INTRODUCTION ENVIRONMENT SOCIAL ECONOMIC CUMMINS SUSTAINABILITY PROGRESS REPORT 2019-2020
POWERING A MORE PROSPEROUS WORLD A NOTE FROM THE CHAIRMAN Rather than discuss the accomplishments detailed in this report for 2019, I want to address the eventful first six months of 2020.
The deadliest pandemic since 1918, markets this year. While these actions employees, while still ensuring we immediately followed by the most were independent of the world-changing supported the critical needs of our sweeping protests in a half century, events that followed, they have helped us customers. We also maintained our are forcing businesses to re-examine weather the new reality. investments in promising technologies, their role in society. Cummins has potentially critical to the company’s long believed that we serve each of The company ended the first quarter future success. our stakeholders best by serving all of this year with $2 billion in cash and stakeholders. This simple idea has marketable securities, and access to With seven sites in Wuhan, China, been the power behind our company’s $1.9 billion in committed credit facilities. Cummins was significantly impacted success for more than 100 years. In May, we bolstered our access to by the virus relatively early. By the liquidity by entering into an agreement time COVID-19 was declared a global Of course, businesses must have the for an additional $2 billion revolving pandemic, the company had established financial resources to make that happen, credit facility. processes and procedures to protect especially in difficult times. Cummins our employees and communities while entered 2020 in a position of strength. These steps, along with our strong supporting customers, many carrying out As we do before each economic financial position, enabled the company essential functions during the pandemic. downturn, the company took actions to move quickly to protect the health, in late 2019 to prepare for weaker safety and job security of Cummins
2 Cummins products support the critical » Redesigned exits, entrances and them. The increasing reports of blatant The pandemic and protests needs of our economy and society: production lines to encourage acts of racism and the empowerment have revealed a fundamental social distancing; of those with racist views are deeply truth about sustainability: THE » Our engines power the trucks troubling. Systemic racism is a scourge » Enhanced cleaning protocols companies and institutions delivering food, medicine and other that weakens our nation and is a burden STAKEHOLDER before, during and after shifts; and basic needs; on all of us that we must remove with are only as strong as the MODEL » Expanded healthcare and leave communities, countries » We power the construction equipment urgency and resolve. Cummins has long building emergency medical facilities programs to support employees and the world around them. and their families. One of Cummins’ most important practiced the stakeholder across the globe; To be successful for our leaders, CEO J. Irwin Miller, actively model of corporate » Cummins generators help keep critical We also sought to make a difference in inserted himself and our company into shareholders over the long governance, maintaining facilities such as hospitals and data the communities where Cummins does the civil rights movement in the 1960s. run, we must ensure the the best way to serve any centers running around the clock; and business. The company partnered with We will honor this legacy by being health and prosperity of individual stakeholder is 3M and DuPont to produce PPE for by serving the interests » Our service branches keep all of this active again at this important moment. all of our stakeholders. equipment working, day after day. medical professionals. The Cummins At the time of this writing, we are still of all stakeholders. Foundation made targeted grants to developing the full scope of activities While I’m proud of the accomplishments “We have a responsibility to To support both our customers and support children and families impacted but at a minimum we will: included in this report, there’s much use part of our resources to communities, Cummins made keeping by COVID-19. And the company work to be done. You can count on respond to the needs of the employees safe our top priority. The documented the procedures we used to » Ensure the inclusion of Black people Cummins to strive for a more society which gives us our majority of our employees who can work safely reopen and posted them publicly and other people of color at all levels prosperous and just world. charter,” longtime Cummins from home have been doing so for more in a playbook to help other businesses of the company; Chairman CEO J. Irwin Miller than three months. This allowed us to and to promote a broad recovery. Use our voice and influence to » wrote in the company’s Annual focus resources and investments on our advocate for social justice; None of this would have been possible Report in 1972. “We can in the engineering and production facilities. without the hard work, dedication and Engage with the criminal justice long run be a healthy company In those facilities, we have taken many » innovative spirit of our employees, system to promote change; and only in so far as we exist and steps to protect the health and safety of managers, leaders and our Board of Tom Linebarger serve within an economically our people, including: » Support organizations working in Chairman and CEO Directors. I am deeply grateful for their economic empowerment, education and socially healthy society.” Cummins Inc. » Mandatory health screenings at continuing courage and commitment in and health care in our communities The model has been embraced Cummins plants and facilities; this challenging environment. to promote equity for Black people by Cummins’ leaders ever since. and people of color. » Personal protective equipment (PPE) Now we face another critical challenge. for frontline employees; Like many, I have been horrified by the » Masks required inside open plants killings of Black people in the U.S. at the and facilities; hands of authorities entrusted to protect
3 SPECIAL REPORT //
By the time the World Health Organization declared CUMMINS COVID-19 a pandemic on March 11, Cummins was moving AND COVID-19 quickly to support customers while protecting employees and the communities where the company does business.
The company was well aware of the virus The Board of Directors moved quickly to operations, supply chain, health and by then. In early 2020, production began reduce costs while ensuring the company safety and more. The Board of Directors Editor’s Note: While this report focuses on Cummins’ environmental, slowing at Cummins’ operations in China, supported critical, frontline workers. also began holding additional “virtual” social and governance performance in 2019, the company feels compelled to briefly report on the unprecedented impact of COVID-19 in 2020. including the company’s seven plants in In early April, the board authorized meetings, and by June 1 had met nine Wuhan, which went into lockdown on temporary pay reductions for itself, the times in 2020 to carry out its oversight Jan. 23 to fight COVID-19. By March, CEO and company Vice Presidents. responsibilities. conditions began stabilizing in China, but The board reduced its pay by 25%, the virus started impacting India, Europe the CEO’s salary by 50% and Vice Employees across Cummins did their and North America. Presidents’ pay by 25%. Cummins part, too, supporting customers while also implemented temporary pay and upholding the company’s tradition of On March 13, just two days after the work-hour reductions for exempt and community engagement. One employee, pandemic was declared, Cummins office employees around the world for example, created modeling to help his offices around-the-world began closing, while preserving pay for many frontline local hospital predict COVID-19 spikes; as employees were asked to work from manufacturing, Distribution and critical another helped a major childcare provider home if possible. The majority of the research and development employees. develop a contingency plan enabling it to company’s manufacturing facilities would safely remain open when a staff member experience shutdowns of four to six Cummins took other steps as well, contracted the virus. weeks. All of Cummins’ operations in establishing a risk assessment team China were back operational by the end to review the latest virus information There’s no question COVID-19 tested of the first quarter, but additional actions and make decisions consistent with Cummins, and the company showed were necessary to keep the company on the company’s values. The team, led its mettle in every possible way. solid financial footing. by the President and Chief Operating Officer, continues meeting regularly on
The Cummins Sales and Service branch in Indianapolis, Indiana (U.S.) demonstrates safe behaviors to support customers doing essential work. 4 SPECIAL REPORT //
Here’s a quick look at how the company has performed in the key areas MAKING A of the environment, social issues and governance during the pandemic: DIFFERENCE ENVIRONMENT SOCIAL GOVERNANCE » Maintained commitment to implement » Established health screenings and » Increased Board of Directors meetings PLANET 2050 environmental strategy temperature checks at open Cummins to provide oversight and guidance in IN A PANDEMIC (see page 20), including internal plants and facilities to keep frontline risk management, planning for a strong planning roadmaps and functional employees safe. recovery and protecting shareholder engagements. interests. » Mandated face masks inside open » Continued investments in research facilities and provided them without » Established daily senior leadership and development of low-carbon charge to employees. meetings on managing the crisis, technologies through cost savings covering production, supply chain, » Redesigned production lines, in other areas. entrances and exits to allow and health and safety and other issues. » Pursued final year of 2020 encourage social distancing. » Created a plan-ahead team environmental goals (see page 23), to anticipate future COVID-19 » Expanded healthcare and leave with focus on low- and no-cost power programs to support employees developments and implement steps down actions during plant shutdowns. and their families. needed for a strong recovery. Reviewed site environmental permits Produced Safe Work Playbook » » Used the company’s Cummins » to identify startup requirements Response Center to provide around- documenting policies and procedures related to monitoring, inspections, the-clock assistance to employees to safely close, open and operate sampling, training, waste storage with questions regarding COVID-19. facilities in a pandemic. and administrative requirements. Made playbook publicly available to » Issued $2 million in emergency » » Inspected waste water treatment COVID-19 grants to communities help other companies reopen and systems prior to plant restarts and around the world to support families contribute to a strong recovery. ensured readiness to effectively and children. » Suspended stock buybacks in second treat accumulated wastewater. quarter to align with focus on liquidity » Partnered with 3M to manufacture » Activated pollution prevention high-efficiency particulate filters for and strength of the company. measures related to storage and 3M’s powered air-purifying respirators disposal of accumulated chemicals, used by medical personnel. fuels and oils during shutdowns. » Partnered with DuPont to supply NanoNet® media for use in N95 respirator masks for healthcare professionals.
5 2 19 32 46 INTRODUCTION ENVIRONMENT SOCIAL GOVERNANCE / CONTENTS ECONOMIC
02 A note from the Chairman PLANET 2050 INITIATIVE COMMUNITY ENGAGEMENT BOARD OF DIRECTORS 04 Cummins and COVID-19 20 New strategy charts path 33 Building more 47 Good governance provides to sustainable future prosperous communities important oversight 05 Making a difference in a pandemic 34 Community impact and giving 07 Sustainability at Cummins COVID-19 IMPACT ETHICS AND COMPLIANCE 22 COVID-19’s potential impact 35 Engineering solutions 49 Sustainability starts with 08 About the cover on 2020 goal progress to gender inequality ethics and compliance 09 Materiality 37 Transforming lives through 2020 GOAL PROGRESS RISK MANAGEMENT 10 Key Performance Indicators technical education 23 Cummins pushes to meet 50 Cummins builds on 11 The U.N.’S Sustainable 2020 Environmental Goals HEALTH AND SAFETY human rights policy Development Goals 24 Energy and GHG 39 Powering a healthier 52 Managing risk effectively 13 Who we are and safer world 26 Water GOVERNMENT RELATIONS 14 How we do it 27 Waste DIVERSITY AND INCLUSION 53 Promoting the power of choice 15 Cummins’ story 41 Diversity and inclusion play 28 Products in use 54 Lobbying 16 Our key tools key roles in sustainability 29 Logistics 17 Awards and recognition 42 Women at Cummins INNOVATION 30 Environmental goals update 55 Innovation to power the world 18 Future focused WORKFORCE PARTNERSHIPS, ADVOCACY 44 A great place to build a career 57 Partnering for progress 31 Advocacy, partnerships SUPPLY CHAIN critical to progress 58 Supply chain transforms sustainably 59 Supply chains do more to use less 60 Supply chain works to preserve human rights
CUSTOMER SUPPORT 61 Putting technology to work for Cummins customers
FINANCIAL PERFORMANCE 63 Cummins achieves record profitability in 2019, prepares for expected downturn in 2020 6 This is the first of the company’s reports 2019 CDP 2019-2020 on sustainability over the next 12 weeks. Cummins is committed to sharing its SUSTAINABILITY SUSTAINABILITY Others include: CDP (formerly the Carbon Disclosure OVERVIEW Project) water and climate filings. The Cummins has also put together AT CUMMINS 2019 CUMMINS CDP was established to help build a another sustainability brochure GRI DATA BOOK truly sustainable economy by helping to give readers a very high-level look The company is again producing a cities, companies and investors measure at the company’s sustainability efforts. At Cummins, the company’s separate posting called Cummins’ 2019 and understand their environmental The overview is posted with the GRI Data Book. It follows the format impact. The 2019 filings will be posted company’s other sustainability approach to sustainability aligns of the Global Reporting Initiative (GRI) in Cummins’ sustainability document related reports and documents established by the United Nations to repository by the end of August 2020. in the document repository. closely to its mission to make develop a consistent way for companies to report on their environmental, social OUR DATA and economic performance. It will be SUSTAINABILITY AT CUMMINS | 2019-2020 Data in this report covers well over 75% people’s lives better by powering posted in the company’s sustainability of the company’s operations. More than document repository by the end of July. 80% of the Environmental and Social POWERING a more prosperous world. Data has been reviewed by Bureau A MORE 2019 CUMMINS Veritas, a world leader in certification. PROSPEROUS A more prosperous world is a world with clean air and water, where businesses WORLD SASB REPORT Its Independent Assurance Statement are partners in weaving a stronger social fabric, and where the benefits of economic is included in the GRI Data Book. growth are shared by as many people in as many communities as possible. Cummins for the first time will produce a report aligned specifically Financial data comes from the Annual The company’s Sustainability Progress Report is organized around three key areas to the disclosures in the Sustainability Report on Form-10K, which is audited in this pursuit: environmental reporting, social reporting and governance/economic Accounting Standards Board (SASB) by PricewaterhouseCoopers LLP, reporting. Cummins strives to be consistent with the reporting structures established reporting platform. SASB was an independent registered public by the Dow Jones Sustainability Indices, the Global Reporting Initiative, and this year, established in 2011 to provide investors accounting firm. for the first time, the company will be formally reporting to the platform established by with industry-specific sustainability the Sustainability Accounting Standards Board (SASB). information about the companies they were considering investing in. This Cummins strives to achieve the environmental, social and governance disclosures report will be posted in the company’s suggested by these and other groups. The company also reports regularly on its sustainability document repository by the sustainability efforts in The Newsroom on cummins.com. end of July. 2019-2020 Sustainability Overview
7 ABOUT THE COVER Our cover captures a busy year in sustainability in 2019. PLANET 2050 Cummins Chairman ELECTRIFIED POWER COMMUNITIES Cummins employees Here’s a quick look at the and CEO Tom Linebarger introduced Transportation officials in Santa Monica, are building stronger communities a new environmental strategy in 2019 California (U.S.), introduced electrified around the world. Here, a joint venture story behind each photo: to address challenges such as climate power to their transportation system employee in China hands out reusable change. It includes specific goals timed in 2019, a GILLIG battery electric bus bags to young students to promote to 2030 and aspirations for the company powered by Cummins’ new electrified environmentalism. extending to 2050. power platform.
INTRODUCTION ENVIRONMENT SOCIAL ECONOMIC SUSTAINABILITY AT CUMMINS 2019-2020
POWERING A MORE PROSPEROUS WORLD
HYDROGEN Cummins made a major GENDER EQUITY A Cummins CLEAN CRUISING The Clean Cruisers investment in low-carbon hydrogen employee mentors a student as part demonstrated in 2019 that adventuring technology in 2019, acquiring hydrogen of the Cummins Powers Women can be done in a low-carbon way. They production technologies provider initiative to promote gender equality. used Cummins’ diesel crate engines in Hydrogenics Corporation. The company their vehicles, running on biodiesel, and renamed its Electrified Power segment planted trees across Central America. New Power to reflect its broader mission.
8 RA EGIC MATERIALITY PRODUCT QUALITY, O OR NI IE / SAFETY, CUSTOMER GA TRAINING AND SATISFACTION
It’s hard to imagine a more ENERGY EFFICIENT AND LOW-EMISSION TECHNOLOGY eventful first six months of 2020. PRODUCTS & INNOVATION
OCCUPATIONAL HEALTH, TRAINING AND DEVELOPMENT As a result, discussions have begun at Cummins O A E O ER IM OR ANCE SAFETY AND WELLNESS DIVERSITY AND on ways the company’s materiality matrix should be ENVIRONMENTAL INCLUSION COMPLIANCE PRODUCT LIFE CYCLE EMISSIONS updated to reflect the global COVID-19 pandemic AND END OF LIFE, AND SUPPLY CHAIN REMANUFACTURING HUMAN ENVIRONMENTAL ENERGY and the need to address racial inequities raised RIGHTS CONDITIONS SUPPLY CHAIN by protests for social justice. DISCLOSURE WORKING CONDITIONS O N A IONA The company will build on its matrix The resulting matrix identified areas PAY AND EQUAL EMPLOYEE ENGAGEMENT REMUNERATION AND WORKPLACE CULTURE developed in late 2018, working such as supply chain, customer training CLIMATE RISK EMPLOYEE WASTE BENEFITS MANAGEMENT MATERIALS SOURCING with Deloitte to identify issues where and satisfaction, and technology and AND TRACEABILITY Cummins has the biggest environmental, innovation as potential opportunities for BOARD DIVERSITY AND COMMUNITY INDEPENDENCE social and governance/economic impact expanded action and reporting attention. PUBLIC ENAGEMENT and reporting gaps. Those areas are addressed in this POLICY 2019 report. Cummins and Deloitte interviewed key SUPPLIER WATER MONI OR voices in and outside the company, However, events in the first half of DIVERSITY including non-governmental organization 2020 put health and safety and leaders, public officials, customers, diversity and inclusion in a new light. agencies that rate and rank companies That will undoubtedly be reflected in on sustainability, as well as company the company’s revised matrix and its leaders and board members. More than sustainability reporting next year. 1,000 Cummins employees were also polled on their sustainability priorities. C MMIN IM AC EMPLOYEES PARTNERS AND CUSTOMERS ENVIRONMENT PRODUCTS CORE BUSINESS AND GOVERNANCE
The X axis includes impacts that are important to Cummins. The Y axis includes impacts that are important to stakeholders outside the company.
9 2017 2018 2019
ECONOMIC Revenue $20.4 billion $23.8 billion $23.6 billion
KEY Net Income $999 million* $2.1 billion $2.3 billion
* Excluding charges totaling $777 million in connection with tax reform in the United States, full year net income PERFORMANCE attributable to Cummins was $1.8 billion ($10.62 per diluted share), with a full year tax rate of 24.5%. INDICATORS 2017 2018 2019 ENVIRONMENTAL GHG emissions (thousands of metric tons CO e) 778 808 753 Cummins takes a broad view 2 Energy consumption1 (thousands of MMBtu) 13,656 14,374 14,038 of sustainability, including the Water use (millions of gallons) 964 949 895 environment, corporate responsibility, Water intensity reduction2 (2010 baseline) 44% 50% 53% health and safety, diversity and Energy intensity reduction2,3 (2010 baseline) 25% 29% 31% inclusion, employee development GHG intensity reduction2,3 (2010 baseline) 33% 37% 42% and governance. The company tracks Recycling rate 90% 90% 91% many key performance indicators. 2017 2018 2019 Here are just a few: SOCIAL H&S Severity Case Rate 0.251 0.264 0.225
H&S Incidence Rate 0.691 0.646 0.593
Code of Conduct cases 1,904 2,215 2,436
Women leaders in the workforce 21.80% 23.22% 23.90% Cummins believes in 1 Primary energy excludes sold transparency. This icon electricity and associated fuel usage Every Employee Every Community (EEEC) participation rate 82% 83% 82% identifies multi-year data that 2 Intensity defined as adjusted for sales allows for comparisons. (energy / GHG) or hours worked (water) People impacted by EEEC projects 3.3 million** 4.3 million 6.5 million 3 Reduction includes consolidated entities only **First year for calculation
10 THE U.N.’S SUSTAINABLE U.N. GOAL CUMMINS’ ROLE STATUS SUMMARY LEARN MORE NO. 1 Cummins TEC provides Launched in 2012, TEC has produced Page 37 NO POVERTY disadvantaged youth a 376 graduates as of 2019 from programs DEVELOPMENT path to decent jobs. around the world. GOALS NO. 4 Education is one of three areas Twenty-two percent of the company’s Page 34 Cummins supports the U.N.’s Sustainable QUALITY of focus for the company’s Corporate Responsibility grants in 2019 EDUCATION community engagement efforts. went to education initiatives, often Development Goals to “end poverty, protect supporting employee-led projects. the planet and ensure prosperity for all.” As a signer of the U.N. Global Compact in 2017, NO. 5 Cummins Powers Women works The Cummins Powers Women initiative Page 35 GENDER with expert non-profits to address impacted the lives of more than the company wants to do its part to make the EQUALITY equality for women and girls. 100,000 people since its launch in 2018. world a better place to live. The company believes its initiatives touch 17 goals with a special focus on 10 where it has the biggest impact: NO. 6 Water is a key focus for the Cummins avoided using about 1 billion Page 20 CLEAN WATER company’s 2020 goals as well gallons of water between 2010 and 2020 Page 26 AND SANITATION as its PLANET 2050 strategy. by implementing conservation measures. Page 59
NO. 7 Energy is a key focus for the A Cummins-supported wind farm Page 20 AFFORDABLE company’s 2020 goals as well in Indiana (U.S.) is sending enough Page 24 AND CLEAN as it’s PLANET 2050 strategy. renewable power to offset nearly a Page 25 ENERGY third of the electricity Cummins uses worldwide with renewable power.
11 ABOUT THE GLOBAL COMPACT THE U.N.’S SUSTAINABLE Cummins is a member of the United Nations DEVELOPMENT GOALS (CONT.)
Global Compact. It is organized around U.N. GOAL CUMMINS’ ROLE STATUS SUMMARY LEARN MORE 10 fundamental principles: NO. 8 The company’s mission is to The company established a “living wage” Page 44 DECENT WORK build a more prosperous world in the United States of $15 per hour and is HUMAN RIGHTS ENVIRONMENT AND ECONOMIC for all stakeholders. taking steps to address wages elsewhere. GROWTH » Businesses should support » Businesses should support and respect the protection of a precautionary approach to internationally proclaimed human environmental challenges. Cummins is implementing In 2019 Cummins installed a number Page 58 rights. NO. 9 » Businesses should undertake INDUSTRY its own Industry 4.0 initiative to of collaborative robots at its facilities » Businesses should make sure initiatives to promote greater INNOVATION AND upgrade its manufacturing efforts. and upgraded its 3D printing capabilities. INFRASTRUCTURE that they are not complicit in environmental responsibility. human rights abuses. » Businesses should encourage the development and diffusion LABOR NO. 12 Improving the company’s In 2019, Cummins missed by a single Page 24 of environmentally friendly RESPONSIBLE energy consumption is a percentage point reaching its 2020 goal » Businesses should uphold the technologies. CONSUMPTION key focus of Cummins’ of a 32% reduction in energy intensity, freedom of association and the AND PRODUCTION 2020 environmental goals. energy use adjusted by hours worked. effective recognition of the right ANTI-CORRUPTION to collective bargaining. » Businesses should work » Businesses should work for the against corruption in all its forms, NO. 13 Addressing climate change The strategy includes science-based Page 20 elimination of all forms of forced including extortion and bribery. CLIMATE is part of the company’s 2030 goals, aligned with the Paris ACTION PLANET 2050 strategy. Agreement to address climate change. and compulsory labor. » Businesses should strive for the effective abolition of child labor. » Businesses should support the NO. 17 Cummins believes strongly Cummins partners with a wide range Page 31 PARTNERSHIPS in partnering to improve its of groups, from the Department of Page 35 elimination of discrimination in TO ACHIEVE products, build stronger Energy to the Meadow Lake Wind Farm. Page 37 employment and occupation. GOALS communities and address It also partners with non-profits through Page 57 the environment. Cummins Powers Women.
12 WORLD HEADQUARTERS WHO 500 Jackson St. WE ARE Columbus, IN 47201 EST. Cummins Inc., a global technology leader, is a corporation of complementary business segments designing, manufacturing, www.cummins.com distributing and servicing a broad portfolio of power solutions. The company’s products range from diesel and natural gas engines to hybrid and electric platforms, as well as related EMPLOYEES technologies, including transmissions, battery 61,615 WORLDWIDE systems, fuel systems, controls, air handling, CMI More than 50% of the company’s employees filtration, emission solutions, and power STOCK SYMBOL are located outside the United States. generation systems. (New York Stock Exchange) (as of Dec. 31, 2019)
FORTUNE 500 CUSTOMERS SALES / EARNINGS RANKING (2020) Cummins serves customers online, through a In 2019, Cummins earned $2.3 billion ($2.4 billion excluding restructuring), network of company-owned and independent on revenues of distributor locations, and through thousands 132 of dealer locations worldwide. $23.6 billion
13 CUMMINS SUSTAINABILITY PROGRESS REPORT 2019-2020 HOW WE DO IT
For almost 20 years Cummins was ENGINE SEGMENT DISTRIBUTION organized into four business segments. Clean, efficient, dependable and durable, The Distribution segment provides sales, Cummins engines are found in nearly service and support to customers around Then, in 2018, the company established every type of vehicle and equipment on the world through the largest number of Earth. The Engine segment designs and certified service and support locations of the Electrified Power segment to builds diesel and natural gas engines any engine manufacturer. Cummins has for heavy and medium duty trucks, COMPONENTS the technical expertise and experience to develop electric powertrains and buses, light duty trucks and for off- Engine manufacturers around the world deliver fast, high quality repairs; planned highway markets including agriculture, incorporate Cummins components to maintenance and upgraded solutions. construction and military equipment. make their products truly outstanding. related components. In 2019, the The Components segment is organized segment was renamed New Power POWER SYSTEMS around these entities: NEW POWER The New Power segment includes » CUMMINS EMISSION SOLUTIONS designs Cummins is a world leader in the design electrification, lithium-ion, fuel cells to better represent its expanded and builds exhaust aftertreatment and manufacture of power generation and renewable hydrogen production solutions to reduce engine emissions. portfolio, including electrification, equipment. The Power Systems segment technologies and potentially other produces power generation systems, new power options. Cummins in components, and services in standby » CUMMINS FILTRATION designs and hydrogen-powered fuel cells and builds heavy duty air, fuel, hydraulic 2019 acquired Hydrogenics, a fuel and prime power, distributed power cell and hydrogen production generation and auxiliary power in mobile and lube filtration, and chemical and potentially other new technologies. exhaust system technology products. technologies company, which applications. It also designs and builds is now included in the segment. the high horsepower engines used for » CUMMINS FUEL SYSTEMS designs these and other purposes. and builds fuel systems that maximize power and fuel economy while helping reduce emissions.
» CUMMINS TURBO TECHNOLOGIES designs and builds turbochargers to maximize engine performance and reduce emissions and fuel consumption.
14 CUMMINS’ STORY
WHY WE EXIST HOW WE WILL DO IT
MISSION VALUES LEADERSHIP INTEGRITY CULTURE Making people’s lives better by Doing what you say you will Inspiring and encouraging do and doing what is right all employees to achieve powering a more prosperous world DIVERSITY & INCLUSION their full potential Valuing and including our differences in decision making BRAND is our competitive advantage PROMISE WHAT WE WANT TO ACCOMPLISH CARING Demonstrating awareness Powering our customers and consideration for the through innovation VISION wellbeing of others and dependability Innovating for our customers EXCELLENCE Always delivering superior results STRATEGY Delivering value TEAMWORK to power their success to all stakeholders Collaborating across teams, functions, businesses and borders to deliver the best work
CUMMINS SUSTAINABILITY PROGRESS REPORT 2019-2020 15 CUMMINS OPERATING SYSTEM
The purpose of the Cummins Operating OUR KEY TOOLS System is to continuously improve the company’s products and services by eliminating waste and reducing variation Here are some key metrics: The tool’s impact, however, goes in processes. The 10 practices are: Cummins is a big proponent of beyond cost savings and building 1 » 15,589 employees have been stronger communities. The tool provides trained on Six Sigma common 01 Put the customer first Cummins with a common language 1 1 and provide real value. Six Sigma, using the business tools through 2019, including and collective mindset that can be Put the customer first, and provide real value 13,871 exempt employees used to address a problem or challenge who are trained to lead Six 02 Synchronize flows (material, improvement tool to save the almost anywhere in the world. The most physical and information). Sigma projects with common, impactful projects are honored as part Synchronize flows (material, physical continuous improvement and information) company and its customers of the company’s annual Impact Awards. 03 Design quality in every methodologies. step of the process. As a continuous improvement company, billions of dollars. » 1,087 current employees took Cummins is committed to providing great 04 Involve people and Six Sigma training in 2019. employees with the tools they need to promote teamwork. Involve people and Six Sigma uses data-based analysis to identify defects solve the most important challenges promote teamwork » Six Sigma projects have in the business, and to recognize the 05 Ensure equipment and tools and variation in a wide range of manufacturing and identified an estimated outstanding work they do. are available and capable. Ensure equipment and tools are available and capable business situations. Cummins employees also use $7.42 billion in Profit Before 06 Create functional Interest and Taxes (PBIT) Six Sigma has been widely credited with Six Sigma when working with community partners helping turn Cummins into the vibrant excellence. Create savings since the tool was functional excellence on Corporate Responsibility projects. and innovative company it is today. first implemented in 2000, 07 Establish the Heading into its 20th year as a key part including $231 million in 2019. right environment. Establish the of Cummins, Six Sigma has established right environment itself as the principal problem-solving tool » Cummins customers 08 Treat preferred used at the company. have saved an estimated suppliers as partners. Treat preferred suppliers $2.43 billion through Six Sigma as partners since the tool was first offered 09 Follow common problem solving techniques.
to them in 2005, including Follow common problem solving techniques $88.8 million in 2019. 10 Use Six Sigma as the primary process improvement method.
Use Six Sigma as the primary process improvement method
16 DIVERSITY » Cummins in 2020 was named one of » Cummins in 2020 was included in AND INCLUSION the TOP 70 COMPANIES FOR EXECUTIVE the 3rd Annual JUST 100, a ranking AWARDS AND WOMEN by the National Association for of America’s best corporate citizens Female Executives, recognizing U.S. by Forbes and Just Capital. RECOGNITION companies with a strong focus The company finished No. 98. on moving women to senior ranks. MANAGEMENT Cummins received several ETHICS AND AND WORKPLACE ETHICAL BEHAVIOR awards during 2019 and early
2020. Here’s a quick look: » Cummins was named in 2019 to DIVERSITY BEST PRACTICES 3RD ANNUAL INCLUSION INDEX, recognizing ENVIRONMENT AND » Cummins was named to companies performing at high levels SUSTAINABILITY BARRON’S 2020 LIST OF AMERICA’S in recruitment, retention, advancement 100 MOST SUSTAINABLE COMPANIES. and company culture. » Cummins was named to the WALL Cummins finished No. 50. » Cummins in 2020 was named one » Cummins was named in 2020 one of STREET JOURNAL’S 2019 MANAGEMENT of AMERICA’S TOP CORPORATIONS » Cummins was named to the WORLD’S MOST ETHICAL COMPANIES TOP 250, which looks at corporate FOR WOMEN’S BUSINESS ENTERPRISES INVESTOR BUSINESS DAILY’S 50 for a 13th consecutive year by the performance in employee engagement by the Women’s Business Enterprise BEST ESG COMPANIES (environment, Ethisphere Institute, a leader in and development, customer National Council, recognizing social and governance) in 2019. advancing ethical business practices. satisfaction and innovation. companies with world-class The company ranked No. 48. The company ranked No. 88. supplier diversity programs. » Cummins in 2019 was included in » Cummins was named to the Newsweek magazine’s first ranking » Cummins in 2019 was named to » Cummins in 2020 received a perfect FTSE4GOOD INDEX 2019. of AMERICA’S MOST RESPONSIBLE job search website Glassdoor’s list » Cummins was named in 2019 to the score for a 15th consecutive year The index measures the COMPANIES, finishing No. 17. of the TOP 100 BEST PLACES TO WORK. DOW JONES INDICES OF THE MOST from the Human Rights Campaign performance of companies The company ranked No. 46. » Cummins in 2019 was named to SUSTAINABLE COMPANIES IN NORTH demonstrating strong environmental, (HRC), the largest LGBTQ civil rights Corporate Responsibility magazine’s » Cummins Chairman and CEO Tom AMERICA. It was the 14th consecutive social and governance practices. organization in the United States. year Cummins made the list. The company was also named to list of the 100 BEST CORPORATE Linebarger was named to Fortune HRC’s list of THE BEST PLACES TO CITIZENS. The company ranked No. 27. Magazine’s list of BUSINESS PERSONS WORK FOR LGBT EQUALITY. OF THE YEAR in 2019. He was No. 12.
17 1972 2015 Miller lays out his thinking on Corporate Responsibility in Cummins’ 1972 Annual Report. Cummins names Jennifer Rumsey its Chief “While some still argue that business Technical Officer, the company’s first female CTO. 1962 has no social responsibility, we believe Rumsey, who joined Cummins in 2000, replaces that our survival in the very long run is the retiring CTO Dr. John Wall. FUTURE FOCUSED Cummins begins operations as dependent upon responsible citizenship in India, first as a joint venture 2019 in our communities and in the society as it 1937 with one plant in Pune. is on responsible technological, financial For more than 100 years Today, the company owns all or part of Cummins unveils PLANET 2050 and production performance.” Cummins earns 20 manufacturing facilities in the country strategy to further reduce its carbon Cummins has been at the its first profit. and employs nearly 14,000 people. footprint and address climate change. forefront of new ideas. 1934 Here’s a brief look J. Irwin Miller, great-nephew 1951 at the company’s of W.G. Irwin, becomes remarkable history. general manager of Miller becomes Chairman Cummins at the age of 24. of the Cummins Board.
1910 1920 1930 1940 1950 1960 1970 1980 1990 2000
Clessie Cummins creates the Cummins takes Irwin for a ride in a used Packard Miller helps Dr. Martin Luther King, Jr. with Cummins purchases President and Chief Operating Officer Cummins celebrates Cummins Engine Company limousine that he equipped with a diesel engine some of the organizing behind the 1963 86% of the Onan Tom Linebarger succeeds Tim Solso 100 years in business. based in Columbus, Indiana (U.S.). on Christmas Day, convincing Irwin of the engine’s March on Washington. Miller was acting as Corporation in suburban as Chairman and CEO on Jan. 1, 2012. William G. Irwin, who employed potential. Irwin invests a much-needed infusion of cash. leader of the National Council of Churches. Minneapolis, Minnesota During Solso’s 10 years leading Cummins Cummins as a driver, supplies (U.S.), which would the company experienced record growth. nearly all of the $50,000 in 1929 1963 become the basis for its startup capital. Power Systems Business. 2012
Miller becomes Executive Cummins barnstorms across the country, 1986 Vice President of Cummins. demonstrating the power and fuel Cummins establishes its Electrified Power efficiency of the diesel engine in his business segment, renaming it New Power 2019 1944 in 2019 to reflect investments in hydrogen Coast to Coast Cummins Diesel Test Bus. Cummins enters China as part of a Miller retires as Chairman of generation and hydrogen fuel cells. deal involving heavy construction the Board, although he remains equipment with active with the company until Cummins engines. his death in 2004.
1919 1975 1977
1932 2018
18 ENVIRONMENT Cummins is committed to reducing its carbon footprint and doing more to use less of the world’s natural resources. The company is also committed to acting with transparency.
WHAT’S INSIDE:
PLANET 2050 INITIATIVE...... 20
COVID-19’S POTENTIAL IMPACT ON GOALS...... 22 Cummins in 2019 achieved its goal to encourage the use 2020 GOAL PROGRESS...... 23 of renewable energy when an expansion the company supports PARTNERSHIPS, ADVOCACY...... 31 of a wind farm in northwest Indiana (U.S.) went fully operational. To learn more, see page 25.
19 PLANET 2050 INITIATIVE //
The company’s new PLANET 2050 Cummins leaders say progress on strategy includes science-based goals the 2030 goals will be periodically NEW STRATEGY for products and facilities timed to 2030 evaluated and communicated, including LEADERSHIP VOICES that meet the standards adopted by the consideration of whether more can CHARTS PATH TO United Nation’s Intergovernmental Panel or should be done in line with global on Climate Change. Science-based goals energy and environmental challenges. “It’s clear that are designed to limit global temperature government, SUSTAINABLE FUTURE rise to no more than 1.5 degrees Celsius The company’s strategy also includes businesses, addressing environmental needs in by the middle of the century. nongovernmental the communities where the company’s To do its part to address climate change PLANET 2050’s longer term aspirations employees live and work and where organizations and include powering customer success Cummins does business. Those goals communities must unite and other global environmental challenges, through carbon neutral technologies are under development. behind swift, decisive action for products and facilities, designing to address the environmental Cummins announced in 2019 a new out waste in products and processes, ASPIRATIONS FOR 2050 threats we face.” and emitting near zero pollution levels The strategy’s aspirations are a first for environmental sustainability strategy with in local communities. TOM LINEBARGER the company. The 2050 targets are Chairman and CEO goals timed to 2030, and aspirations for 2050. The new strategy builds on the success organized around the same categories Cummins of goals announced in 2014 and timed as the 2030 goals and include: to 2020 to reduce the company’s energy “Since our » Powering customer success using and water use as well as the carbon communities and carbon neutral technologies that dioxide (CO ) from its products. 2 address air quality. businesses depend on a healthier planet, CHALLENGING GOALS » Wasting nothing through the circular economy principles to use less, we will take strong Cummins’ eight 2030 goals (page 21) use better and use again. action on climate change and are divided into two categories: » Having a net positive impact in every work toward a future where Goals addressing climate change and community where Cummins operates. we waste nothing.” air emissions, and goals for the use of natural resources in the most BRIAN MORMINO sustainable way. Executive Director, Technical & Environmental Systems Cummins
Cummins Chairman and CEO Tom Linebarger unveils PLANET 2050 in November 2019.
20 PLANET 2050 INITIATIVE //
PLANET 2050 NUMBERS 2050 ASPIRATIONS 2030 GOALS
COMMUNITIES ARE 1. Reduce absolute 300 MILLION ETTER ECAUSE DOING OUR PART TO greenhouse gas (GHG) Metric tons of carbon dioxide WE ARE THERE ADDRESS CLIMATE CHANGE emissions from facilities and operations by 50%. (CO2) to be reduced through AND AIR EMISSIONS 2050 TARGETS 2. Reduce scope 3 science-based goals by 2030. 2050 TARGETS absolute lifetime GHG Net positive impact in SCIENCE-BASED TARGETS emissions from newly every community where Customer success is powered sold products by 25%. Cummins operates. by carbon neutral technologies 3. Partner with customers that address air uality. to reduce scope 3 GHG Near zero local site 100% Carbon neutrality and near zero emissions from products environmental footprint. pollution in Cummins’ facilities in the field by 55 million Packaging plastics at Cummins to and operations. metric tons. be reused or responsibly recycled by 2030 under PLANET 2050. 4. Reduce volatile organic compounds emissions USING NATURAL from paint and coating operations by 50%. RESOURCES IN THE 5. Create a circular life-cycle 4.0 MILLION MOST SUSTAINA LE WA plan for every part to use less, use better, use again. 2050 TARGETS Tanker trucks full of gasoline 6. Generate 25% less waste equal to the amount of CO2 Design out waste in products in facilities and operations to be removed under the and processes CIRCULAR ECONOMY as a percent of revenue. company’s 2030 goals. Use materials again for next life 7. Reuse or responsibly recycle Reuse water and return clean 100% of packaging plastics to the community and eliminate single-use plastics in dining facilities, at employee events NOTE: Company facilities include all consolidated and as amenities. operations and joint ventures that are part of the 50% Cummins Enterprise Environmental Management 8. Reduce absolute water System. The company’s strategy also includes addressing environmental needs in communities consumption in facilities New 2030 goal for reduction in 2050 where Cummins employees live and work and operations by 30%. volatile organic compounds from PLANET and where the company does business. PROSPERIT LEADERSHIP AD OCAC NURTURE EN IRONMENT TOGETHER Those goals are under development. paint and coating operations.
21 COVID-19 IMPACT // COVID-19’S POTENTIAL IMPACT ON 2020 GOAL PROGRESS
The company’s logistics goal, too, Cummins is facing unprecedented challenges as a business because of COVID-19. could suffer if Cummins expedites shipping to support customers whose While the company’s sustainability goals are critical to the business, other more products are considered essential during the pandemic. The team is immediate company priorities might make progress difficult in 2020. working to remain as efficient as possible while overall volume is down, thus The current environmental sustainability Cummins has aggressively affecting the goal calculation. plan for the remainder of 2020 – subject implemented power-down actions to potential updates – is to: to save energy at facilities subject to Finally, the company’s 2020 energy and shutdowns during the crisis, although water intensity goals will be impacted » Continue implementing capital there is often some energy use to some extent by the reduction of projects for energy and water necessary for critical functions. employee hours as a result of workforce efficiency already underway, actions announced in late 2019 and early where needed resources are That could result in a net energy savings, 2020. Both goals are measured as a not otherwise occupied with but other facilities are working different percentage of employee hours worked. COVID-19 support activities; shifts and open longer to maintain social distancing and implement cleaning Cummins is continuing to track » Postpone until 2021 capital protocols. This could use more energy performance, but the company may spending for projects not than if production lines were optimized not have a full grasp on COVID-19’s already in progress to support for efficiency. impact on its 2020 environmental other business priorities; and goals until early 2021, when results Waste generation may also increase are compiled on 2020 performance. » Continue implementing all as the company prioritizes the safety low- and no-cost environmental of Cummins employees and uses The company will transparently report its An employee works at the Cummins’ initiatives that don’t conflict disposable items such as personal results as always, looking ahead to the engine plant in Seymour, Indiana with any focused COVID-19 (U.S.), in May 2020 after the company protective equipment. challenges and opportunities presented response efforts. implemented new safety protocols by Cummins’ next set of goals for 2030. because of COVID-19.
22 2020 GOAL PROGRESS // CUMMINS PUSHES TO MEET 2020 ENVIRONMENTAL GOALS Six years after announcing its first global environmental sustainability plan, Cummins has achieved three of seven numeric goals and is very close to a fourth, while significantly offsetting the electricity it uses with renewable energy.
Cummins continued to exceed The 2019 year-end energy intensity uses at its facilities in its headquarters the carbon dioxide (CO2) savings it performance was just one percentage state of Indiana. expected to achieve by 2020 through point shy of the company’s 32% goal. partnering with customers on fuel The company, however, acknowledges The company also exceeded its goal to economy projects, avoiding 17 million there could be challenges to meeting its certify 40 of Cummins’ highest energy use facilities to the ISO 50001 Standard, metric tons of CO2. target (page 22) by the end of 2020. which makes efficiency part of the The company has also surpassed its 2020 Cummins also made a significant step company’s everyday operations. water reduction target, a goal that was forward in its goal to use and promote increased just a few years after Cummins’ renewable sources of energy. A northwest In addition to the complications from global environmental sustainability plan Indiana (U.S.) wind farm expansion the COVID-19, external challenges remain was announced in 2014. company is supporting through a virtual to achieving every 2020 goal, especially power purchase agreement completed in the area of waste management. The its first full year of operation in 2019. company is calling on the creativity and hard work of its employees to surmount The Cummins’ engine plant at While the power generated by the these remaining obstacles, if possible. Rocky Mount, North Carolina (U.S.), has a state-of-the-art water treatment expansion doesn’t go directly to system to be brought on-line in 2020 Cummins, the company’s share A goal-by-goal update on Cummins’ that includes filtering through plants of the expansion is now producing progress in 2019 starts on the in a greenhouse to increase the following page. amount of water that can be reused. nearly as much electricity as Cummins
23 2020 GOAL PROGRESS //
Cummins invested $30 million, double a decline in hours worked must be The company’s GHG emissions its typical annual amount, in 140 energy offset by even greater reductions in decreased by about 56,000 metric efficiency and renewable energy projects energy use. Total energy costs in 2019 tons on an absolute basis in 2019 ENERGY ENERGY AND GHG during 2019 toward achieving its energy were approximately $150 million or and fell 7.2% adjusted for hours and greenhouse gas (GHG) goals. about 7% of Cummins’ net income. worked compared to the prior year. STRATEGY Cost savings are projected to be Cummins continues to use about $5.2 million per year. A global campaign for LED lighting Approximately 38,000 metric tons during the year produced impressive of the overall GHG reduction can a facility investment plan approach. This approach Absolute energy use steadily decreased results; about 85% of the company’s be attributed to the use of updated includes a comprehensive during 2019 for the first time since the light fixtures are now LED. emission factors from the U.S. array of energy efficient and company began actively tracking it in Environmental Protection Agency, renewable energy technologies, 2006. Rolling four quarter energy use In 2016, the company pledged to the International Energy Agency such as compressed air Achieve a 32% energy fell 3% from the last quarter of 2018, have 90% of its facility GHG footprint, and other country-specific sources. optimization, test cell energy recovery, on-site solar, the highest absolute quarter of energy or 40 sites, certified to the ISO intensity reduction from energy management standard 50001. Cummins’ primary energy consumption LED lighting and advanced use at the company. machine controls. company facilities By the end of 2019, the company had decreased by 2% on an absolute basis At the end of 2019, Cummins’ energy surpassed the goal, reaching 44 sites. in 2019, while falling by 2.8% adjusted Aggregated savings from by 2020 and increase intensity reduction of 31% was just for hours worked compared to 2018. energy efficiency efforts total the portion of electricity short of its 32% goal, impacted by a Between 2010 and 2019, the company’s about $62 million per year. 9% decline in hours worked measured energy efficiency and renewable energy Cummins uses derived efforts reduced Cummins’ GHG intensity Cummins uses tools and from mid-year to end of year. Since resources available from by 42%. GOAL from renewable sources. Cummins’ goal is an intensity goal, 2019 programs such as ISO 50001, 32% the international energy 31% management system standard, 2018 ENERGY and the U.S. Department of INTENSITY 29% Energy’s Superior Energy Performance (SEP) program. BASELINE YEAR: 2010 PROGRESS 2017 Percentage reduction in energy 2015 2016 intensity (adjusted by hours worked) 25% compared to 2010 baseline year. 24% 24%
2014 19%
24 2020 GOAL PROGRESS //
ENERGY AND GHG
Meanwhile, Cummins Juarez, CUMMINS EXPANDS a Components facility in Juarez, Mexico, expanded its solar array, A LOOK AT SOLAR Cummins has solar USE OF RENEWABLES adding 172 kWp of renewable power. arrays around the world. Here’s three examples: HARNESSING WIND POWER Cummins has made a major commitment to renewable energy, pursuing both solar Since it went online in mid-December BEIJING, CHINA 2018 to end of 2019, the Meadow and wind projects in 2019. Crews in 2019 expanded the Lake VI wind farm in northwest Indiana solar array at the Beijing Foton (U.S.) generated enough renewable Cummins Engine Plant to a SOLAR HEATING UP “Our campaign approach helped us energy to offset 15.7% of Cummins second building. to get the benefits of economies of global facilities’ carbon footprint. The company had 25 onsite solar scale and deliver significant value to the The expansion was made possible photovoltaic (PV) system installations business and environment,” said Ajay through Cummins’ 15-year virtual JUAREZ, MEXICO in operation in 2019, with a total Vaidya, India ABO Facilities Leader. power purchase agreement (VPPA) generation capacity of 16.9 MW. In 2019, Cummins Juarez for 75 MW capacity signed in 2017. Nine new solar PV projects were expanded the solar array In China, the Beijing Foton Cummins at the plant. added in India, alone, where solar Engine Company in 2019 expanded Renewable energy credits (RECs) from intensity is high, and power from the the largest solar array in the company, the project totaled 126,774 metric tons JAMESTOWN, NEW YORK (U.S.) grid is carbon-intensive and expensive. adding panels to a second building that, of CO2e (carbon dioxide equivalent), thanks to technology advances, will The Cummins’ engine plant in Cummins has 11 total solar installations which will directly come off Cummins’ produce nearly as much power as the Jamestown, New York, includes in India, with three more expected to be GHG footprint. Cummins will retire original 650,000 square foot array built a solar array. The plant is part complete in 2020. The company has a the RECs. The VPPA provided the in 2016. That array generates about of the U.S. Department of total solar capacity of 10 MW in India, anticipated hedge effect against energy 15% of the building’s electricity needs. prices, as a slight price settlement loss Energy’s Better Buildings, providing about 9% of the total electricity Better Plants Challenge. Cummins uses in the country. was offset by reduced utility costs at the company’s Indiana plants.
25 2020 GOAL PROGRESS //
Cummins met or exceeded both Since the goal’s baseline year of 2010, with community improvements of its 2020 water goals in 2019. direct water use is down by 21%, that either conserve water or make The company hit its water use intensity even with an increase in the number new water sources available. WATER WATER (water use adjusted for hours worked) of facilities during that time period. reduction target of 50% in 2018, Examples include initiatives in villages STRATEGY and surpassed that in 2019, Much of Cummins’ water efficiency near the company’s campus in Phaltan, improvements in facilities to meet its India, where Cummins employees have The goals of Cummins’ achieving a 54% reduction. comprehensive water strategy, 2020 goal have been achieved through worked with village residents for many which addresses both direct-water Cummins used 895 million gallons low- and no-cost efforts, notably fixing years to establish water supplies that use and community engagement, of water in 2019, a 54 million gallon leaks and process optimization. Efforts make the villages less vulnerable to are to mitigate business risk, to be a good global citizen and to reduce decrease from 2018 and a 77 million have also involved capital projects, periods of drought. costs and compliance risk. gallon decrease since the company primarily equipment efficiency upgrades. Reduce direct water use initiated its water strategy in 2014. Water neutral sites must be These goals are consistent with the core commitments of the CEO The 54 million gallon decrease Cummins’ water neutrality efforts have re-evaluated every year to count across Cummins by 50% also yielded success. Fifteen sites have toward goal achievement. Water Mandate, which Cummins between 2019 and 2018 was the joined in 2019. The U.N. Global been validated as water neutral toward by 2020, adjusted for hours single biggest drop in direct water 2019 Compact’s commitment initiative consumption since 2013. the company’s 2020 goal of 15. These mobilizes business leaders on water, worked. Achieve water locations are off-setting their water use 54% sanitation and the U.N.’s Sustainable neutrality at 15 Cummins Development Goals. manufacturing, technical, 2018 Endorsers of the CEO Water 2020 GOAL ACHIEVED 50% Mandate commit to continuous and other larger sites WATER progress against six core elements INTENSITY of stewardship and, in so doing, located in regions where understand and manage their own PROGRESS water risks. The mandate’s six water is in short supply. Percentage reduction of 2017 commitment areas: direct water use adjusted 44% by hours worked. 2016 » Direct operations 2015 BASELINE YEAR: 2010 42% » Supply chain and 41% watershed management » Collective action » Public policy » Community engagement 2014 » Transparency 35%
26 2020 GOAL PROGRESS //
Cummins recycled 91% of the total the removal of 30 million pounds waste it generated in 2019, a modest (13,500 metric tons) of packaging waste. rate increase over the previous year. WASTE HAZARDOUS WASTE Advances in returnable and re- This positive waste reduction, however, useable packaging, while good for the negatively impacts the recycling rate, STRATEGY WASTE environment, are making achieving the as most corrugated and wood packaging The company follows the Cummins is committed to 2020 recycling goal of 95% a challenge. is widely recycled in many operating regions of the world. principles of the waste avoiding the generation of management hierarchy of hazardous waste and properly The overall picture, however, is Cummins’ second waste goal is 30 “Zero reduce, reuse, recycle and handling hazardous materials in impressive. Since the baseline year of recovery. The “nothing the workplace, but the definition Disposal” sites by the end of 2020. 2010, Cummins’ total waste disposal wasted” aspiration of the of what constitutes hazardous decreased about 10.6% in absolute There are currently 23 sites pending final new sustainability strategy waste varies widely by country. Increase company terms, while experiencing a 47.2% validation. The company has a stringent PLANET 2050 will challenge Cummins to minimize waste The company follows all reduction in disposal adjusted for hours validation process to certify a site. recycling rate to 95% generation at the outset and applicable local and regional worked. Compared with 2018, Cummins’ Under Cummins’ definition of Zero more fully repurpose the regulations. For U.S. sites that total waste disposed in 2019 decreased generate hazardous waste, by 2020. Reach “zero Disposal, waste can only be burned as waste that is generated through by 3,641 metric tons or 15.4% on an circular economy principles. the company has a formal disposal” status at a last resort to create energy and then absolute basis and by 15.7% adjusted supplier pre-qualification only if there’s a net energy gain, creating Reducing the company’s process to ensure such 30 sites with 100 or more for hours worked. more energy than is needed to sustain waste as business grows will waste is handled properly. people by 2020 where require a cross-functional In 2019, the company implemented combustion. Each validated site must 100% of waste is reused, be re-evaluated every year to count approach, including several high-impact projects including product design, packaging, toward goal achievement. recycled or recovered co-generation and energy recovery manufacturing, supply chain, GOAL for energy rich but difficult to recycle services and company-wide 95% in a useful manner. employee engagement. material. Challenges remain, including RECYCLING regulatory barriers and the absence of RATE BASELINE YEAR: 2010 recycling or recovery suppliers in some regions of the world. PROGRESS Percentage of waste recycled compared to baseline year of 2010. Cummins has been reducing packaging 2019 waste globally by increasing its use of 91% returnable and reusable packaging. 2014 2015 2016 2017 2018 Last year, the company completed more 90% 90% 89% 90% 90% than 100 packaging projects resulting in
27 2020 GOAL PROGRESS //
From optimizing products for specific 2020 goal of 3.5 million metric tons. The company’s data is modeled using market segments, to the use of software Cummins’ fuel economy teams overall volumes by segment and engine PRODUCTS to assist in the truck specification throughout the world continue model sold in a given year, and by PRODUCTS process, to the ability to customize to implement new products-in-use determining the volumes in operation IN USE IN USE electronic engine settings and projects, with more than 300 total each year using the long-standing parameters, Cummins helps customers projects since 2014. Cummins New and ReCon Parts STRATEGY reduce their carbon footprint throughout proprietary parts consumption model as the life of the company’s products. Global fuel economy teams have been well as customer engineering analysis. GHG emissions from building functional capability via fuel Cummins products in use In 2019, Cummins maintained its annual economy forums, training and tools. Yearly miles per gallon or gallons per are the company’s largest run rate reduction of 4.3 million metric hour are converted to million metric tons environmental impact and Cummins estimates that the lifetime represent an estimated 99% tons, which it achieved in 2018 when of CO2e (carbon dioxide equivalent). emissions of its products sold in 2019 of Cummins’ GHG footprint Cummins surpassed the company’s due to fossil fuel use. is 925 million metric tons of CO2. Partner with customers The company’s biggest to improve the efficiency 2019 opportunity to expand 2018 product stewardship beyond of our products in use, 2020 GOAL ACHIEVED 4.3 MILLION 4.3 MILLION the upfront design of its products is in working with reaching by 2020 an customers to improve the PRODUCTS efficiency of Cummins products annual run-rate reduction 2017 IN USE in use and ensuring customers of 3.5 million metric PROGRESS 3.4 MILLION have the latest tools to 2016 improve fuel efficiency. tons (MMT) of carbon Annual C0 reduction 2 2.9 MILLION dioxide (CO ). run rate in metric tons. The company expects to cut 2 CO2 emissions by 23 million metric tons, saving customers up to $9 billion through greater BASELINE YEAR: 2014 fuel efficiency by the end 2015 of 2020. 1.6 MILLION Cummins expects to work with about 20% of its customer 2014 base, touching nearly 2 million engines, as it seeks to tailor 0.7 MILLION engine specifications to customer applications.
28 2020 GOAL PROGRESS //
Like most global companies, Cummins The logistics management team, with relies on various modes of transportation data from every shipment, launched a Six KEY NUMBERS IN 2019 to move materials and product between Sigma project in 2019 to correlate factors CUMMINS LOGISTICS plants, warehouses and distributors most impacting CO levels. Working with 2 Average road LOW CARBON before it ultimately gets to customers. Transplace, Cummins third-party logistics shipment MINDSET partner, the company is optimizing at Cummins Cummins has The challenge is managing the supply Cummins-managed freight daily, making in miles. demonstrated its ability to chain to move freight fast and efficiently. the company’s top 30 highest CO 730 2 think creatively to reduce Cummins is working to reduce its generating routes a priority. its carbon footprint. carbon footprint by measuring, Here are three ways benchmarking and reviewing the In 2019, the company was able to the company is putting company’s freight network and increase average truckload weights renewable power to use. Use the most efficient strategically making better choices. by 5.4% over 2018, and decrease SEVEN
CO2 emissions per kilogram by 7%, NEW POWER method and mode to Percent CO2/kilogram making progress on the company’s reduction level of Cummins is putting more focus on move goods across the 2020 goal of 10%. battery-electric and fuel cell powered product and materials (including hydrogen) platforms. Cummins network to Cummins has greatly expanded its The largest CO2 improvement came moved in 2019. technical capability with electrified reduce CO per kilogram when some import shipments for the 2 LOGISTICS power technology, offering electrified of goods moved by Cummins’ engine plant in North Carolina powertrains for school bus, transit STRATEGY were switched to entry from the U.S. bus and work truck applications. 10% by 2020. East Coast rather than the West Coast. By meeting the company’s SOLAR The current focus is on shifting some logistics goal, Cummins aims shipments to efficient rail transportation. 25,000 Cummins is making a major to create and maintain an investment in solar, projecting efficient transportation network Shipments per month it will have more than two dozen that reduces CO emissions by onsite solar projects completed 2 managed by the company BASELINE YEAR: 2014 improving transport planning to by the end of 2020. maximize loads, reduce miles in North America. when trucks are empty and WIND minimize distance traveled. The company helped an Indiana (U.S.) wind farm expand, offsetting nearly all the energy the company uses at its Indiana facilities.
29 Environmental Icons ENGINE FUEL RAW EFFICIENCY MATERIALS
ENERGY RAW LOGISTICS MATERIALS
Environmental Icons ENGINE FUEL RAW PRODUCTSEFFICIENCY COMMUNICATIONSMATERIALS WATER IN USE & MARKETING
ENERGY SUPPLIER RAWEMPLOYEE INCREASE FACILITY RECYCLINGLOGISTICSENGAGEMENT RATE MATERIALSENGAGEMENT 2020 GOAL 95% ENVIRONMENTAL WASTE FACILITIES & PRODUCTS COMMUNICATIONS OPERATIONS KEY WATER IN USE 2019 PROGRESS& MARKETING • 91% GOALS UPDATE INDICATORS ZERO DISPOSAL SUPPLIER EMPLOYEE Environmental Icons ENGAGEMENT ENGAGEMENT ENGINE FUEL RAW EFFICIENCY 2020 GOALMATERIALS 30 SITES Here’s a look at Cummins’ progress toward its environmental goals. WASTE
Environmental performance includes all consolidated operations and joint ventures subscribing to Cummins’ Enterprise Environmental Management System. FACILITIES & OPERATIONS ENERGY 2019 PROGRESS 23 SITES* RAW LOGISTICS MATERIALS ENVIRONMENTAL PERFORMANCE 2016 2017 2018 2019 REDUCE DIRECT WATER USE INTENSITY 1 Environmental Icons Energy consumption (thousands of MMBtu) 12,889 13,656 14,375 14,016 ENGINE FUEL RAW PRODUCTSEFFICIENCY COMMUNICATIONSMATERIALS WATER IN USE 2020& MARKETING GOAL 50%
GHG emissions (thousands of metric tons CO2e) 762 778 808 751 ENERGY 2019 PROGRESS • 54% SUPPLIER RAWEMPLOYEE Generated waste (thousands of metric tons) 186 207 227 224 LOGISTICSENGAGEMENT MATERIALSENGAGEMENT
Disposed waste (thousands of metric tons) 21 21 24 20 WASTEWATER NEUTRALITY
FACILITIES & PRODUCTS COMMUNICATIONS OPERATIONS IN USE 2020 GOAL& MARKETING 15 SITES Recycled waste (thousands of metric tons) 166 186 203 204 WATER Recycling rate (%) 89 90 90 91 2019 PROGRESS 15SUPPLIER SITES EMPLOYEE ENGAGEMENT ENGAGEMENT Environmental Icons Hazardous waste (thousands metric tons) 3 4 5 7 ENGINE FUEL RAW EFFICIENCY MATERIALS WASTEREDUCE ENERGY USE INTENSITY IN FACILITIES
Water use (millions of gallons) 930 964 949 895 FACILITIES & OPERATIONS 2020 GOAL 32% Environmental Icons ENERGY RAW 2 ENGINE FUEL LOGISTICS RAW Enterprise ISO 14001 certified entities 108 108 109 111 MATERIALS EFFICIENCY 2019MATERIALS PROGRESS • 31% Environmental Icons Manufacturing sites certified to ISO 14001 / OHSAS 18001 (%) 96 95 97 97 ENGINE FUEL RAW EFFICIENCY PRODUCTS MATERIALS COMMUNICATIONS WATERREDUCE CO PER KGIN OFUSE GOODS SHIPPED& MARKETING ISO 50001 Certified sites 16 27 36 ENERGY44 2 RAW 2020 GOAL 10% LOGISTICS Net sales (millions U.S. dollars) 17,509 20,428 23,771 23,571 SUPPLIER MATERIALSEMPLOYEE ENERGY ENGAGEMENT ENGAGEMENT 3 RAW2019 PROGRESS • 7% LOGISTICS MATERIALS Water intensity reduction since 2010 (%) 43 44 50 53 WASTE
3,4 FACILITIES & Energy intensity reduction since 2010 (%) 24 25 29 31 OPERATIONS REDUCE CO2 FROM PRODUCTS IN USE ANNUALLY 3,4 PRODUCTS COMMUNICATIONS GHG intensity reduction since 2010 (%) 30 33 37 WATER42 IN USE & MARKETING PRODUCTSGOAL 3.5 MILLIONCOMMUNICATIONS METRIC TONS (MMT) WATER IN USE & MARKETING 1 Primary energy excludes sold electricity and associated fuel usage 2 Includes global CMI managed facilities and 50:50 JV non-managed facilities 2019 PROGRESS • 4.3 MMT 3 Intensity defined as adjusted for hours worked for energy, GHG and water 4 Reduction includes consolidated entities only SUPPLIER EMPLOYEE *Pending final validation SUPPLIERENGAGEMENT EMPLOYEEENGAGEMENT ENGAGEMENT ENGAGEMENT 30 WASTEWASTE
FACILITIESFACILITIES & & OPERATIONSOPERATIONS PARTNERSHIPS //
segments at Cummins, reporting The company is active in the Diesel directly to the CEO. Technology Forum, which raises ADVOCACY, PARTNERSHIPS awareness about the importance of For facility compliance, the company clean diesel technology. recently implemented its global Legal CRITICAL TO PROGRESS Compliance External Audit Program, The Health Effects Institute was which requires each of Cummins’ founded by the U.S. EPA and industry Cummins’ policy advocacy and partnerships play key roles regional groups around the world to leaders, including Cummins, to provide select an external vendor to conduct impartial, high quality, scientific findings in the company’s environmental strategy and compliance. compliance audits at their sites. on air pollution. This program has a common audit Cummins belongs to BSR, which works By advocating for tough, Environmental Protection Agency (EPA) Air Resources Board as they develop methodology to drive effective, with members to develop sustainable clear and enforceable 2010 emissions regulations for on- new regulations to reduce NOx emissions transparent and consistent compliance business strategies through research regulations, and working highway products. for on-highway engines. assessment across regions. Cummins and cross-sector collaboration. with others to develop Meanwhile, Phase 2 of the U.S. GHG/ also uses legal compliance software to new technologies to meet them, The Renewable Energy Buyer’s fuel efficiency regulations passed in TRACKING COMPLIANCE help ensure full knowledge of compliance Cummins achieves four strategic goals: Association, a member-based platform 2016 include separate engine standards. Keeping track of global standards is no obligations and track any issues. that includes Cummins, works to » Technology development. Cummins continues to support this small job. In 2019, the company certified streamline and accelerate corporate » Incentives to accelerate progress. regulation and in 2017 began working or maintained more than 140 engine PARTNERING FOR PROGRESS procurement of off-site, utility-scale » A balanced, global regulatory approach. to implement it in its products. The first configurations with approximately Cummins is a member of many wind and solar energy. » Responsible regulations. phase goes into effect in 2021. 17 governing agencies around the world. organizations that promote sustainability Cummins believes strongly it has a These certifications represent at least 34 and low-carbon technology. They Cummins also belongs to the Through its Government Relations function technical advantage when everyone different emissions standards for diesel include the global Hydrogen Council, International Council on Clean (see page 53) and by other means, must meet the same standards. and natural gas products for on-highway, the U.S. Fuel Cell Hydrogen Energy Transportation (ICCT), whose the company is advocating for separate off-highway, marine and rail applications. Association, the California Hydrogen mission is to improve the environmental engine standards around the world as PROMOTING REGULATIONS Business Council, the CA Fuel Cell performance of road, marine and air other regions consider GHG regulations. In 2019, Cummins recreated the Product Partnership and Hydrogen Europe. transportation to benefit public health Emissions regulations are expected Compliance and Regulatory Affairs CEO Tom Linebarger sits on the board and mitigate climate change. In 2018, to continue tightening globally with a Cummins also continues working to function to strengthen its collaboration of the Hydrogen Council. Cummins produced 31,864 soot-free growing focus on greenhouse gas (GHG) lower levels of oxides of nitrogen (NOx) with agencies setting emissions standards. Over the next five years, Brazil, and particulate matter in its product engines as part of a key ICCT initiative. regulations and certification processes. Cummins also participates in the U.S. China, India, Mexico and other countries emissions in the U.S. and globally. The The group functions independently EPA’s Green Power Partnership to are expected to adopt the low emissions company is committed to working with from, and provides oversight to, product promote the voluntary use of low carbon levels contained in the Euro VI and U.S. the U.S. EPA and the California (U.S.) development teams and business power sources such as renewable energy. Partners on innovation - page 58
31 SOCIAL Social issues ranging from community engagement to the health and safety of employees are key to Cummins’ sustainability.
WHAT’S INSIDE:
COMMUNITY ENGAGEMENT...... 33
HEALTH AND SAFETY...... 39
DIVERSITY AND INCLUSION...... 41
WORKFORCE...... 44 Cummins employees in India work on a project designed to capture water in monsoon season to prevent droughts later.
32 COMMUNITY ENGAGEMENT //
The mission of Cummins’ KEY NUMBERS IN 2019 BUILDING MORE community work is to PRIORITY AREAS support its employees Cummins focuses its employee PROSPEROUS as they partner with engagement efforts on three 6.5 global priority areas critical local nonprofits to to healthy communities: COMMUNITIES solve some of the most MILLION difficult societal problems. 01 // Estimated number of people served in 2019 by Cummins’ Through this engagement EDUCATION community engagement programs. CUMMINS JOINT VENTURE and investment in global strategic Improving the quality employees distribute programs, the company aims to reusable bags to community and alignment of educational kindergartners to promote build more prosperous communities systems to ensure the students environmental awareness around the world. of today are ready for the in Xiangyang, China. workforce of tomorrow. Cummins has a deeply rooted historical commitment to community problem solving. Each CEO, starting 02 // 82% with J. Irwin Miller in the 1950s, ENVIRONMENT Cummins employees has had a personal commitment to participating in the company’s corporate responsibility, including Ensuring everything primary community the company’s current Chairman Cummins does leads engagement program. to a cleaner, healthier and CEO Tom Linebarger. and safer environment. Linebarger, and the entire leadership team at Cummins, join the company’s 03 // more than 60,000 employees to engage personally in identifying EQUALITY OF $20.5 community needs, partnering to OPPORTUNITY address those challenges and helping Increasing opportunity people thrive in their day-to-day lives. MILLION and equity for those Cummins community most in need. grants in 2019.
33 COMMUNITY ENGAGEMENT //
ENGAGEMENT GRANT MAKING IMPACT COMMUNITY One of the company’s chief metrics Cummins, through the Cummins Here’s a quick look at the for community engagement is employee Foundation and by other means, financially estimated impact of Cummins’ participation in Cummins’ Every Employee supports community engagement projects community engagement efforts. IMPACT AND GIVING Every Community program, which enables around the world. In 2019, the company each employee to use at least four work gave $20.5 million to communities through hours to engage in their communities. Community Development Grants and other PEOPLE SERVED For the fourth year in a row, more than strategic community investments in Cummins is a data-driven company 80% of Cummins employees participated Cummins’ three global priority areas. 2017 3.3 MILLION in the program. In 2019, the company in everything it does, including increased its participation goal from 70% Here’s a look at 2019 grant-making to 80%, but health and safety measures by priority area. 2018 4.3 MILLION the impact of its community implemented due to COVID-19 will make engagement programs. the goal difficult to achieve in 2020. 2019 6.5 MILLION 2019 82% JOBS SECURED 2018 83% GOAL ALIGNMENT 2017 2,429 Cummins’ community engagement 2017 82% 2018 2,473 programs impact these U.N. Sustainable Development Goals. 2016 81% 2019 3,428 22% EDUCATION 2015 80% 13% ENVIRONMENT WATER CONSERVED 2014 73% 55% EQUALITY OF 2017 4.9 MILLION kL OPPORTUNITY 2018 12 MILLION kL 2013 67% 10% OTHER 2019 7.2 MILLION kL 2012 63%
34 COMMUNITY ENGAGEMENT // ENGINEERING SOLUTIONS TO GENDER INEQUALITY In 2018, Cummins launched Cummins Powers Women, its $11 million (and growing) global grant commitment to advancing women and girls in communities around the world.
The program currently Pitan was already developing national works with eight global programs for women and girls before nonprofit partners to she participated in the workshop. accelerate gender She saw girls in her region struggling equality through to attend or finish school and getting leadership training, married before they were ready. advocacy, mentoring, At the workshop, she learned the financial inclusion, importance of including law- and entrepreneurship and strategic policy-makers in strategic and effective engagement with nonprofit leaders. advocacy. As a result, she is focusing her Leaders like Oyeyemi Pitan, who work on the passage of a national level graduated from the advocacy and gender and equal opportunity bill, which Cummins employee Emma Benchell mentors leadership accelerator workshop in aims to reduce gender discrimination, a young girl in Indianapolis, Indiana (U.S.), Nigeria led by Rise Up, one of Cummins protect women’s rights and increase as part of the Cummins Powers Women partnership with the nonprofit Girls Inc. Powers Women’s nonprofit partners.
35 COMMUNITY ENGAGEMENT //
women’s opportunities in both public humanitarian organizations and Cummins and private spaces across Nigeria. Powers Women partner CARE, which KEY NUMBERS IN 2019 works around the globe to save lives, The Cummins Powers 100,000 defeat poverty and achieve social justice. Women program has seen Led by a Cummins Six Sigma Black great success in just two Lives impacted since the Belt, the group discussed the four most Cummins Powers Women FORTY years. It has served more pressing issues facing CARE. Cummins initiative started in 2018 leaders offered their business acumen Cummins leaders and teams than 100,000 people, and experience to help formulate plans working with Cummins Powers invested in 74 advocacy to address each of the challenges and Women partners in 14 countries. initiatives in six regions, The partnership is a continuation provided CARE with tools to improve its and resulted in eight new of the company’s commitment to capacity and partnership opportunities. and improved laws and diversity and inclusion and ensuring In London, Cummins Government policies supporting its global workforce is reflective of LEARN MORE the communities in which it operates. Relations Director Laura Gilmore led a gender equality. webinar on basic lobbying and advocacy In 2019, Cummins leaders around skills for Cummins Powers Women 1,900+ the world put their skills to good use partner Rosa, a charitable fund designed Volunteer hours by Cummins by engaging directly with Cummins to support small organizations across employees with the eight Powers Women nonprofit partners the U.K. that benefit women and global nonprofit partners to further their work and initiatives. girls. More than 30 participants from in Cummins Powers Women. Rosa’s grantees attended the webinar The Cummins Asia Pacific leadership to learn how best to communicate team, for example, gathered in with local and national government Melbourne, Australia, to participate stakeholders. With the help of Gilmore’s in a skills-based workshop with expertise, the grantees learned how eight senior leaders from international to build good relationships with 1,500+ government stakeholders to further their organizations’ goals. Cummins employees signing Nathan Stoner, Vice President of up to serve as Cummins the China Area Business Organization Powers Women ambassadors, at Cummins, speaks about Cummins committing to learn and Powers Women at a town hall event in China. volunteer in support of gender equality.
36 COMMUNITY ENGAGEMENT //
Strong educational systems, improved TRANSFORMING access to industry-relevant skills training TECHNICAL and decent work make the communities EDUCATION FOR LIVES THROUGH COMMUNITIES in which Cummins employees live and TECHNICAL EDUCATION work healthier and stronger. This is good for Cummins, other businesses
and communities.
At the same time, jobs global communities by equipping that do not require skills disadvantaged youth with the technical LEARN MORE are disappearing and skills that lead to decent work. there are rising levels To learn more about of unemployment and Cummins TEC provides skills Cummins TEC: development and a pathway into poverty in the ranks of the Technical Education the prospering economy through a unskilled and uneducated, for Communities, causing individual and Cummins-supported curriculum, teacher check out the program’s community hardship. training, career counseling support, and workplace and classroom learning. webpage which goes Communities around the world are into greater depth on suffering from widening gaps in wages The program’s success depends TEC and the philosophy and incomes due in part to skill set on effective partnerships with other behind it. Cummins has disparities. Launched in 2012 to address local hiring and training employers, this need, Cummins TEC: Technical government and community also produced a video Education for Communities is the first organizations. A coalition of more than on a graduate in the global strategic community program 50 partners helps guide the schools and TEC STUDENT Amina program in Africa. Saaidi performs a developed by Cummins from the ground provide workplace learning opportunities test on a Cummins up. The program seeks to create to ensure student outcomes align with engine in Morocco. educational change in the company’s community needs.
37 COMMUNITY ENGAGEMENT //
The impact of Cummins TEC is tracked Engaging more female students in through identified program metrics and Cummins TEC programs around the KEY NUMBERS IN 2019 student outcomes, which show how world is a challenge many sites are Cummins TEC improves the lives of working to improve. students and their families. For example, The program in Shiyan, China, Cummins graduates of the program receive wages TEC locations. that far exceed average living wages in implemented a pilot process in 2019 24 Australia, China, Latin America, Europe, to increase female enrollment, resulting India, Africa and the Middle East. in 10 young women enrolling. This is At the same time, the program’s the first female group of students since Countries spending per graduate decreased the program launched there in 2016. with Cummins by 93% from 2015 to 2019. Increasing female enrollment remains a TEC programs. key focus for the program in 2020. 14 “I often see that our Amina Saaidi is a 2018 graduate of the technical jobs are one of Cummins TEC program in Morocco. She Cummins the places many people credits the program for providing her with TEC can access to gain a good basic foundational skills and hands-on 376 graduates. paying job to support their learning, such as engine fundamentals families,” said Cummins and how to install engine components. Chairman and CEO Tom Upon graduation, she joined Cummins Percent of Maroc, where she continued to hone employers who Linebarger. “Our Technical her technical skills. She learned about say they would Education for Communities different Cummins engines (mechanical 98 recommend the program goes beyond and electronic), new technology systems hiring of TEC Cummins TEC students learn about training to provide a and how to troubleshoot for repairs. graduates. engines at a joint venture plant in Chongqing, China. pathway into the economy “Being in the workshop and field service, that doesn’t already exist.” doing inspections or installing parts Percent of and assembly, improved many skills for In 2019, two new Cummins TEC sites employers who me, such as my technical knowledge, were launched, bringing the total number say TEC graduates self-confidence, communication and to 24 in 14 countries. One of the new 92 exceeded their teamwork,” Saaidi said. sites, in Onitsha, Nigeria, will be the expectations. first co-ed TEC school in the country.
38 HEALTH AND SAFETY //
POWERING A HEALTHIER AND SAFER WORLD KEY NUMBERS IN 2019 Cummins is committed to being world The reorganization played a critical role in Cummins’ rapid response to COVID-19 8% in early 2020, as the Global Health class in health and safety. The company GOALS Improvement in the and Safety team delivered vital health FOR 2023 recorded improvements in most key information throughout the organization. Incidence Rate of Subject matter experts were able to Cummins believes Recordable Injuries in 2019. metrics in 2019, including: respond quickly to employee questions progress can be driven and process the latest information as it by setting aggressive, became available from health and safety » An 8% IMPROVEMENT in Cummins’ BEHIND THE NUMBERS but achievable goals. experts around-the-world. $3 MILLION+ Incidence Rate, the rate of recordable Key 2023 goals for health The improvements occurred across Estimated amount in productivity savings from injuries, from 0.646 in 2018 to 0.593 and safety (established in multiple regions. Cummins in China, for the 150 improvements submitted as part of the in 2019 – the lowest Incidence Rate example, saw a 31% improvement in its BRINGING HSE TOGETHER 2018) include: company’s 2019 Ergo Cup competition. since 2015. Incidence Rate. Latin America recorded Cummins in 2019 also worked to » An 18% IMPROVEMENT in the Severity a 31% improvement in Lost Workday truly integrate Health, Safety and the » Improve Cummins’ Lost Workday Rate, the rate of lost cases. Asia-Pacific reduced Lost Environment (HSE), which for many average Injury/ Illness work days, from 7.706 to 6.357. Workdays by 36%. years have been included together Rate (Incidence Rate) by 38% between » A 15% IMPROVEMENT in the Severity within the industry but mostly pursued Meanwhile, the Cummins Global separately. For the first time at Cummins, 2018 and 2023. 31% Case Rate, the rate of lost or restricted Improvement in the Contractor Health and Safety team accomplished HSE objectives and targets were work days, from 0.264 to 0.225. » Improve Cummins’ Incidence Rate in 2019. several major initiatives in 2019 that introduced in one 2020 plan, providing A in the Contractor Lost Day Case Rate » 31% IMPROVEMENT quickly began paying dividends. HSE employees with clear priorities as Incidence Rate, the rate of recordable by 39% over the the company strives to quickly address injuries involving contractors, from The function, for example, reorganized same time period. the needs at every site. 0.768 to 0.528. its operating model to a more regionally » Improve the based approach, streamlining While 2019 will go down as an Most importantly, there were no company’s Lost communication and reducing reaction outstanding year for health and safety, employee fatalities in 2019. time to critical challenges. Day Rate by 30% 90% the company is committed to continuous from 2018 to 2023. Amount by which Cummins outperformed improvement. Protecting Cummins’ the average Incidence Rate for the U.S. Motor greatest asset, its employees, is a job Vehicle Manufacturing Industry in 2018. never truly done.
39 HEALTH AND SAFETY //
SAFETY PERFORMANCE INDICATORS HOW CUMMINS COMPARES EMPLOYEE LED EFFORTS Here’s a look at key trends in safety at Cummins. Here’s Cummins’ Incidence Rate compared to other industries. REDUCE ERGONOMIC INJURIES US MOTOR & GENERATOR MFG Incidence Rate Indicator Cummins continued to make progress on reducing INCIDENCE RATE US MOTOR VEHICLE MFG CUMMINS ergonomic injuries in 2019, recording a 15% improvement 0.8 in the company’s Ergonomic Incidence Rate and setting 2.3 a record for participation in the 8th annual Cummins 2018 6.3 Ergo Cup competition. 0.6 0.64 The rate is the number of employees per 100 who experienced an 2.1 0.4 2017 6.4 ergonomic OSHA-recordable injury. The rate declined to 0.127 in 2019, 0.69 as the company completed more than 5,000 new ergonomic job assessments and implemented over 2,000 job improvements. 0.2 3.2 2016 6.5 A record 80 sites participated in the 2019 Ergo Cup competition, 0.63 submitting more than 150 improvements totaling over $3 million in 0.0 2012 2013 2014 2015 2016 2017 2018 2019 3.1 productivity savings and $12 million in estimated cost avoidance. 2015 6.6 Severity Case Rate 0.59 Two projects took top honors in the competition. Cummins employees SEVERITY CASE RATE 2.9 in China won the Engineering Award for redesigning testing to re-position 0.3 2014 6.9 an exhaust pipe remotely, improving safety while reducing the time 0.61 necessary to complete the task.
3.0 Cummins employees in Huddersfield, U.K., meanwhile, won the 0.2 2013 7.1 0.65 Judge’s Choice Award for developing a semi-automatic crane that eliminates manually lifting a turbocharger core into position. 3.8 2012 7.4 0.1 0.69
3.9 2011 7.5 0.0 0.78 2012 2013 2014 2015 2016 2017 2018 2019 4.4 NOTE: The company’s Incidence Rate, also known as the average injury / illness rate is the relative number of recordable injuries and illnesses per 100 employees. 2011 8.0 The Severity Case Rate is the rate of lost or restricted work days. 0.99
40 DIVERSITY AND INCLUSION // DIVERSITY AND INCLUSION PLAY KEY ROLES IN SUSTAINABILITY Diversity and inclusion are critical to Cummins’ ability to innovate, to win in the marketplace and to create sustainable success.
Cummins employees come from different a team where all people are backgrounds and experiences and embraced for who they are and aspire to work in an environment that what they aspire to achieve. is representative at every level of the communities in which Cummins operates At Cummins, diversity and inclusion is a around the world. They are each unique business imperative. Having diverse and in their perspectives and passions. inclusive workplaces allows Cummins to attract and retain a truly global workforce. Employees have varied experiences Diversity and inclusion enable Cummins and personal motivations that drive to bring the right combination of them. They are united in their relentless perspectives, insights and skills to solve desire to see a world, a workplace, the challenges of today and tomorrow.
Cummins has put an emphasis on diversity and inclusion for nearly 50 years. It is one of the company’s five official values today.
41 DIVERSITY AND INCLUSION //
WOMEN AT CUMMINS As part of Cummins’ global commitment volunteered more than 11,000 hours to diversity and inclusion, the company toward disability inclusion community Cummins has made a special effort in recent years to takes proactive measures to review talent projects, and the company is examining management and accountability systems the readiness of its own facilities and bring women into the highest levels of the company. and processes to mitigate bias and technology. Cummins is establishing ensure the equitable acquisition and partnerships to improve the hiring of advancement of all talent. people with disabilities.
To ensure Cummins has an integrated, Late in 2019, Cummins Chairman LEADERSHIP SUPERVISORS WORKFORCE sustainable and global approach to and CEO Tom Linebarger encouraged Cummins offers training and mentoring programs The number of women supervisors of exempt The percentage of women overall at the diversity and inclusion, the company employees to see diversity and to increase the pool of potential women leaders. employees, which includes salaried workers, is company continues to make a slow but established the Global Diversity and inclusion as an opportunity for growth. The Cummins Executive and Leadership teams about the same as 2018 and up from 22% in 2014. steady increase, up from 25.9% in 2014. consist of senior leaders focusing on strategy Inclusion Strategy team in 2019. He also talked about an important item and operations, respectively. OVERALL BREAKDOWN OVERALL BREAKDOWN The team is developing a global before the company’s leaders: updating diversity and inclusion strategy Cummins’ Business Case for Diversity. CUMMINS EXECUTIVE TEAM WOMEN 23.9% 25.77% to realize this vision. The Business Case for Diversity is WOMEN IN CUMMINS Cummins’ commitment to achieving MEN 76.1% WORKFORCE WOMEN 50% 2011 The strategy will include a global a diverse and inclusive workforce. learning and development curriculum MEN 50% GLOBAL BREAKDOWN 26.88% designed to increase awareness and “Our ability to attract talent Percentage of women supervisors enhance employee competency by WOMEN IN of all types and engage and CUMMINS LEADERSHIP TEAM CUMMINS encouraging employees to be conscious INSIDE U.S. 23.9% WORKFORCE of their privilege, filters, bias and cultural include them in solving our 2019 WOMEN 41% OUTSIDE U.S. 23.8% preferences. The team is also moving most complicated problems MEN 59% forward on Cummins’ U.S. Diversity will determine our success Growth Initiative focused on Black as a company,” Linebarger and Latinx talent. PERCENTAGE OF WOMEN AT TOP TWO SALARY LEVELS 28.46% said. “It’s just that simple. Between 2014 and 2019, women at the top two The company is also working to attract If we are able to do that salary levels at the company increased 45%. GLOBAL BREAKDOWN and retain more women globally and better than the competition, 2019 Percentage of women in Cummins workforce has put a special focus on people with 24.36% disabilities through its Disability Inclusion we win.” 23.22% INSIDE U.S. 25.57% 21.8% Initiative. Cummins employees have 21.01% 2018 OUTSIDE U.S. 28.02% 19.6% 2017 2016 2015
2014
42 DIVERSITY AND INCLUSION //
KEY NUMBERS IN 2019 COUNTRY OF BIRTH GLOBAL DIVERSITY PROCUREMENT EMPLOYEE More Cummins employees were born outside Cummins believes using diverse suppliers enables the the United States than inside the U.S. in 2019. RESOURCE Meanwhile, the gap between leaders born company to tap into the power of diverse thoughts and inside the United States and outside the approaches, increases competition for Cummins’ business GROUPS U.S. continued to narrow. and spreads the many benefits of economic growth to a larger With more than 100 employee number of communities. Cummins is a member of the Billion 25% ALL EMPLOYEES resource groups worldwide, Dollar Roundtable, a select group of companies consistently Cummins constantly seeks new Cummins employees who BORN IN doing at least $1 billion in annual business with diverse suppliers. ways to provide opportunities speak two or more languages THE U.S. for leadership training, cross- 37.26% Cummins reached a new high in supplier diversity in 2018, surpassing $2 billion in global spending with suppliers who self-identify as diverse in their region of the world. Spending dipped in 2019 as business cultural learning and professional BORN OUTSIDE development. THE U.S. slowed in several key markets, but remained well above $1 billion. 62.74% $13 BILLION+ Established around the world, the groups are open to all Global spending with suppliers $2.06 billion LEADERS employees and organized by 2100 who self-identify as diverse in different facets of diversity such BORN IN their region since 2010, including THE U.S. That’s a 235% increase in global diverse spending since 2010. $1.83 billion as gender, age, disability, sexual a record $2 billion in 2018. 55.08% orientation and gender identity, 1800 multicultural and military status. BORN OUTSIDE $1.63 billion THE U.S. 44.92% In 2019, the company started Years Cummins $1.49 billion $1.73 billion a Global Inclusion Leadership has had a Supplier 1500 Council to more closely knit Diversity Program. $1.54 billion together the array of global 40 AGE employee resource groups to $1.03 billion More than half of Cummins employees are 39 or less. 1200 amplify the voices they represent, and harness their collective $943 million 60+ 5% power to effect positive change. Through this global council, each 50-59 16% 900 $810 million dimension of diversity has a global 40-49 23% executive sponsor and chair to 45% 30-39 33% $545 million help groups work across regions. Increase in women at Cummins 20-29 22% 600 in top two salary levels between < 20 1% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2014 and 2019.
300 43 WORKFORCE //
TRAINING Market-based compensation data is TO LEARN MORE constantly collected and analyzed within A GREAT PLACE The Cummins Learning Center each country in which the company To learn more about working at conducted more than 500,000 hours operates, ensuring the Cummins’ rates Cummins, check out the company’s of online and in-person non-mandatory remain competitive. Company employees Careers page on cummins.com, TO BUILD A CAREER training, ranging from leadership and participate in a variable compensation where you can get more information project management to Six Sigma and program. Additional benefits vary on development programs, onboarding, engineering. That doesn’t include the between locations and include options benefits and interview tips. Cummins offers many opportunities training employees might get through such as 401(k) Retirement Savings Plans; their individual business segment or site, medical, dental and life insurance; flexible to help employees master their jobs or mandatory safety and ethics training. spending accounts; pension plans and employee stock purchase plans. and look ahead to their next position The company puts a major emphasis on leadership training to both prepare LIVING WAGE at the company through a combination employees for advancement and to PARENTAL LEAVE Using data provided by create a better work experience for all Cummins introduced a new U.S. BSR (Business for Social employees. A good boss and meaningful of great training and the constructive parental leave policy in 2018. In general, Responsibility), Cummins is work can be critical ingredients to a the policy provides eligible employees looking at living wages and good work experience for any employee. feedback necessary to advance. up to 12 weeks of fully paid leave to benefits around the world. primary caregivers and up to six weeks FEEDBACK of fully paid leave to secondary caregivers In 2019, the company following the birth, adoption or placement established a minimum wage Cummins provides the constructive of a foster child/children. for its U.S. employees of at feedback necessary to help employees least $15 per hour, although advance using a web-based tool This is in addition to disability most positions at Cummins and regular, meaningful one-on-one leave, which is intended to provide pay above this level. conversations between employees a medical recovery period for women and their supervisors. following the birth of a child. Cummins The company is reviewing recognizes that bringing a new child compensation at other sites to into the family can be both wonderful COMPENSATION ensure it is offering living wage and challenging. Cummins is focused rates around the world. Cummins provides competitive on supporting employees during this compensation packages to attract, very important time. motivate and retain employees. It is Engine Business President critical the company provide competitive Srikanth Padmanabhan and equitable compensation and benefits visits with employees on the plant floor. programs to all Cummins employees.
44 WORKFORCE //
TRAINING AND DEVELOPMENT ASSIGNMENT LANGUAGES Employees in 2019 engaged in almost 550,000 hours of non-mandatory COUNTRIES 2.47% 2.93% SPOKEN training through the Cummins Learning Center. Here’s a look at the top BRAZIL AUSTRALIA classes and the estimated time employees invested. Cummins has employees in More than 20% of Cummins employees are proficient at more more than 50 countries around than one language. Here’s a look: the world. Here’s a look: 8.55% 41,057.5 HOURS CHINA NUMBER OF LANGUAGES 01 Leadership Conversations EMPLOYEE 25,402 HOURS 14.09% 46.52% 75% INDIA ASSIGNMENT UNITED STATES ONE LANGUAGE 02 Project Management COUNTRIES 23,628 HOURS 15% 03 Six Sigma Continuous Improvement – Foundations EMPLOYEES TWO OR MORE IN THE U.S. 9.27% 46.52% MEXICO 22,164 HOURS 8% 04 Spectrum Diversity EMPLOYEES 7.43% THREE ORE MORE OUTSIDE THE U.S. UNITED KINGDOM 17,040 HOURS 53.48% 8.75% 2% 05 Service Leadership Training 1 REST OF WORLD FOUR OR MORE
10,922.5 HOURS TOP 10 LANGUAGES* 06 Service Leadership Training 2 EMPLOYEE STEM VOLUNTARY 48% 9,546 HOURS 01 English 10% 07 Six Sigma Continuous Improvement – Process Redesign REPRESENTATION INFLUENCE ATTRITION 02 Marathi About a third of the Cummins workforce The majority of Cummins employees in EXEMPT 8% 8,853 HOURS is represented by unions under collective the U.S. exempt from minimum wage 03 Chinese 08 Six Sigma Continuous Improvement – Value Stream Transformation bargaining agreements expiring between and overtime provisions (primarily non- 4% INSIDE U.S. 8% 2019 and 2023. union) have a background in science, 04 Spanish 8,528 HOURS technology, engineering and math: 6% OUTSIDE U.S. 5% 09 Six Sigma Continuous Improvement – Statistical Improvement 05 Hindi NON-EXEMPT 8,147 HOURS 3% 06 Spanish (North American) 10 Geometric Dimensioning and Tolerancing 7% INSIDE U.S. 3% 30.9% 52.6% 8% OUTSIDE U.S. 7,895 HOURS 07 Portuguese (Brazilian) UNIONIZED EMPLOYEES STEM BACKGROUND 1% 11 Service Leadership Training 3 OVERALL 08 Romanian 1% *Time based on estimated time to complete a course 69.1% 47.4% 6% INSIDE U.S. 09 French 7% OUTSIDE U.S. 1% NON-UNIONIZED NON-STEM 10 Tamil Other languages – 12% 45 Steven Ploog (left) and Nathan Stuart (right) re-powered classic Land Cruisers for a low-carbon spin through Central America in 2019. The California (U.S.)-based Clean Cruisers used R2.8 Cummins Turbo Diesel crate engines running on biodiesel to demonstrate adventuring can be done in an environmentally sensitive way. They also planted GOVERNANCE / trees to offset their carbon impact. ECONOMIC Cummins believes governance and economic performance are fundamental to sustainability. Without both, it’s difficult for a company to succeed over the long term.
WHAT’S INSIDE:
BOARD OF DIRECTORS...... 47
ETHICS AND COMPLIANCE...... 49
INNOVATION...... 55
CUSTOMER SUPPORT...... 61
FINANCIAL PERFORMANCE...... 63
46 BOARD OF DIRECTORS //
INDEPENDENCE RESPONSIBILITIES GOOD GOVERNANCE PROVIDES AND DIVERSITY OF LEAD DIRECTOR Cummins believes that directors SERVING as Chairman of the with different backgrounds and Governance & Nominating Committee. experiences makes the board IMPORTANT OVERSIGHT CONFERRING with the Chairman of and the company stronger. the Board on, and approving, board Here’s a brief look: Individual directors have visited meeting agendas and meeting schedules to assure there is sufficient The Cummins Board of Directors provides 13 different company locations in DIVERSITY time for discussion of all agenda items. Australia, China, India and the United vision, strength and stability through sound States in just the past two years. CALLING AND PRESIDING over all meetings of the board at which the All the directors attended at least 3 of 11 directors are female Chairman is not present, including and independent judgment on significant 75% of the board’s meetings in 2019. executive sessions of independent directors and communicates issues affecting the company. The Board of Directors has worked feedback on executive sessions 3 of 11 directors are ethnically diverse hard to bring fresh viewpoints to its to the Chairman. The 11-member board includes the on, and approving board agendas, as INDEPENDENCE work. In just the past five years, four LEADING the annual performance company’s Chief Executive Officer and well as serving as the chairman of the new directors were added to the board reviews of the Chief Executive 10 independent directors, consistent Governance & Nominating Committee. and there have been nine new directors Officer and the board. with the definition established by the since 2009. The board also pursues new 10 of 11 are independent Cummins is fortunate to have former ENSURING that there is open U.S. Securities and Exchange ideas and approaches through its goal of communication between the U.S. Secretary of Labor Alexis M. Commission and the New York Stock having rotating committee assignments independent directors and the Exchange. Board Member Rich Freeland, Herman serving in this important position. The Board of Directors believe strongly Chairman as well as other every three to five years. management members. formerly President and Chief Operating in accountability. Shareholders have the The Board of Directors provide robust Officer at Cummins, retired from the Regular conversations with shareholders right to call special meetings if they meet BEING AVAILABLE when oversight through five fully independent company and the board in 2019. is another key goal for the board. a voting power threshold of 10%. They deemed appropriate by the committees: Audit, Compensation, board for consultation and direct The CEO and at least one board member also have the right to unilaterally amend Governance & Nominating; Finance; communication with shareholders. Through its ongoing guidance, the meet routinely with shareholders to company by-laws upon a majority vote. and Safety, Environment & Technology. Board of Directors protect the interests discuss topics including company REVIEWING at his or her discretion, Each director has a background More information on the Board of information to be sent to the board. of shareholders. It believes those growth, strategy, and performance on particularly relevant to the company’s Directors and governance as well as interests are best served by combining environmental, social and governance CONFERRING with the Chairman operations and they frequently visit executive compensation can be found the roles of chairman and CEO with a (ESG) matters. In 2019, they reached on other issues of corporate Cummins’ locations without the in the 2020 Proxy. The board also plays importance, as appropriate. strong and independent lead director. shareholders holding about 30% of the CEO present to talk directly with an important role in risk management. The lead director has many critical duties, company’s outstanding shares. including conferring with the chairman managers and employees. See the story on page 52 to learn more.
47 BOARD OF DIRECTORS //
CUMMINS BOARD MEMBERS BOARD GOVERNANCE AT A GLANCE Here’s a quick look at key governance matters regarding Cummins Board of Directors. To learn more go to the governance documents website on cummins.com.
BOARD » Size: 11 members ROBERT J. DR. BRUNO V. STEPHEN B. ROBERT K. ALEXIS M. » Independent Directors: 10 BERNHARD FRANKLIN R. DI LEO DOBBS HERDMAN HERMAN » Mandatory Retirement Age: 74 years old Vice President for Research and CHANG DIAZ Retired Senior Vice President, Retired Senior Group Managing Director of Kalorama Chairman and Chief Executive » Annual Election of Directors: Yes a Professor of Engineering at Chairman and Chief Executive IBM Corporation, a global President at Fluor Corporation, Partners, LLC, a Washington, Officer of New Ventures, LLC, the University of Notre Dame. Officer of Ad Astra Rocket technology and consulting a Fortune 500 company offering D.C.-based consulting firm. a corporate consulting He joined the board in 2008. company. Currently Managing He joined the board in 2008. company. She joined the board Company, a U.S. spaceflight engineering, procurement, LEADERSHIP Director of Bearing-North, LLC, in 2001 and currently serves engineering company based in construction, maintenance, and an independent advisory firm. as Lead Director. » Combined Chairman and CEO: Yes Houston, Texas. He joined the project management services. board in 2009. He joined the board in 2015. He joined the board in 2010. » Independent Lead Director: Yes
PROCEDURAL » Super Majority Voting Threshold for Mergers: No » Proxy Access: Yes » Shareholder Right to Amend Bylaws: Yes » Shareholder Called Special Meetings: Yes » Poison Pill: No
POLICIES / GUIDELINES » Code of Conduct for Directors, N. THOMAS THOMAS J. WILLIAM I. GEORGIA R. KAREN H. Officers and Employees:Yes LINEBARGER LYNCH MILLER NELSON QUINTOS » Stock Ownership Guidelines for Directors and Executive Officers:Yes Chairman and Chief Executive Chairman of TE Connectivity President of the New York- Retired President and Retired Chief Customer Officer, Cummins Inc. He joined Ltd., a global provider of based Wallace Foundation, a Chief Executive Officer of Officer of Dell Technologies Inc., » Anti-Hedging and Pledging Policies: Yes the board in 2009. connectivity and sensor national philanthropy focused PTI Resources, LLC, an a global supplier of personal solutions. He joined the on education for disadvantaged independent consulting firm. computers and other computer » Compensation Recoupment Policy: Yes board in 2015. children and the arts. He joined She joined the board in 2004. hardware items. She joined the the board in 1989. board in 2017.
48 ETHICS AND COMPLIANCE //
concerns and their knowledge of the code varied depending on their SUSTAINABILITY geographic location and role with CODE OF the company. CONDUCT
STARTS WITH ETHICS The Ethics and Compliance team PRINCIPLES has been working to improve Here are the 10 major principles behind AND COMPLIANCE communications on ethics, especially Cummins’ Code of Business Conduct: in those areas of concern raised by 01 We will follow the law everywhere. the survey. Among the steps taken We will embrace diverse has been the development of a tool kit 02 Cummins believes the sustainability of any company is built on perspectives and backgrounds, to help managers talk about ethics and and treat people with dignity a foundation of ethical behavior. Ethics have been an important the importance of high ethical standards. and respect. Managers play a critical role not just 03 We will compete fairly and honestly. part of company culture at Cummins from its founding in 1919, in communications, but in reinforcing to its 100th anniversary in 2019 and on to today. policies and setting agendas. 04 We will avoid conflicts of interest. The Ethics and Compliance function 05 We will demand that everything we do leads to a cleaner, healthier also formed a cross-functional team in The Ethics and Compliance function Cummins also conducts an annual promoting and protecting the Code and safer environment. will play a key role in ensuring that Ethics Certification campaign, asking of Conduct. Cummins has a strict 2019 to identify and designate select culture continues at Cummins for employees, including members of non-retaliation policy protecting corporate policies as Cummins Core 06 We will protect our technology, our information and our the next 100 years. the company’s Board of Directors, employees who make reports of Policies (CCPs). CCPs are existing key intellectual property. to state they are following all key possible code violations in good faith. global policies that apply to all employees Company employees worldwide are compliance policies. As of March 2020, and are closely tied with the Code of 07 We will demand that our financial required to comply with Cummins’ 33,186 employees had completed the In 2019, a key focus for the team Conduct and Mission, Vision and Values. records are accurate and that our reporting processes are Code of Business Conduct, built around 2019 certification process. The Ethics was addressing the findings of a 2018 These policies were revised to improve clear and understandable. 10 fundamental principles (see right). and Compliance team reviews any survey it conducted with the Ethisphere clarity, readability and understanding, The Ethics and Compliance team exceptions and works with Cummins’ Institute to gauge employee perceptions and are more easily accessible to 08 We will strive to improve our communities. reinforces these principles through Human Resources function to document about ethics at Cummins. More than employees on the website. several online training courses, and investigate those exceptions. 16,000 employees participated in the 09 We will communicate ranging from anti-bribery to conflicts survey, which found while there was Examples of CCPs include: Anti-Bribery honestly and with integrity. of interest and fair competition. The Ethics and Compliance team broad recognition of the importance the and Prohibited Payments Policy, 10 We will create a culture where promotes a “speak up” culture where company places on ethical behavior, Treatment of Each Other at Work Policy, employees take responsibility employees play an active role in employees’ willingness to report Conflicts of Interest Policy and Workplace for ethical behavior. Violence Prevention Policy.
49 ETHICS AND COMPLIANCE //
CUMMINS BUILDS ON ABOUT HUMAN RIGHTS HUMAN RIGHTS POLICY THE POLICY REPORTING Here’s a quick look at Cummins’ Ethics and Compliance Human Rights Policy: has also been working Cummins continued to build on the Human Rights Policy ADOPTION: Completed in December to complete reporting on 2017 after a nearly year long review, adopted in 2017, implementing company-wide training on the the policy was officially posted in human rights required January 2018. by the United Kingdom. policy in 2019, and working to fully integrate the new policy into CONTENTS: The policy specifically Companies doing business precludes human trafficking and in the country must assess company functions with the greatest potential to see violations exploitation, and forced labor, child labor, bonded labor and prison labor, suppliers on the risk they and supports foreign and migrant such as child labor and human trafficking. worker rights. present from a human rights perspective. The policy, which applies to the together found any policy violations were to look for worker health and safety IMPACT: The policy applies to Cummins entities in which the company has a company and its suppliers, prohibits most likely to be seen deep in the company’s concerns, worker treatment issues controlling ownership interest or Those deemed at highest numerous forms of compulsory labor as supply chain, perhaps involving the raw and the handling of hazardous and management responsibilities, including risk must then be subject to well as child labor. Many of its provisions material that goes into the steel or other combustible materials, in addition subsidiaries and joint ventures. increased levels of review were included in Cummins’ Code of metals the company uses. Outside to contract compliance issues. INSPIRATION: The policy was guided and oversight, including by the Universal Declaration of Business Conduct and the company’s vendors providing services ranging from signing that they comply Supplier Code of Conduct, but catering to cleaning have also been The Eyes Open Audits have devoted Human Rights, the International more attention to the issues of child and Labor Organization’s Declaration on with Cummins codes of Cummins leaders wanted to make it identified as a potential area to watch. Fundamental Principles and Rights at forced labor to ensure alignment with abundantly clear where the company Work, the United Nations Global Compact conduct. Australia and stands on these important issues. The Ethics and Compliance team is requirements in the company’s Supplier and the U.N.’s Guiding Principles on France have passed similar Business and Human Rights. working with the company’s supply chain Code of Conduct. The Human Rights legislation. You can see Ethics and Compliance leaders hope the function to integrate the policy in the Policy offers greater detail on compliance SUPPLIERS: Cummins commits to the company’s reporting employee training will raise awareness Eyes Open Audits conducted primarily requirements. Select employees have supply chain transparency, pledging about potential policy issues. An by purchasing personnel during supplier completed mandatory online training to work with suppliers and partners at the Transparency in assessment when the policy was put visits. These audits ask employees on the topic. in high-risk locations to mitigate the Supply Chains page on risk of human trafficking and other violations of human rights. cummins.com.
50 ETHICS AND COMPLIANCE //
COMPLIANCE TRAINING MAINTAINING THE CODE CUMMINS Thousands of employees complete mandatory ethics training every year Training and guidance are not enough to ensure compliance. Cummins relies on SUPPLIER CODE its employees to speak up if they witness behavior that potentially violates the Business at Cummins through the Cummins Learning Center. The company is Code of Conduct. Employees may report a potential violation through a secure website OF CONDUCT changing its reporting this year to look more narrowly at annual participation. or a toll-free telephone number. Where legally permissible, employees can report The Cummins Supplier Code of Conduct Training is frequently updated, assigned based on its relevance to particular anonymously if they wish. helps the company ensure it is doing business jobs and delivered on a cyclical basis. So, in a single year, training in one with other companies around the world Once a potential violation is reported, Cummins has a global team of Master Investigators sharing Cummins’ values for sustainable topic area may be larger or smaller. stationed around the world, who investigate alleged Code of Conduct violations. practices. It is built around seven principles: In 2019, 2,436 cases were investigated, 47% of those cases were substantiated and 41% of the substantiated cases led to terminations. 01 Obey the law everywhere. TRAINING 2019 ENROLLMENT 02 Treat people with Anti-Bribery 3,816 dignity and respect. 2016 2017 2018 2019 Antitrust and Fair Competition 568 03 Avoid conflicts of interest. Total cases 1,772 1,904 2,215 2,436 04 Provide a safe and Careful Communications at Work 3,185 healthy workspace. 6,658 05 Protect Cummins Code of Business Conduct Cases outside U.S. 48.5% 49.7% 51.5% 47% technology, information Conflicts of Interest* 29,437 and intellectual property. Cases in the U.S. 51.5% 50.3% 48.5% 53% 06 Protect the environment and 5,395 Data Privacy conserve natural resources. Doing Business Ethically 3,396 Anonymous reports 33% 32% 35% 37% 07 Assist Cummins in enforcing the code. Export Compliance 358 Cases substantiated 43% 38% 35% 47% Cummins requires a verification response Fair Labor Standards Act 26 from suppliers that they are following the code before they are added to the company’s Preventing Money Laundering* 1,971 Terminations* 37% 38% 40% 41% supplier database. Cummins may visit facilities, review documentation and conduct Protecting Human Rights in the Supply Chain* 1,938 audits, if necessary, to ensure compliance. Average days to close 13 16 19 22 Treatment of Each Other at Work 6,569 * Substantiated cases are now calculated on cases only investigated through the Ethics Investigation Process. * Denotes updated trainings launched in 2019. ** The termination rate is now calculated on substantiated cases and cases only investigated through the Ethics Investigation Process. *** The average days to close formula updated to accurately account for missing dates in the data.
51 RISK MANAGEMENT //
MANAGING RISK EFFECTIVELY CYBER SECURITY AND DATA PRIVACY Cummins believes strongly that the most sustainable Cummins takes cyber security and data privacy extremely companies manage risk well. seriously, whether it involves the company’s own intellectual property, employee information or the data of Cummins’ customers, suppliers, distributors, shareholders, The Enterprise Risk Management team of Directors. The board and its The company performs tabletop job applicants or visitors to the company’s website. at Cummins works with the company’s committees provide robust oversight exercises at its key sites to ensure they top leaders to establish a culture where of the company’s Enterprise Risk are ready if an emergency takes place, The Ethics and Compliance function leads a cross functional team that key risks are identified and responded Management program, dedicating and their Business Continuity Plans implements the company’s Data Privacy program. The team includes members to appropriately, with guidance and time to this responsibility at every are properly focused. The company from Legal, Information Technology, Human Resources and other groups. oversight from the company’s Board regular board meeting. believes this multifaceted approach, Outside consultants have reviewed the program and Cummins has prepared of Directors. cascaded down to every location, detailed plans to improve compliance. In 2020, a cross-functional team of For example, in 2019, the board engaged is critical to effective risk and leaders is taking on oversight of the program. This starts with the Enterprise Risk outside experts to provide education emergency management. Council, made up of Cummins’ Chief on cyber security risks in the industry All Cummins personnel, including temporary employees, contractors or Operating Officer, Chief Financial and to complete a review of Cummins’ A list of potential risks that could anyone handling personal data on the company’s behalf are required to follow Officer, General Counsel, Vice Enterprise Cyber Security program. impact Cummins’ business performance the data protection requirements contained in Cummins’ policies and President – Corporate Strategy and The company provides periodic updates is available on page 17 of the procedures. The company does not sell or share personal information provided Chief Administrative Officer. They meet to the board on its progress in mitigating 2019 Annual Report on Form 10-K. to Cummins with third parties for their own use. The company retains personal quarterly with the leader of the Risk this important risk. The report is the definitive source for information based on legal and business needs, then securely destroys it. Management function to review and financial information about the company. update material risks to the company Cummins, meanwhile, continues work Data protection is part of Cummins’ Code of Business Conduct and Supplier and their mitigation plans. on improving the Business Continuity Risk management is also covered Code of Conduct. Mandatory training is part of the company’s compliance Plans at its sites to ensure facilities and extensively in the 2020 Proxy, training. Cummins’ privacy policy, and its E.U. – U.S. Privacy Shield Website The most significant risks are each functions are prepared if something including on page 12 of the document. Privacy Statement, are linked to at multiple locations across the company’s assigned to a member of the Cummins happens to the site or a key aspect of its external website, including for the company’s Connected Solutions program, Leadership Team, who are responsible supply chain. The Global Security team which uses telematics to improve the performance of customers’ engines, for managing the risk. Those leaders manages the plans, which is a key part and Cummins’ Careers web page. make periodic reports to the relevant of the company’s transition to holistic committees of the company’s Board emergency management.
52 GOVERNMENT RELATIONS //
On Capitol Hill, both Tony Satterthwaite, In China and India, This international council has provided a the leader of the Distribution segment the Government Relations platform for the company to collaborate PROMOTING THE then and now company President with experts and companies with teams engaged with and Chief Operating Officer, a similar vision of the future, and to policymakers to ensure and Wayne Eckerle, Vice President continue promoting the innovative POWER OF CHOICE oxides of nitrogen (NOx) of Global Research and Technology, technologies Cummins has to offer. testified in front of two separate and particulate matter (PM) The Cummins Government Relations team Congressional committees on the future standards for conventional The company’s work with the Hydrogen Council educates elected officials in of heavy duty transportation. They said technologies are fully Europe, Asia and the U.S. about the works around the world to support the improving existing technologies and implemented and enforced, investing in new ones would be the importance of government investment in establishing the rules of the company’s sustainability initiatives and its best way to address climate change research and infrastructure to accelerate and improve air quality. road for new technologies. adoption and ensure technologies reach mission of making people’s lives better by their potential for customers. These engagements, along powering a more prosperous world. THE PATH FORWARD with additional advocacy by TRADE IS KEY Cummins believes in tough, clear the team, is how Cummins In addition to the work with the New and enforceable regulations. It offers is using its voice and its In 2019, the future of energy continued to Power segment, the Government customers a diverse set of power technology leadership to platforms, so they can choose what’s Relations team continued to advocate evolve, and the team worked to advocate inform governments about best for their particular circumstances. for free trade agreements that support the policies that will lead to for the adoption of “technology neutral” Given the advances in clean diesel and Cummins’ global supplier network. the infrastructure needs for electrification, a more sustainable future. The focus for much of 2019 was on fuel cells and other new technologies, environmental standards and air quality With Cummins’ New Power business the United States-Canada-Mexico it doesn’t make sense to preclude any segment encompassing hydrogen Agreement (USMCA). The team worked option now. goals globally. generation, fuel cell technology and to ensure the agreement would allow the battery electric powertrains, Government company to continue as a leader in North Relations, along with senior leadership, American manufacturing while enforcing became actively engaged in the key environmental standards to keep all Hydrogen Council executive committee. three partners accountable for trade’s environmental impact.
53 GOVERNMENT RELATIONS //
LOBBYING POLITICAL POLITICAL CONTRIBUTIONS ACTIVITIES Cummins belongs to a number of trade organizations. In the U.S., political contributions CIPAC contributions are based on: Cummins bans contributions using are made by the Cummins Inc. Political corporate funds to candidates, political While the company may not agree with these » Public integrity of the candidate. associations on every matter, Cummins believes Action Committee (CIPAC) and parties and independent expenditures, funded solely by voluntary employee » Representation of a Cummins including advertisements that support they help ensure government leaders know where contributions. CIPAC makes contributions facility or employees. or oppose individual candidates. the company stands on key issues. to federal and state candidates on » Support for issues important a bipartisan basis and according to to Cummins. The company also will not use corporate Here’s a list of U.S. trade organizations paid dues in excess of $50,000 during federal and state election laws. funds to contribute to 501 (c) (4) and » Timely and effective calendar year 2019, as well as the U.S. Chamber of Commerce, which fell below CIPAC is governed by corporate 527 tax-exempt groups in the United constituent service. the $50,000 threshold. Listed with each group is an estimate of the portion of dues policies and bylaws that state: States that are engaged in political used for lobbying or other political expenditures. » Political leadership or organization. activity or make payments to influence » CIPAC contributions are ballot issues, unless the issues are » Support for the company’s values. strictly voluntary. directly tied to the company’s core values and business interests. TRADE LOBBYING KEY CUMMINS » Employees will not be All of CIPAC’s activities are disclosed ORGANIZATION ESTIMATE ISSUES to the Cummins Board of Directors in reimbursed directly or indirectly In those cases, Cummins is committed an annual political contribution report. National Association Immigration, trade, for political contributions. $32,804.00 to publicly disclosing any payments of Manufacturers manufacturing A complete list of the political action » Employees will not be pressured to including recipient names and amounts. committee’s contributions to contribute to CIPAC or make any The company made no such payments Business Roundtable $120,000.00 Trade, taxes candidates is available here. other personal political contribution. in 2019.
Engine Manufacturers Truck and engine $4,848.56 » Failure to contribute to CIPAC shall not Association manufacturing disadvantage an employee’s career.
U.S. Chamber of Commerce $10,000.00 Immigration, taxes
American Trucking Association $13,696.80 Trade, environment
TOTAL $181,349.36
54 INNOVATION //
Since Cummins’ founding in 1919, The year was filled with firsts. New The company didn’t simply innovate the company has been the leader Power unveiled in 2019 a hydrogen- in what it made but in how it made INNOVATION TO in diesel innovation, adding natural powered demonstration truck to explore products. Cummins, for example, gas, electrification, and now exploring that technology. Working in partnership produced its first low-volume part POWER THE WORLD hydrogen and other technologies to add with bus manufacturer GILLIG, using 3D printing for the company’s to its broad portfolio of power solutions. New Power also introduced Cummins’ New and ReCon Parts function in 2019. first electrified power platform for buses Clessie Cummins’ improvements to Cummins invested for the first time for the transportation system in Santa Cummins also invested in newer over $1 billion in research, development Monica, California (U.S.). 3D printer technology, which will allow the diesel engine were just the first and engineering expenses in 2019, the company to print parts that are and renamed its Electrified Power Cummins Power Systems launched lighter, stronger and more effective than examples of innovation at the company segment New Power to reflect a the HSK78G natural gas generator parts created using traditional methods broader mission. series in 2019 for various applications that employ molds, molten metal and that bears his name. to provide reliable and efficient power, equipment to cut and shape parts. while reducing operating costs. The L9N Near Zero emissions natural gas engine Innovators lead, and Cummins continued developed by Cummins’ Engine segment leading the way in diesel technology in helped power the public transit system 2019, launching its 2020 X15 Efficiency in Santiago, Chile, the first application Series engine for heavy duty trucks for that engine outside the U.S. about a year prior to regulatory requirements. The new X15 offers The company also completed in 2019 improved fuel economy and further its acquisition of fuel cell and hydrogen reduces greenhouse gas emissions. technologies provider Hydrogenics. Cummins began developing its fuel cell As Cummins looks to its next 100 years, capabilities 20 years ago. The acquisition innovation will be critical, whether its of Hydrogenics will enable the company improving the company’s diesel engines, to offer a full, differentiated hydrogen bringing new low-carbon technologies to solution, from start to finish, seamlessly the marketplace or working in new ways integrated for Cummins customers. to use less of the world’s resources.
Big Blue Bus in Santa Monica, California, unveiled its first-ever electric bus in 2019, a GILLIG battery electric bus powered by Cummins’ first-ever electrified powertrain. 55 INNOVATION //
RESEARCH AND DEVELOPMENT KEY NUMBERS IN 2019 EXPANDING CUMMINS’ KNOWLEDGE Cummins for the first time topped $1 billion in spending on research, development and engineering expenses in 2019 as the company explored Cummins continued to expand its advances in fuel cells, electrification, and diesel and natural gas platforms. 3.5% knowledge base in part through Fuel economy improvements from engine 2014 $754 MILLION hardware enhancements that provide better highly targeted acquisitions. air handling and lower friction in the 2020 2015 $735 MILLION X15 Efficiency Series diesel engine. In 2019, the company completed its acquisition of fuel cell and hydrogen technologies provider Hydrogenics Corporation, based in Mississauga, Canada. 2016 $637 MILLION With roots spanning 70 years, Hydrogenics is the worldwide leader in designing, manufacturing, building and installing industrial and commercial hydrogen 2017 $754 MILLION 200+ YEARS generation, hydrogen fuel cells and large-scale energy storage solutions. 2018 $902 MILLION Combined years of It was the latest in a series of acquisitions by Cummins. In 2018, the company experience between Cummins 2019 $1.001 BILLION acquired Silicon Valley-based Efficient Drivetrains, Inc. of Milpitas, California. and partner GILLIG that went It designs and produces hybrid and fully-electric power solutions. The company into the first-ever GILLIG in 2017 acquired Brammo Inc. based in Talent, Oregon. It designs and develops battery electric bus. battery packs for mobile and stationary applications. CREATIVE THINKERS Cummins’ technical staff received more than 250 global patents for a fourth straight year in 2019. Cummins’ fuel cell and hydrogen technologies business, formerly The 277 patents in 2019 are second only to the record 287 patents set in 2017. known as Hydrogenics, was selected as a key partner by French railway manufacturer Alstom to develop and implement hydrogen fuel cell systems for Alstom’s iLint, the world’s first hydrogen fuel 250 cell train. (Photo copyright Alstom/Rene Frampe). 287 COMPANY High end of the mileage range between RECORD 277 fill-ups for a demonstration hydrogen fuel 259 264 cell truck unveiled by Cummins in 2019. 249 2017 2019 217 2016 2018 2015 2.0MW 2014 156 Power density of the HSK78G natural gas generator series from a 78L engine, delivering a high electrical efficiency up to 2013 44.2% on a wide range of pipeline natural gas.
56 INNOVATION // PARTNERING FOR PROGRESS Cummins believes in partnering with others to achieve innovation in its products. Here’s a look at nine public-private partnerships the company is working on. The sponsoring or co-funding agency is the Department of Energy (DOE) unless noted.
PROJECT NAME PARTNERS TECHNOLOGY OBJECTIVE
ACE Achates Power Opposed piston, two stroke engine technology for low Demonstrate key technology attributes and develop manufacturing Advanced Combat Engine - Defense Department heat rejection and high-power density/efficiency technology for future combat vehicles and defense applications
ST2 Peterbilt, Eaton Advanced engine, drivetrain, and vehicle technologies Fifty-five percent engine Brake Thermal Efficiency (BTE). Strong focus on commercial SuperTruck II for Class 8 line-haul trucks viability. Greater than 125% freight efficiency improvement versus 2009 product.
ETREE Paccar, Argonne National Laboratory, National Renewable Class 6 electric truck with diesel range extender engine Greater than 50% petroleum reduction for 85% of Class 6 pickup Electric Truck with Range Extender Engine Energy Laboratory (NREL), Ohio State University (OSU) and delivery applications
NEXTCAR Purdue, Peloton, Peterbilt, NREL, ZF Group Multiple controls concepts capitalizing on information Class 8 truck fuel savings exceeding 20% with technology costing Connected and Automated Vehicle Technologies and connectivity technologies to save fuel less than $3,000 per truck
CERC-TRUCK Argonne, Oak Ridge National Laboratory, Purdue, OSU, Medium duty electric truck with spark-ignited range Cost-effective achievement of greater than 50% freight efficiency improvement versus U.S.–China Clean Energy Research Center University of Michigan, Freightliner Custom Chassis Corp. extender and other high efficiency vehicle technologies today’s medium- and heavy-duty vehicles
SOFC Ceres, Pacific Northwest National Laboratory (PNNL), Solid oxide fuel cell technologies for high efficiency and Demonstrate 60% electrical efficiency for the off-grid data center market, Solid Oxide Fuel Cell University of Connecticut reliability distributed energy generation using natural gas fuel
WXFC WAVE - Wireless Advanced Vehicle Electrification, Wireless high-power extreme fast charging development Develop and demonstrate 500kW wireless inductive charger with Wireless eXtreme Fast Charging for Class 8 BEV Schneider Electric, Utah State University, and deployment for electric drayage trucks Cummins powered battery electric Class 8 drayage tractor Total Transportation Services, Inc.
APADASCIA Michelin, NREL, Clemson University Integration of automated driver and platooning Assess real-world fuel savings potential and actively address barriers Advanced Platooning, ADAS, and Controls Integration control features with tire sensing connectivity to widespread market acceptance of platooning and other key data inputs
HDNG Funded by DOE, South Coast Air Quality Management District, Innovative combustion design with optimized in-cylinder Ten percent better cycle and peak BTE with 0.02 g/bhp-hr NOx, Heavy Duty Class 8 Ultra-Low NOx Natural Gas Engine California (U.S.) Energy Commission; Administered by NREL charge motion and emission control on a global platform reduced aftertreatment cost, and diesel-competitive torque curve
57 SUPPLY CHAIN //
Cummins’ global supply chain is critical to the company’s SUPPLY CHAIN sustainability, producing clean, efficient and dependable TRANSFORMS products that use fewer of the world’s resources. The company is A key aspect is the welcoming of A GLIMPSE AHEAD SUSTAINABLY embracing what some this new approach to manufacturing, Linking new technologies via the Internet call the fourth Industrial which has also been called Industry 4.0. may hold the biggest potential change Revolution, new It brings together digital, physical and for manufacturing. The Beijing Foton technologies to create cleaner, more biological systems to work smarter, Cummins Engine Company (BFCEC) in efficient and safer workplaces, operating safer, cleaner and more efficiently, Beijing, China, is so wired with high-tech in a way that protects and preserves allowing humans to focus on the tools it can almost identify defects in human rights. most important tasks. certain tasks and potential bottlenecks With over 90 manufacturing locations Cummins has been introducing tools in before they happen. in more than a dozen countries, its plants such as collaborative robots, The joint venture has seen significant including Brazil, China, India, Mexico, or “cobots,” for several years, taking over improvements in quality and other the United States and the United repetitive and awkward tasks to make important metrics. The plant was named Kingdom, Cummins is well aware that manufacturing safer and more efficient. in January 2020 to the World Economic its supply chain touches many lives. The company is also working to Forum’s Global Lighthouse Network, integrate high-speed 3D printing into an elite list of leaders in applying EMBRACING THE FUTURE its manufacturing technology, selling the technologies of Industry 4.0 to manufacturing. Cummins for several years has its first 3D printed metal part in the been in the midst of a supply chain company’s New and ReCon Parts These technologies are studied every day transformation, becoming more function in the first quarter of 2019. at Cummins’ Manufacturing Engineering integrated and efficient so the Development Center in Columbus, Cummins invested in new, high company can thrive in the future. Indiana (U.S.). The center is reviewing precision binder jet 3D printing The transformation is broad based, robotic arms and other tools with technology a month later. including manufacturing, procurement, sensors, cameras and even microphones quality, health and safety, and more. that can be linked to the Internet to improve efficiency or detect problems.
Lee Brandsasse, a member of the The center provides Cummins with a Manufacturing Engineering Development consistent and uniform way to test these Center’s extended team, measures a part using a laser-scanning arm. ideas for use in the company’s plants.
58 SUPPLY CHAIN //
As a participant in the U.S. Department steps such as improving lighting and of Energy’s Better Buildings, Better heating and air conditioning with newer, KEY NUMBERS IN 2019 Plants Challenge, Cummins’ Jamestown more efficient systems. Engine Plant in Jamestown, New York, (U.S.) has taken numerous steps to save Cummins has also been steadily energy, from installing LED lighting and upgrading heating and air conditioning adding regenerative dynamometers, ONE to the solar array on its roof. also known as regen dynos, that are capable of capturing the energy used by an engine in a test cell and converting BILLION The company’s efforts to reduce its it into electricity to help power the plant. Gallons of water use avoided environmental impact in many ways The Cummins Technical Center, for since 2010 through Cummins’ started at Cummins’ manufacturing example, gets about 23% of its energy water conservation efforts. plants, which have implemented from regen dynos. numerous initiatives to reduce the water and energy the company More than 1,000 employees uses and the waste it disposes. across the globe serve as Environmental Champions, trained In ways ranging from the simple to to look for inefficient practices or complex, the company has avoided equipment that can be replaced. 31% The company believes the champions the use of about 1 billion gallons of water since 2010, most through the know their plants best and are most Energy intensity reduction company’s manufacturing sites. qualified to look for improvements. achieved in 2019 as part Now, at sites such as the Rocky Mount of Cummins’ 2020 SUPPLY CHAINS DO Finally, the company recycles more Engine Plant in North Carolina (U.S.), environmental goals. Cummins is implementing state-of-the-art than 90% of the material it touches, water treatment systems that will allow with the largest volumes taking place at MORE TO USE LESS the company’s manufacturing facilities. the vast majority of water used on site to be reclaimed and reused. Cummins’ supply chain has played a critical role in Company personnel frequently Cummins has reduced energy intensity, share best practices with suppliers, meeting the company’s 2020 environmental goals, and who must state they comply with 1000+ energy used adjusted by hours worked, will play a key role in meeting the 2030 goals included more than 30% under the company’s Cummins’ Supplier Code of Conduct Cummins employees trained 2020 environmental goals. Much of that principle No. 6, which says they as Environmental Champions in Cummins’ PLANET 2050 environmental strategy. also can be linked to the company’s will “protect the environment and preserve natural resources.” to look for waste, water manufacturing sites, which have taken and energy inefficiencies in company facilities.
59 SUPPLY CHAIN //
Cummins employees with 30 years or more experience working on RAM SUPPLY CHAIN WORKS TO engines celebrate production of the 3 millionth engine in 2019 at the Columbus MidRange Engine Plant PRESERVE HUMAN RIGHTS outside Columbus, Indiana (U.S.). Cummins has long insisted its suppliers uphold human rights and support the company’s opposition to any kind of compulsory labor or any form of human trafficking.
That position was redoubled in In many ways, the policy was merely an One of the primary ways the company December 2017 when the company extension of the language long included checks for compliance among its finalized its Human Rights Policy after in the company’s Supplier Code of suppliers is through Eyes Open Audits. a nearly year-long review. The policy Conduct, which also states Cummins’ These audits are regularly performed specifically addresses: opposition to compulsory labor and when purchasing and other personnel human trafficking. visit suppliers to review contract » Human trafficking and exploitation. performance. They look specifically “We insist that our suppliers uphold » Forced labor, child labor, bonded labor, for problems in worker health, worker these principles and we are committed prison labor and military labor. safety, protecting Cummins information, to working with all suppliers and other hazardous or unsafe materials and child » Foreign and migrant worker rights. partners as they undertake similar labor, as well as issues pertaining to the year as Cummins recognized economic assessments of their own business,” The policy states in addition to its own treatment of others. activity was slowing in many key markets. the code states. Cummins complies with operations, Cummins will take steps to In 2019, there were 391 Eyes Open both the California (U.S.) “ensure our suppliers and partners that During 2019 the company worked In 2018, when Cummins revised its Audits completed. That’s an 8% decline Transparency in Supply are located in high-risk locations and/ to align its audits specifically with the Supplier Code of Conduct, the company from the previous year. It should be Chains Act and the U.K. or that may be more exposed to human Human Rights Policy looking ahead required its more than 4,000 suppliers to noted, however, that the company began Modern Slavery Act. trafficking risk due to the nature of the to 2020 and beyond. accept the new code – 100% accepted to curtail travel during the last half of the The company posts its industry in which they operate adopt disclosures the company’s supplier code. in the relevant measures to mitigate such risks.” Ethics and Compliance section on cummins.com.
60 CUSTOMER SUPPORT //
Innovation and technology continue to drive Cummins, and Cummins Care is no PUTTING exception. PrevenTech Mining®, for example, is an integrated digital solution applying connectivity, big data, advanced TECHNOLOGY TO analytics and the Internet of Things together with live expert support for customers, communicating customized WORK FOR CUMMINS recommendations to improve operations.
PrevenTech Mining monitors engine CUSTOMERS data remotely and provides early detection and diagnosis of equipment issues. PrevenTech Mining has resulted Keeping Cummins products running in increased performance, reliability, safety, operating efficiency and uptime – is critical to the company’s business the amount of time equipment stays in operation. In addition to mining, and sustainability, and technology is Cummins will release PrevenTech applications for rail, on-highway truck, oil how Cummins Care increases efficiency and gas, power generation, and marine. and convenience for customers. In addition, Connected Diagnostics™ uses telematics to wirelessly connect Cummins Care is the company’s Cummins’ equipment convenient, Cummins engines to the company for Connected Advisor provides both RemoteConnect is a suite of high-tech primary tool to support customers. there is now a live chat function immediate diagnosis of engine system immediate action recommendations tools enabling Cummins technicians in In 2019, Cummins Care’s website, in North America and Europe. fault alerts and provides customers and a prioritized list of nonemergency the field to work remotely with experts valuable information – within seconds. at the company to support customers. care.cummins.com, hosted articles These expanded offerings allow faults to plan future repairs. To learn more, see the story on page 62. and information in six languages to customers to select the right tool for Connected Advisor™ utilizes meet customer needs around the the job they are trying to accomplish. These are just three examples of the telematics data input from world quickly and easily. technology tools the company offers Cummins Care is continually Connected Diagnostics to provide a to support customers. To see more Additionally, Cummins Care has live improving, and those efforts are filtered, prioritized list of actionable about another Cummins’ tool called phone support available 24 hours a day, recognized by customers. They rated recommendations for faults on RemoteConnect, check out the 365 days a year in Europe and North Cummins Care 4.5 out of five stars operating engines. story on page 62. America. To further make supporting across all communication channels (phone, email, web chat).
61 CUSTOMER SUPPORT //
EXTRA HELP FOR KEY NUMBERS IN 2019 CUSTOMERS REMOTELY CUSTOMER RemoteConnect is another innovation ACCESS being deployed to keep customers’ engines 140+ POINTS running; it’s like having a factory expert RemoteConnect kits deployed alongside technicians in the field in North America to connect factory throughout North America. experts on line with technicians working remotely to help customers. Each RemoteConnect kit includes a cellular hot spot with a private network, diagnostic tools, remote camera, and audio/video safety glasses. The audio/video safety glasses allow a Cummins Care expert to see what the onsite technician is seeing in real-time, enabling the technician and expert to collaborate to resolve an issue. Rating out of five that customers BY PHONE: give Customer Care across every 1-800-CUMMINS RemoteConnect has resulted in improved repair efficiency, less downtime communications platform it uses – and greater customer satisfaction. The kits have been placed in more than phone, electronic chat and email. (North America) 140 Cummins locations, primarily in the U.S. and Canada but Cummins Care is working to deploy them elsewhere, too. ON THE WEB:
The tool has been especially helpful during the COVID-19 crisis in Languages available for care.cummins.com articles and information early 2020 when travel was restricted to stop the spread of the virus. to meet customer needs BY EMAIL: on Cummins Care’s Experts who normally would have traveled to a location for a repair website in 2019. Access via website. joined by RemoteConnect instead. 6 Responses within 24 hours.
RemoteConnect enables an expert potentially hundreds of miles away BY CHAT: to see what the technician sees on site, so they can work collaboratively to solve customer challenges. Above, the technician uses special safety See website. glasses equipped with cameras to transmit a picture of what he sees. 365 Below is what the expert might see on his or her laptop. Days per year Customer Care service is available to customers around the clock in North America and Europe.
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Revenues for all of 2019 were $23.6 billion compared to $23.8 billion in CUMMINS 2019 $23.6 billion CUMMINS 2018. But earnings before interest, taxes, SALES depreciation and amortization (EBITDA) BY YEAR 2018 $23.8 billion ACHIEVES RECORD were a record $3.6 billion (15.3% of sales) or $3.7 billion (15.8% of sales) 2017 excluding restructuring. This compares $20.4 billion to $3.5 billion or 14.6% of sales in 2018. PROFITABILITY IN 2016 $17.5 billion Net income attributable to Cummins 2019, PREPARES for the full year was $2.3 billion 2015 $19.1 billion ($14.48 per diluted share), or $2.4 billion ($15.05 per diluted share) excluding 2014 $19.2 billion FOR EXPECTED restructuring, compared to net income of $2.1 billion ($13.15 per diluted share) DOWNTURN IN 2020 in 2018. The effective tax rate for the full year was 20%. Lower truck production in North Despite the slow-down, the company “Despite challenging conditions in many America and weaker demand in the made a record investment in research, While revenues fell 1% in 2019 compared of our largest markets over the last six global construction, mining, and power development and engineering expenses to a record 2018, net income at Cummins months, Cummins delivered record generation markets drove most of the in 2019, topping $1 billion as Cummins profits and operating cash flow in 2019,” revenue decrease in the final quarter of explored low-carbon platforms such as increased 9.5% as the company ratcheted said Chairman and CEO Tom Linebarger 2019. Currency also negatively impacted electrified power, as wells as hydrogen- when the 2019 results were released on revenues by 1%, primarily due to a and natural gas-powered fuel cells. down expenses when the global economy Feb. 4, 2020. stronger U.S. dollar. Cummins also continued improving the company’s diesel and natural gas slowed in the final quarter of the year. The announcement came about a month The company executed several measures product lines and related components. before COVID-19 was declared a global to reduce costs and improve future pandemic, which will be reflected in next performance in the second half of 2019. To learn more about the company’s year’s report. The belt-tightening the These actions included a plan to reduce financial performance in 2019, see company did in 2019 better positioned headcount, which resulted in a charge of Cummins’ 2019 Annual Report Cummins for the impact of the virus $119 million ($90 million after tax) in the on Form 10-K, the most complete during the first six months of 2020 fourth quarter of 2019. source for financial information (see the Chairman’s note on page X). about the company.
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ENGINE 2019 REVENUE 2019 REVENUE BUSINESS BY PRODUCT BY APPLICATION 2019 REVENUE BY 35% HEAVY-DUTY TRUCK MARKETING TERRITORY 60% ON-HIGHWAY 14% OFF-HIGHWAY 27% 26% PARTS & SERVICE MEDIUM-DUTY TRUCK & BUS 2% 18% LIGHT-DUTY AUTO MIDDLE EAST & AFRICA 7% 20% OFF-HIGHWAY 10% ASIA PACIFIC EUROPE & CIS DISTRIBUTION 2019 REVENUE 2019 REVENUE 4% BY PRODUCT BY REGION INDIA 41% PARTS 69% US & CANADA 10% 4% CHINA CHINA 19% ENGINES 2% INDIA 62% 9% EUROPE/CIS U.S. & CANADA 22% POWER GEN 3% MIDDLE EAST & AFRICA 5% 11% ASIA PACIFIC LATIN AMERICA & MEXICO 18% SERVICE 2% LATIN AMERICA & MEXICO
COMPONENTS 2019 REVENUE 2019 REVENUE 2019 REVENUE BY BUSINESS BY APPLICATION BY SEGMENT 44% EMISSION SOLUTIONS 55% CUMMINS ENGINES 19% FILTRATION 18% TURBO TECHNOLOGIES 35% 11% FUEL SYSTEMS & 24% OTHER ENGINE MANUFACTURERS ENGINE ELECTRONICS 8% AUTOMATED 21% AFTERMARKET 27% TRANSMISSIONS DISTRIBUTION POWER 2019 REVENUE 2019 REVENUE 23% BY PRODUCT BY PRODUCT LINE COMPONENTS SYSTEMS 52% POWER GENERATION 57% POWER GENERATION 15% 20% INDUSTRIAL 35% INDUSTRIAL 8% GENERATOR POWER SYSTEMS 8% GENERATOR TECHNOLOGIES TECHNOLOGIES 20% PARTS
64 CUMMINS SUSTAINABILITY PROGRESS REPORT 2019-2020 CONTRIBUTORS CONTACTS TO THIS REPORT Jennifer Struffert Abon, Emma Benchell, CAROLE CASTO POWERING Fernanda Beraldi, John Brockhaus, Vice President – Corporate Communications David Clark, Karen Cecil, Kelley Creveling, 301 E. Market St. Susan Criswell, Laurie Counsel, Mark Indianapolis, IN 46204 Dhennin, Angel Franklin, Jasmin French, A MORE Manuel Gaitan, Dasia Gilbert, Kevin MARY CHANDLER Graham, Rebecca Hewitt, James Vice President – Corporate Responsibility Hopkins, Helena Hutton, Brian Jaskot, Chief Executive Officer – The Cummins Foundation Michelle Garner-Jana, Brijesh Krishnan, 301 E. Market St. PROSPEROUS Ramona Kudla, Anna Lintereur, Julie Liu, Indianapolis, IN 46204 Anne Mack, Jon Mills, Katie Moreau, Nichole Morris, Terry Neff, Swetal BRIAN MORMINO Patankar, John Pendray, Brian Sanders, Executive Director – WORLD Meredith Sanders, Steve Sanders, Technical and Environmental Systems Rosann Scattoloni, Sumedha Sharma, 500 Jackson St. Chris Shieldsmith, Lauren O’Dell Sidler, Columbus, IN 47201 Mark Sifferlen, Carol Suhich, Matthew Cummins Inc. Walker, Erica White, Dane Whitlock, CATHERINE VAN WAY Box 3005 James Wide, Mark Wilson, Head of Government Relations Columbus, Indiana 47202-3005 Phillip Wilson and Katie Zarich 601 Pennsylvania Ave., Suite 1100 U.S.A. Washington, D.C. 20004
1-800-CUMMINS™ (1-800-286-6467) BLAIR CLAFLIN (EDITOR) cummins.com Director – Sustainability Communications 301 E. Market St. ©2020 Cummins Inc. Indianapolis, IN 46204 [email protected]
™ Products mentioned in this report are subject to copyright and trademark protections.
65 CUMMINS SUSTAINABILITY PROGRESS REPORT 2019-2020