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2017 Cummins Sustainability Progress Report

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2017 Cummins Sustainability Progress Report 2017 SUSTAINABILITY PROGRESS REPORT DYNAMIC SOLUTIONS FOR A CLEANER PLANET DYNAMIC SUSTAINABILITY CUMMINS PROGRESS REPORT GRI DATA BOOK Cummins unveiled AEOS in 2017, a fully electric, heavy duty This document is Cummins’ 2017 The company is again POWERINGdemonstration truck. The truck will A MOREhelp thePROSPEROUS company study electrification. Sustainability Progress Report, producing a separate posting CORPORATE RESPONSIBILITY which reflects the company’s broad called Cummins’ GRI Data WORLD HEALTH & SAFETY CUMMINSAND view of sustainability, including Book. It follows the format of the SUSTAINABILITY DIVERSITY & INCLUSION the environment, corporate Global Reporting Initiative (GRI). responsibility, safety, diversity ABOUT OUR Established by the United Nations, and inclusion, innovation, financial FINANCIAL the GRI’s goal is to develop a performance and our newest INNOVATION consistent way for companies SUSTAINABILITY section on customer support. DYNAMIC SOLUTIONS FOR A CLEANER PLANET CUSTOMER SUPPORT to report on their environmental, ETHICS & GOVERNANCE REPORTING As a signer of the United Nations’ social and economic performance. Global Compact in 2017, Cummins We’ve also added some data we supports the U.N.’s 17 Sustainable believed didn’t fit in the Progress Cummins’ sustainability Development Goals to “end poverty, Report, but was still important protect the planet and ensure to disclose. The data book also reporting is primarily prosperity for all.” See the notations includes an update on materiality. on page 6 of this report where we The 2017 Cummins GRI Data connected to four postings believe our disclosures align with SUSTAINABILITY Book will be posted by the end those aspirations. OVERVIEW in the hope of reaching the of June 2018. Cummins has also put together We’ve continued working to make another eight-panel sustainability right people with the right this report shorter and easier to read, brochure to give readers a moving many of the feature stories CDP very high level look at the information at the right time. to The Newsroom on cummins. Cummins is committed to company’s sustainability efforts. com. We try to post at least one sharing its CDP (formerly the The overview is posted with our sustainability related story there Carbon Disclosure Project) other sustainability related reports per week. We also continue to water and climate filings. in our document repository. move some data to our GRI Data The 2017 filings will be posted Book, which can be found where in our repository sometime in we post all of our sustainability July. The 2016 reports are BLAIR CLAFLIN related documents. available now. Director – Sustainability Communications This report was completed in May 2018 and is Cummins’ 15th edition. CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 2 ABOUT THE COVER CORPORATE RESPONSIBILITY HEALTH & SAFETY A validation team The dependability of Cummins’ The trips often take several weeks, DIVERSITY & INCLUSION makes its way up products is critical to the under less than ideal conditions, company’s sustainability, so but Cummins engineers love the a mountain road Cummins engineers put them chance to go in-depth on the FINANCIAL at Loveland Pass to the test before they go into company’s products, free of any INNOVATION production and reach customers. distractions. You can learn more CUSTOMER SUPPORT (6.7 percent grade about validation testing, and ETHICS & GOVERNANCE Validation testing takes place at 11,990 feet), numerous other aspects of the not only in the U.S., but in China, during testing company’s business, by going to India, the U.K. and elsewhere. The Newsroom on cummins.com. of Cummins’ X12 U.S.-based teams in Columbus, Cummins tries to post at least one engine in Colorado Indiana have traveled as far as story a week on the website relative Fairbanks, Alaska, and Death (U.S.A.) in 2017. to the company’s sustainability. Valley, California, to find the ideal combination of temperature and grade. Cummins engineer Trent Berardi (center, with laptop), talks to X12 team members during a stop in central Utah (U.S.A.). CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 3 TABLE OF CONTENTS CORPORATE RESPONSIBILITY HEALTH & SAFETY DIVERSITY & INCLUSION INTRODUCTION ENVIRONMENT SOCIAL ECONOMIC 2 14 23 32 45 FINANCIAL ABOUT OUR CUMMINS MOVES EMPOWERING PEOPLE CUMMINS ACHIEVES BOARD PROTECTS INNOVATION SUSTAINABILITY STEADILY TOWARD 2020 TO BUILD STRONGER RECORD REVENUES INTERESTS OF CUSTOMER SUPPORT REPORTING ENVIRONMENTAL TARGETS COMMUNITIES IN 2017 SHAREHOLDERS ETHICS & GOVERNANCE 3 20 24 34 47 ABOUT THE COVER ENVIRONMENTAL COMMUNITY LEADERSHIP TAKING INNOVATION CUMMINS WORKS GOALS UPDATE ENGAGEMENT FROM BUZZWORDS TO EFFECTIVELY 5 TO REALITY MANAGE RISK KEY PERFORMANCE 21 26 INDICATORS PARTNERING TO SOLVE CUMMINS WORKS TO 37 48 COMPLEX PROBLEMS BECOME WORLD CLASS A VERY CUMMINS WORKS 6 IN HEALTH AND SAFETY PRODUCTIVE YEAR WITH POLICY MAKERS THE UN’S SUSTAINABLE 22 TO BUILD A MORE DEVELOPMENT GOALS STRATEGIC ACTIONS 28 39 AT A GLANCE DIVERSITY AND INCLUSION PARTNERING PROSPEROUS WORLD 8 WHO WE ARE PLAYS KEY ROLE IN FOR PROGRESS SUSTAINABILITY 40 9 HOW WE DO IT 31 COMMITMENT EMPLOYEES GET THE TO CUSTOMERS IS 10 TOOLS TO SUCCEED KEY TO SUCCESS CUMMINS’ STORY AT CUMMINS 42 11 SUSTAINING A CULTURE OUR KEY TOOLS OF ETHICAL BEHAVIOR 12 AWARDS AND RECOGNITION 13 OUR HISTORY CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 4 2015 2016 2017 KEY ECONOMIC PERFORMANCE Revenue $19.1 billion $17.5 billion $20.4 billion CORPORATE RESPONSIBILITY Net Income $1.40 billion $1.39 billion $999 million* HEALTH & SAFETY DIVERSITY & INCLUSION INDICATORS * Excluding charges totaling $777 million in connection with tax reform in the United States, full year net income attributable to Cummins was $1.8 billion ($10.62 per diluted share), with a full year tax rate of 24.5 percent. Cummins takes a broad view 2015 2016 2017 FINANCIAL INNOVATION of sustainability, including ENVIRONMENTAL CUSTOMER SUPPORT GHG emissions (thousands of metric tons CO e) 774 763 777 ETHICS & GOVERNANCE the environment, corporate 2 Energy consumption1 (thousands of MMBtu) 13,959 13,015 13,804 responsibility, safety, diversity Water use (millions of gallons) 947 930 962 and inclusion, employee Water intensity reduction2 (2010 baseline) 41% 42% 44% development and governance. Energy intensity reduction2,3 (2010 baseline) 24% 24% 25% 2,3 The company tracks a number GHG intensity reduction (2010 baseline) 29% 30% 33% Recycling rate 90% 89% 90% of key performance indicators. Cummins believes in transparency. 2015 2016 2017 This icon identifies Here are just a few. multi-year data SOCIAL that allows for comparisons. H&S severity case rate 0.195 0.225 0.251 H&S incidence rate 0.588 0.631 0.691 Code of Conduct cases 1,830 1,772 1,904 1 Primary energy excludes sold electricity and associated fuel usage Women leaders in the workforce 21% 21.80% 23.22% 2 Intensity defined as adjusted for sales (energy / GHG) or hours worked (water) 3 Reduction includes consolidated entities only Every Employee Every Community (EEEC) participation rate 80% 81% 83% People impacted by EEEC projects n/a n/a 3.3 million** **First year for calculation CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 5 05 NO POVERTY (1) / ZERO HUNGER (2) / GOOD HEALTH & WELLBEING (3) THE UN’S SUSTAINABLE Corporate Responsibility, page 23 Corporate Health & Safety, page 26 DEVELOPMENT GOALS QUALITY EDUCATION (4) / CORPORATE RESPONSIBILITY GENDER EQUALITY (5) HEALTH & SAFETY Cummins supports the UN’s Sustainable Development Goals Corporate Responsibility, page 23 DIVERSITY & INCLUSION to “end poverty, protect the planet and ensure prosperity for all.” Diversity and Inclusion, page 28 As a signer of the UN's Global Compact, the company wants CLEAN WATER AND SANITATION (6) / AFFORDABLE AND CLEAN ENERGY (7) FINANCIAL to do its part to make the world a better place to live. INNOVATION Environment, page 14 Corporate Responsibility, page 23 CUSTOMER SUPPORT ETHICS & GOVERNANCE DECENT WORK AND ECONOMIC GROWTH (8) / INDUSTRY, INNOVATION AND INFRASTRUCTURE (9) Corporate Responsibility, page 23 Innovation, page 34 REDUCED INEQUALITIES (10) Corporate Responsibility, page 23 Ethics & Compliance (Human Rights Policy), page 43 SUSTAINABLE CITIES AND COMMUNITIES (11) / RESPONSIBLE CONSUMPTION AND PRODUCTION (12) Innovation, page 34 Environment, page 14 CEO Letter, page 7 CLIMATE ACTION (13) / LIFE ON LAND (15) Environment, page 14 Corporate Responsibility, page 23 PEACE AND JUSTICE, STRONG INSTITUTIONS (16) / PARTNERSHIPS TO ACHIEVE THE GOAL (17) Ethics & Compliance, page 42 Corporate Responsibility, page 23 Environment, page 14 CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 6 LINEBARGER'S A NOTE FROM CAREER AT CUMMINS THE CHAIRMAN CHAIRMAN AND CORPORATE RESPONSIBILITY CHIEF EXECUTIVE OFFICER HEALTH & SAFETY Neither is easy, but after more than We did all this without sacrificing Our products must work in extreme Jan. 1, 2012, to present DIVERSITY & INCLUSION 25 years with Cummins, first as a our customers’ need for affordable, heat and bone-chilling cold; high PRESIDENT AND wide-eyed summer intern and today dependable power. That’s why I say, in the mountains and far below CHIEF OPERATING OFFICER as CEO of this nearly 100-year-old without hesitation, that innovation is the earth’s surface. And we must 2008-2011 FINANCIAL company, I can say with confidence good for customers and good for support and service our products EXECUTIVE VICE INNOVATION we are up to the challenge. the environment, too. It’s time to nearly anywhere in the world. PRESIDENT, PRESIDENT – POWER GENERATION BUSINESS CUSTOMER SUPPORT stop pitting the interests of one 2005-2008 ETHICS & GOVERNANCE Just in 2017, Cummins started That’s a tall order. against the other. VICE PRESIDENT – production on the cleanest, most But if we can help POWER GENERATION fuel efficient diesel engine our There are challenges, of course. customers’ successfully 2003-2005 company has ever made, the X15. Powertrain technologies are transition to increasingly VICE PRESIDENT AND Our Cummins Westport joint venture advancing faster than at any cleaner technologies, CHIEF FINANCIAL OFFICER 2000-2003 launched a natural gas engine moment in my lifetime.
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