Better than Sector Average Products Analyst’s Comments, alphabetically listed by 33 Industrial & Farm Equipment X X X X company name Mail, Freight, & Shipping Medical Products & Equipment X Appendix: PSI Questionnaire 63 Metals X* X X X* X X Mining, Crude Oil Questions should be addressed to: Motor Vehicle & Parts X X X X Municipalities X Dr. J. Emil Morhardt, Director Oil and Gas Equipment X ([email protected]) Petroleum & Refining X X X Roberts Environmental Center Pharmaceuticals X X X X X Claremont McKenna College Scientific, Photo, & Control X 925 N. Mills Ave. Claremont, CA 91711-5916, USA Equipment Direct line: (909) 621-8190 Telecommunications, Network, & X Peripherals Elgeritte Adidjaja, Research Fellow Transportation X (909) 621-8698 ([email protected]) * Multiple-sector category was separated in later years. Departmental Secretaries: (909) 621-8298 The goal of corporate report analysis conducted by the Roberts Envir onmental Center is to acquaint students with environmental and social issues facing the world’s industries, and the ways in which industry approaches and resolves these issues. The data presented in this report were collected by student research assistants and a research fellow at the Roberts Environmental Center. Copyright 2012 © by J. Emil Morhardt. All rights reserved. www.roberts.cmc.edu 2 Capital Goods: Industrial & Farm Equipment Sector 2012 Capital Goods (Industrial and Farm Equipment) Sector Corporate Environmental and Sustainability Reporting Company Rankings Overall Grade A+ Wärtsilä (Finland) Wärtsilä 63.39 B+ Schneider Electric (France) B+ Mitsubishi Electric (Japan) Schneider Electric 49.89 B Sandvik (Sweden) Mitsubishi Electric 48.70 B Komatsu (Japan) Sandvik 41.20 B- Vallourec (France) B- Sumitomo Electric Industries (Japan) Komatsu 40.44 B- LeGrand (France) Vallourec 39.06 B- Kubota (Japan) Sumitomo Electric Industries 36.93 B- ABB (Switzerland) C+ Caterpillar Inc. (USA) LeGrand 36.41 C+ Mitsubishi Heavy Industries (Japan) Kubota 36.35 C+ Atlas Copco (Sweden) ABB 35.47 C+ Samsung Heavy Industries (South Korea) Caterpillar Inc. 34.22 C+ MAN Group (Germany) Mitsubishi Heavy Industries 33.49 C Deere & Company (USA) Atlas Copco 31.20 C WW Grainger (USA) C Cooper Industries (USA) Samsung Heavy Industries 30.26 C- Schindler Holding (Switzerland) MAN Group 29.58 C- Nidec (Japan) Deere & Company 26.25 C- Cummins (USA) C- Eaton (USA) WW Grainger 25.36 C- Hyundai Heavy Industries (South Cooper Industries 24.69 Korea) Schindler Holding 23.23 C- Illinois Tool Works (USA) D+ Bharat Heavy Electricals (India) Nidec 22.76 D+ Paccar Inc. (USA) Cummins 22.76 D+ Parker Hannifin (USA) Eaton 21.46 F Shanghai Electric Group (China) F Fanuc (Japan) Hyundai Heavy Industries 20.10 F Vestas Wind Systems (USA) Illinois Tool Works 19.84 Bharat Heavy Electricals 16.09 Paccar Inc. 14.27 Parker Hannifin 13.28 Shanghai Electric Group 1.98 Fanuc 0.00 Vestas Wind Systems 0.00 0 25 50 75 100 This report is an analysis of the voluntary environmental and social reporting of companies on the 2010 Forbes List Capital Goods- Industrial and Farm Equipment sector lists. Data were collected from corporate websites during the initial analysis period (dates shown below). A draft sector report was then made available online and letters were sent to all companies inviting them to review the analysis, to identify anything missed by our analysts, and to post additional material on their websites if they wished to improve their scores. Analysis Period: 2/3/2011through 6/11/2011 Draft sector report available for review: 10/22/2011through 11/25/2011 www.roberts.cmc.edu 3 Capital Goods: Industrial & Farm Equipment Sector 2012 The Pacific Sustainability Index (PSI) Overview the PSI Scoring System The Pacific Sustainability Index (PSI) uses two systematic questionnaires to analyze the quality of the sustainability reporting—a base questionnaire for reports across sectors and a sector-specific questionnaire for companies within the same sector. The selection of questions is based on, and periodically adjusted to, the most frequently-mentioned topics in over 1,900 corporate sustainability reports analyzed from 2002 through 2009 at the Roberts Environmental Center. The Roberts Environmental Center The Roberts Environmental Center is an environmental research institute at Claremont McKenna College (CMC). Its mission is to provide students of all the Claremont Colleges with a comprehensive and realistic understanding of today’s environmental issues and the ways in which they are being and can be resolved-- beyond the confines of traditional academic disciplines and curriculum--and to identify, publicize, and encourage policies and practices that achieve economic and social goals in the most environmentally benign and protective manner. The Center is partially funded by an endowment from George R. Roberts (Founding Partner of Kohlberg Kravis Roberts & Co. and CMC alumnus), other grants and gifts, and is staffed by faculty and students from the Claremont Colleges. Methodology Student analysts download relevant English language web pages from the main corporate website for analysis. Our scoring excludes data independently stored outside the main corporate website or available only in hard copy. When a corporate subsidiary has its own sustainability reporting, partial credit is given to the parent company when a direct link is provided in the main corporate website. We archive these web pages as PDF files for future reference. Our analysts use a keyword search function to search reporting of specific topics, fill out a PSI scoring sheet (http://www.roberts.cmc.edu/PSI/scoringsheet.asp), and track the coverage and depths of different sustainability issues mentioned in all online materials. Scores and Ranks When they are finished scoring, the analysts enter their scoring results into the PSI database. The PSI database calculates scores and publishes them on the Center’s website. This sector report provides an in- depth analysis on sustainability reporting of the largest companies of the sector, as listed in the latest 2010 Forbes lists. Prior to publishing our sector report, we notify companies analyzed and encourage them to provide feedback and additional new online materials, which often improve their scores. What do the scores mean? We normalize all the scores to the potential maximum score. Scores of subsets of the overall score are also normalized to their potential maxima. The letter grades (A+, A, A-, B+, etc.), however, are normalized to the highest scoring company analyzed in the report. Grades of individual companies in the report might be different from grades posted online on the Roberts Environmental Center's website, since the normalization of scores of an individual company online is not limited to the companies analyzed in the sector report, but also includes other companies of the same sector irrespective of the year of analysis. Companies with scores in the highest 4% get an A+ and any in the bottom 4% get an F. We assign these by dividing the maximum PSI score obtained in the sector into 12 equal parts then rounding fractional score up or down.