PROGRESSREPORT 2017SUSTAINABILITY

DYNAMIC SOLUTIONS FOR A CLEANER PLANET 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 CUMMINS AND 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. We’ve using fewer resources, achieving emission levels 90 percent just scratched the surface of we will achieve our VICE PRESIDENT – Greetings, SUPPLY CHAIN MANAGEMENT below EPA standards for a key what information technology can mission of making 1998-2000 There are two critical challenges contributor to smog. do through telematics. And new people’s lives better MANAGING DIRECTOR – when it comes to the sustainability competitors and business models by powering a more HOLSET ENGINEERING COMPANY We started a new joint venture (A DIVISION OF CUMMINS) of a business like Cummins: are constantly trying to disrupt us. prosperous world. 1997-1998 with Eaton to develop the most »» Achieving our mission of advanced automatic transmissions Cummins continually invests in Thank you for your interest SENIOR MANAGER – ENGINEERING OPERATIONS AND TECHNICAL “powering a more prosperous for medium and heavy-duty vehicles. new technologies and business in Cummins, CENTER LEADER, HOLSET world,” while meeting our And our company began work on areas to bring innovation to our 1996-1997

obligation to use fewer of an all-electric powertrain for urban customers in a dependable way. ENGINE COMPANY ASSISTANT

its resources. buses that will be on the market Our goal is to offer them the full TO GROUP VICE PRESIDENT FOR WORLDWIDE OPERATIONS, by the end of 2019. range of powertrain technologies »» Helping customers succeed PROGRAM MANAGER – so they can choose the right one ADVANCED FUEL SYSTEMS through innovation and Tom Linebarger 1994-1996 dependability, so when for their application. Chairman and CEO INTERNSHIP – ASSISTANT TO they win, we win. Cummins Inc. PLANT MANAGER COLUMBUS MIDRANGE ENGINE PLANT 1992

CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 7 INTRODUCTION WORLD WHO HEADQUARTERS 500 Jackson St. WE ARE Columbus, IN 47201 EST. Cummins Inc., a global power leader, is a corporation of complementary business units www.cummins.com that design, manufacture, distribute and service engines and related technologies, including fuel systems, EMPLOYEES WORLDWIDE controls, air handling, filtration, 58,600 CMI More than 50 percent of the company’s emission solutions and electrical STOCK SYMBOL employees are located outside the United States.

power generation systems. (New York Stock Exchange) (approximate employee total, as of December 2017)

FORTUNE 500 CUSTOMERS SALES / EARNINGS RANKING (2017) Cummins’ customers are located in approximately In 2017, Cummins earned $999 million* on revenues of 190 countries and territories that the company reaches through a network of more than 600 company-owned and independent 159 distributor locations and approximately 7,400 dealer locations. $20.4 billion

CUMMINS SUSTAINABILITY * Excluding charges totaling $777 million in connection with tax reform, PROGRESS REPORT 2017 8 full year net income attributable to Cummins was $1.8 billion. INTRODUCTION CUMMINS CUMMINS ENGINE DISTRIBUTION BUSINESS BUSINESS The Engine Business segment Cummins Distribution Business sells manufactures and markets diesel and services the full range of Cummins and natural gas engines for on- products for over 20 application and off-highway use around the segments in more than 190 countries HOW WE world. Markets include heavy- and territories around the world. and medium-duty trucks, buses, light-duty trucks and areas such COMPONENTS DO IT as agriculture, construction and BUSINESS ELECTRIFIED military equipment. The Components segment POWER Cummins is organized into is organized around the Cummins established its Electrified five business segments. CUMMINS following businesses: Power segment in early 2018. This segment brings together all In 2017, the company introduced POWER »» Cummins Emission Solutions of the company’s electrification an electrification division to SYSTEMS designs and builds exhaust resources into a single reporting segment that posted its results manage its work in that fast In 2016, Cummins reorganized its aftertreatment solutions to as part of Cummins' first quarter business, combining the company’s reduce emissions for light-, growing area. In early 2018, earnings in 2018. Power Generation segment and its medium-, heavy-duty and the division was established high-horsepower engine business high-horsepower engines. to create a new Power Systems as Cummins’ fifth business »» Cummins Filtration designs segment. The segment is a global and builds heavy-duty air, fuel, segment, Electrified Power. provider of power generation systems, hydraulic and lube filtration, and Here's a look at the components, and services in standby chemical and exhaust system power, distributed power generation, company today: technology products. as well as auxiliary power in mobile applications. The segment also »» Cummins Fuel Systems designs designs, manufactures, sells and and manufactures fuel systems that supports diesel and natural gas high maximize power and fuel economy horsepower engines for a wide variety while helping to reduce emissions. of uses including power generation, marine, mining and rail. »» Cummins Turbo Technologies designs and builds turbochargers to maximize engine performance and reduce emissions and fuel consumption. CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 9 INTRODUCTION CUMMINS’ STORY Cummins updated its mission, vision and values in 2017.

WHY WE EXIST HOW WE WILL DO IT MISSION VALUES LEADERSHIP INTEGRITY CULTURE Making people’s lives Doing what you say you will Inspiring and do and doing what is right encouraging all DIVERSITY & employees to achieve better by powering a INCLUSION their full potential Valuing and including our more prosperous world differences in decision making is our competitive advantage BRAND PROMISE CARING WHAT WE WANT TO ACCOMPLISH Demonstrating awareness Powering and consideration for the our customers VISION wellbeing of others through innovation EXCELLENCE and dependability Always delivering superior results Innovating for our customers STRATEGY TEAMWORK Collaborating across teams, Delivering value to power their success functions, businesses and to all stakeholders borders to deliver the best work

CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 10 INTRODUCTION ENVIRONMENT OUR KEY TOOLS SOCIAL Cummins employees also CORPORATE RESPONSIBILITY use Six Sigma when working HEALTH & SAFETY SIX SIGMA AND with community partners on CUMMINS OPERATING SYSTEM DIVERSITY & INCLUSION The purpose of the Cummins Operating System is to continuously CONTINUOUS Corporate Responsibility projects. improve the company’s products and services by eliminating The tool’s impact, however, goes waste and reducing variation in processes. The 10 practices are: IMPROVEMENT 1 beyond cost savings and community FINANCIAL Cummins is a big proponent engagement. It provides Cummins1 1 PUT THE CUSTOMER FIRST INNOVATION of Six Sigma, using the business with a common language and AND PROVIDE REAL VALUE. CUSTOMER SUPPORT Put the customer first, improvement tool to save the and provide real value collective mindset across the ETHICS & GOVERNANCE company and its customers SYNCHRONIZE FLOWS globe that can be used to address billions of dollars. (MATERIAL, PHYSICAL AND INFORMATION). a problem or challenge almost Synchronize flows (material, physical and information) Six Sigma uses data-based analysis to identify defects and anywhere in the world. DESIGN QUALITY IN EVERY variation in a wide range of manufacturing and business situations. STEP OF THE PROCESS. The most impactful projects Since its introduction at Cummins in 2000: are honored as part of the INVOLVE PEOPLE AND »»Approximately 23,000 people have been trained company’s Impact Awards. PROMOTE TEAMWORK. Involve people and As a continuous improvement promote teamwork on Six Sigma tools at the company, including more company, Cummins is committed ENSURE EQUIPMENT AND TOOLS than 11,400 current professional employees. to providing great employees with ARE AVAILABLE AND CAPABLE. Ensure equipment and tools are the tools they need to solve the available and capable »»Six Sigma projects have identified an estimated most important challenges in the CREATE FUNCTIONAL EXCELLENCE.

Create $6.85 billion in Profit Before Interest and Taxes (PBIT) business, and to recognize the functional excellence ESTABLISH THE savings over the tool’s history at Cummins. outstanding work they do. RIGHT ENVIRONMENT. Establish the right environment Six Sigma has widely been TREAT PREFERRED »»Cummins customers have saved an estimated credited with helping turn SUPPLIERS AS PARTNERS. Cummins into the vibrant, Treat preferred suppliers $1.44 billion through Six Sigma since the tool as partners was first offered to them in 2005. innovative company it is today. FOLLOW COMMON PROBLEM After 17 years as a key part SOLVING TECHNIQUES. Follow common of Cummins, Six Sigma has problem solving techniques established itself as the principal USE SIX SIGMA AS THE PRIMARY problem solving tool used at PROCESS IMPROVEMENT METHOD. Use Six Sigma as the primary the company. process improvement method

CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 11 AWARDS AND RECOGNITION MISCELLANEOUS AWARDS CORPORATE RESPONSIBILITY HEALTH & SAFETY Cummins received a number of awards and recognition during 2017. Here’s a quick look: CUSTOMER MANAGEMENT DIVERSITY & INCLUSION LEADERSHIP TOP 250 Cummins’ Connected Diagnostics, Cummins finished 96th in the Wall DIVERSITY ETHICS ENVIRONMENT a telematics feature enabling the Street Journal’s inaugural Management company to communicate over the Top 250 list released in 2017. The list FINANCIAL air with its engines to recommend is based on rankings by the Drucker INNOVATION TOP 50 COMPANIES WORLD’S MOST DOW JONES actions when a system fault occurs, Institute, which looks at corporate CUSTOMER SUPPORT was awarded Frost & Sullivan’s 2017 performance in areas such as customer ETHICS & GOVERNANCE FOR DIVERSITY ETHICAL COMPANIES SUSTAINABILITY North American Customer Value satisfaction, employee engagement Cummins was Cummins was named to the INDEX Leadership award. The global research and development, and innovation. named one of Ethisphere Institute’s 2017 list of the and consulting firm said the feature the Top 50 Companies World’s Most Ethical Companies for delivers “exceptional customer service.” for Diversity by a 10th consecutive year. EMPLOYER OF DiversityInc magazine EXCELLENCE for an 11th consecutive AMERICA'S MOST TOP EMPLOYER Cummins China won the prestigious year in 2017. JUST COMPANIES Cummins was named to the 2017 Forbes magazine named Cummins to Employer of Excellence China award Dow Jones Sustainability Index for its list of America's Best Employers for in 2017 for a second year in a row. Cummins was North America. The index surveys a second consecutive year in 2017. The appraisal by 51job Inc., the leading CORPORATE named to the second global companies on a wide range integrated human resources service EQUALITY INDEX annual JUST 100 of sustainability issues. Cummins has (HR) provider in the country, assesses Cummins list of America’s ACHIEVEMENT been on the list since 2006. companies on 10 criteria including their received a Most JUST IN SOCIAL growth plans in China, their financial perfect score Companies by RESPONSIBILITY performance and their alignment between for a 12th JUST Capital and Forbes Magazine. The NEWSWEEK Cummins India in 2017 was one of HR and corporate development strategy. consecutive list is based on qualities Americans say GREEN RANKING five companies receiving a year in the 2017 Corporate Equality Index they want to see in a company such Cummins finished 25th in Commendation for Significant from HRC, the largest U.S. civil rights as fair pay and creating jobs. Cummins Newsweek’s 2017 Green Ranking Achievement in Social Responsibility by HDT TOP 20 organization for LGBTQ employees. made the first JUST100 list in 2016. of U.S. Companies. The ranking the Confederation of Indian Industry - PRODUCTS OF 2017 assesses the environmental performance ITC Sustainability Awards. ITC is an Heavy-Duty Trucking (HDT) magazine of the world’s largest publicly traded Indian conglomerate. Judges recognized named the Cummins X15 diesel engine companies. Cummins was named Cummins’ community efforts to conserve to its list of the 20 Top Products of 2017. Best in Industry in the Machinery and protect water, plant trees and HDT editors cited the engine’s improved category for U.S. companies. expand educational opportunities fuel economy, extended service intervals, in the communities it serves. enhanced drive-ability and emissions after-treatment.

CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 12 INTRODUCTION OUR HISTORY Cummins has a rich history, replete with examples of innovation, entrepreneurship and vision. Here’s a look at some highlights over the last 98 years:

1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 13 ENVIRONMENT

CUMMINS MOVES STEADILY TOWARD UN GOALS Cummins’ environmental 2020 ENVIRONMENTAL TARGETS initiatives align with CORPORATE RESPONSIBILITY HEALTH & SAFETY at least seven of the DIVERSITY & INCLUSION Products in-use goal at 97 percent completion United Nations Sustainable Development Goals (SDGs) Cummins closed in on its 2020 products-in-use goal in 2017, changed logistics to end poverty and FINANCIAL suppliers and worked on innovative solutions to its facility goals. ensure prosperity for all. INNOVATION Here's a look at the seven. CUSTOMER SUPPORT ETHICS & GOVERNANCE In several areas, facility improvement progress slowed as the company neared goals and additional gains became more challenging. If goals are set aggressively, easy gains can be accomplished relatively quickly, but the remaining advances often require significant effort. This has been particularly true for energy efficiency, where Cummins is working on its third goal since 2006.

However, with the ingenuity and hard work of more than 58,000 employees around the world, the company is confident it will meet its 2020 goals.

Cummins officials meet with officials from Meadow Lake Wind Farm in northwest Indiana. Cummins entered into an agreement to help the farm expand. To learn more click here.

CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 14 Environmental Icons ENGINE FUEL RAW EFFICIENCY MATERIALS

RAW LOGISTICS MATERIALS

PRODUCTS COMMUNICATIONS PRODUCTS IN USE IN USE &Cummins’ MARKETING fuel economy Performance in 2017 built on global CORPORATE RESPONSIBILITY teams throughout the world momentum, with the launching of STRATEGY HEALTH & SAFETY have implemented more than new initiatives and more Power Greenhouse gas (GHG) emissions DIVERSITY & INCLUSION SUPPLIER EMPLOYEE250 products in use improvement System and Distribution Business from Cummins products in use are the ENGAGEMENT ENGAGEMENT PRODUCTS projects since 2014, achieving a projects. The average fuel economy company’s largest environmental impact IN USE GOAL 3.4 million metric ton annual run improvement of nearly 7 percent and represent an estimated 99 percent FINANCIAL rate of CO2 reduction toward the across all projects is larger than the of Cummins’ greenhouse gas (GHG) INNOVATION PARTNER WITHFACILITIES & company’s goal of a 3.5 million company’s original projections of footprint due to fossil fuel use. OPERATIONS CUSTOMER SUPPORT CUSTOMERS TO metric ton run rate by 2020. 2 to 5 percent improvements. ETHICS & GOVERNANCE Cummins’ biggest opportunity to expand IMPROVE THE That’s about 97 percent of the Global fuel economy teams product stewardship beyond the upfront EFFICIENCY OF way to the company’s latest goal. OUR PRODUCTS IN have been building functional design of its products is in working with USE, REACHING BY capability via fuel economy customers to improve the efficiency of the 2020 AN ANNUAL RUN- forums, training and tools. company’s products in use and ensuring RATE REDUCTION OF customers have the latest tools to improve fuel efficiency. Cummins’ goal is to partner 3.5 MILLION METRIC 3.5 million TONS (MMT) OF 3.4 million with customers to improve the fuel efficiency of the company’s products CARBON DIOXIDE (CO2 ). 2020 2017 GOAL in use, and by extension reduce CO . Baseline year: 2014 2.9 million YEAR 2

2016 Cummins wants to cut CO2 emissions PRODUCTS by nearly 16 million metric tons, saving IN USE customers up to $6.3 billion through PROGRESS greater fuel efficiency by the end of 2020. 1.6 million In meeting this goal, Cummins expects CO2 reduced in metric tons to work with about 20 percent of its 2015 customer base, touching nearly 2 million engines as it tailors engine specifications 0.7 million to customer applications.

2014

CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 15 Environmental Icons ENGINE FUEL RAW EFFICIENCY MATERIALS Environmental Icons ENGINE FUEL RAW EFFICIENCY MATERIALS

RAW LOGISTICS MATERIALS RAW LOGISTICS MATERIALS

Cummins used 962 million gallons validated as water neutral WATER STRATEGY PRODUCTS COMMUNICATIONS IN USEof water in 2017,& MARKETINGa 32 million gallon toward the company’s 2020 PRODUCTS COMMUNICATIONS The goals of the company’s IN USE &increase MARKETING from 2016, but a 10 million goal of 15. They are off-setting CORPORATE RESPONSIBILITY comprehensive water strategy, gallon decrease since the company their water use with community HEALTH & SAFETY SUPPLIER EMPLOYEE which addresses both direct ENGAGEMENTinitiated its waterENGAGEMENT strategy in 2014. improvements that either DIVERSITY & INCLUSION SUPPLIER EMPLOYEE water use and community ENGAGEMENT ENGAGEMENT conserve water or make Since the goal’s baseline year of engagement, are to mitigate WATER GOALS new sources available. FACILITIES & OPERATIONS2010, direct water use is down business risk, to be a good FINANCIAL REDUCE DIRECT WATER by 16 percent, while water use Meanwhile, a risk analysis global citizen and to reduce INNOVATION FACILITIES & adjusted for hours worked is down and mapping exercise of the costs and compliance risk. USE ACROSSOPERATIONS CUMMINS CUSTOMER SUPPORT BY 50 PERCENT BY by 44 percent – all despite an company’s top 200 suppliers, To achieve the company’s ETHICS & GOVERNANCE 2020, ADJUSTED increase in the number of facilities completed in 2016 by Verisk 50 percent water intensity FOR HOURS WORKED. during the that time period. Maplecroft, has helped reduction goal, Cummins will Cummins better understand Cummins’ water neutrality expand the work it does with ACHIEVE WATER water risk in its supply chain. NEUTRALITY AT work is also progressing well. its sites in a water management 15 CUMMINS Eight sites have now been program, including support of MANUFACTURING, regenerative test cell projects TECHNICAL, AND using less water, intensive OTHER LARGER SITES WATER 50 percent engagement with higher LOCATED IN REGIONS INTENSITY water use locations, water 2020 balance studies and strategic WHERE WATER IS PROGRESS GOAL YEAR capital funding for water IN SHORT SUPPLY. percent reduction 44 percent reduction projects. Baseline year: 2010 42 percent 41 percent 2017 Cummins’ strategy also identifies the critical role 2016 2015 water plays in the company’s supply chain. The company 35 percent is beginning to work with suppliers to help them develop 2014 less water intensive techniques.

CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 16 Environmental Icons ENGINE FUEL RAW EFFICIENCY MATERIALS

RAW LOGISTICS MATERIALS Environmental Icons ENGINE FUEL RAW EFFICIENCY MATERIALS The company’s greenhouse gas distributor locations that were ENERGY STRATEGY (GHG) emissions increased by about part of the Distribution Business PRODUCTS COMMUNICATIONS Cummins continues to use IN USE &14,000 MARKETING tonsRAW on an absolute basis in segment’s North American LOGISTICS MATERIALS CORPORATE RESPONSIBILITY 2017, but fell 3.6 percent adjusted consolidation. a facility investment plan HEALTH & SAFETY for hours worked compared to approach, with a focus on HARNESSING DIVERSITY & INCLUSION PRODUCTS COMMUNICATIONS Cummins uses tools and test cell energy recovery WIND POWER SUPPLIER IN USE EMPLOYEEthe prior year.& MARKETING The company has ENGAGEMENT ENGAGEMENT resources available from ENERGY AND now achieved about a 25 percent and investments in on-site Cummins entered into a Virtual programs such as ISO 50001, renewable projects to offset SUPPLIER reduction inEMPLOYEE energy intensity (energy Power Purchase Agreement (VPPA) GHG GOAL ENGAGEMENT ENGAGEMENT the international energy FINANCIAL use adjusted by hours worked) electricity purchased from the to expand a northwest Indiana management system standard, INNOVATION FACILITIES & toward its 2020 goal of a 32 percent grid. Ongoing site projects wind farm in 2017. ACHIEVE AOPERATIONS 32 PERCENT CUSTOMER SUPPORT FACILITIES & and the U.S. Department of OPERATIONS reduction at company facilities. include “smart” lighting, and ETHICS & GOVERNANCE ENERGY INTENSITY Energy’s Superior Energy The company’s analysis showed REDUCTION FROM improvements to building Cummins’ primary energy Performance program. envelopes and heating and that the VPPA was the most COMPANY FACILITIES consumption increased by 6 percent The company plans to cost-effective way for Cummins to BY 2020 AND INCREASE cooling systems. The company on an absolute basis while falling implement ISO 50001 at estimates savings of nearly quickly encourage significant GHG THE PORTION OF by 0.9 percent adjusted for hours 40 sites, or 90 percent of its reductions compared to investing ELECTRICITY CUMMINS $50 million per year from its worked compared to 2016. carbon footprint, by 2020. energy efficiency efforts. in more onsite installations. USES DERIVED Twenty six sites have been The company had a number The expansion will add 75 FROM RENEWABLE certified through 2017. The 2020 energy goal includes SOURCES. of challenges in maintaining a commitment to increase the megawatts to the existing Baseline year: 2010 progress on its goal, including amount of energy sourced 600 megawatt capacity at the several new buildings and from renewable power. Meadow Lake Wind Farm 32 percent The company is looking to complex. When fully operational in expand onsite renewables early 2019, the wind farm expansion 2020 GOAL will generate renewable electricity YEAR where it makes sense and has ENERGY committed up to $10 million equivalent to the amount Cummins INTENSITY 25 percent for these projects. Cummins uses at all of its Indiana facilities. 24 percent 24 percent has 14 solar installations, PROGRESS 2017 The project will reduce GHG percent reduction the most significant being the 2015 2016 emissions by 165,000 metric tons 3.6 megawatt installation at CO e per year (CO equivalent), 19 percent the Beijing Foton Cummins 2 2 which is equal to 21 percent Engine Company Ltd. in China. 2014 of Cummins’ global GHG footprint. To learn more, click here.

CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 17 2016 Environmental Icons ENGINE FUEL RAW EFFICIENCY MATERIALS

RAW LOGISTICS MATERIALS

PRODUCTS COMMUNICATIONS IN USE & MARKETING

SUPPLIER EMPLOYEE ENGAGEMENT ENGAGEMENT

Cummins in 2017 recycled sites are approaching Zero Cummins is also committed WASTE FACILITIES & CORPORATE RESPONSIBILITY OPERATIONS90 percent of the total waste Disposal, but face challenges such to avoiding the generation of STRATEGY HEALTH & SAFETY the company generated as regulatory barriers in India and hazardous waste and properly The company follows a DIVERSITY & INCLUSION over the year, equivalent to China, and the absence of vendors handling hazardous materials waste management hierarchy WASTE GOALS approximately 186,000 tons. to help with hard-to-recycle wastes. in the workplace. The definition consistent with current industry for what constitutes hazardous standards: avoid the generation FINANCIAL Since the baseline year of 2010, Under Cummins’ definition of INCREASE COMPANY waste varies widely by country. of waste, reuse, recycle, and INNOVATION Cummins’ total waste disposed Zero Disposal, waste can only be RECYCLING RATE TO Cummins follows all appropriate recover energy from waste. CUSTOMER SUPPORT decreased by about 3 percent in burned as a last resort to create 95 PERCENT BY 2020. local and regional regulations. ETHICS & GOVERNANCE absolute terms, while experiencing energy and then only if there is a For U.S. sites that produce Reducing packaging is one a 36 percent reduction in disposal net energy gain, creating more REACH “ZERO DISPOSAL” hazardous waste, Cummins has key way Cummins avoids the adjusted for hours worked. energy than is needed merely STATUS AT 30 SITES a formal vendor pre-qualification generation of waste. Reusing to sustain combustion. waste might involve reusing WITH 100 OR MORE Compared with 2016, process to ensure waste is pallets or finding an alternative PEOPLE BY 2020 Cummins’ total waste disposed handled properly. use without any reprocessing. WHERE 100 PERCENT in 2017 increased by 801 tons Recovery and reuse of OF WASTE IS REUSED, or 4 percent on an absolute coolants and solvents is RECYCLED OR basis and by 2 percent adjusted RECYCLING RATE still another example. RECOVERED IN A for hours worked. PROGRESS USEFUL MANNER. percent recycled The recycling of metals, Baseline year: 2010 There are currently 10 sites certified 95 percent paper or wood also reduces as Zero Disposal – seven in Europe, the amount of waste that and one each in North America, 2020 GOAL has to be disposed. the Asia-Pacific region and the YEAR The company’s ultimate China region. Eighteen additional goal is “Zero Disposal” 90 percent 90 percent 90 percent 89 percent at 30 Cummins facilities 2017 2014 2015 by 2020. 2016

CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 18 Environmental Icons ENGINE FUEL RAW EFFICIENCY MATERIALS

RAW LOGISTICS MATERIALS Environmental Icons ENGINE FUEL RAW

EFFICIENCY PRODUCTS MATERIALSCOMMUNICATIONS IN USE & MARKETING

SUPPLIER EMPLOYEE ENGAGEMENT ENGAGEMENT RAW LOGISTICS MATERIALS

FACILITIES & CORPORATE RESPONSIBILITY OPERATIONS HEALTH & SAFETY DIVERSITY & INCLUSION A change in Cummins’ LOGISTICSPRODUCTS COMMUNICATIONS IN USE transportation& MARKETING management system FINANCIAL GOAL impacted the company’s baseline SCIENCE BASED TARGETS INNOVATION data and additional data collected. LOGISTICS In 2017, Cummins signed on to the Science Based Targets CUSTOMER SUPPORT USE THE MOST STRATEGY SUPPLIER EMPLOYEE Initiative (SBTI) that uses environmental science to support ETHICS & GOVERNANCE EFFICIENT METHOD AND In 2017, Cummins changed its ENGAGEMENT ENGAGEMENT companies with GHG reduction target setting, consistent MODE TO MOVE GOODS transportation management system In meeting the company’s with limiting global warming to 2 degrees Celsius or lower. ACROSS THE CUMMINS provider. The new system has been logistics goal, Cummins aims to create and maintain an NETWORK TO REDUCE rolled out to all suppliers in the U.S., Cummins’ commitment will apply to its next facility energy and efficient transportation network CO PER KILOGRAM with Mexico expected to be added GHG reduction target to be announced in 2019. Cummins’ three 2 FACILITIES & that reduces CO emissions by OF GOODS MOVEDOPERATIONS BY in 2018. 2 energy/GHG reduction goals (including the current one with a goal improving transport planning to 10 PERCENT BY 2020 completion date of 2020) have used the principles and data of Regional optimization solutions are maximize loads, reduce miles science based target setting while not officially part of the initiative. Baseline year: 2014 planned throughout the company, when trucks are empty and And while not required, the SBTI encourages companies to set starting with India and Europe in minimize distance traveled. a science based target for the sources of its large Scope 3 2018, and Africa, Brazil and Asia emissions, which for Cummins is the company’s products in in 2019. By the end of 2019, use that represent 99 percent of its GHG footprint. 80 percent of the Cummins network will be using an optimized transportation solution.

The change is expected to result in more accurate data, but the company will be unable to report its progress until the baseline data is stable, which is expected by mid-2018.

CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 19 Environmental Icons ENGINE FUEL RAW EFFICIENCY MATERIALS

RAW LOGISTICS MATERIALS

Environmental Icons ENGINE FUEL RAW PRODUCTSEFFICIENCY COMMUNICATIONSMATERIALS IN USE & MARKETING ENVIRONMENT

SUPPLIER RAWEMPLOYEE LOGISTICS INCREASE FACILITY RECYCLINGENGAGEMENT RATE MATERIALSENGAGEMENT 2020 GOAL 95 PERCENT ENVIRONMENTAL

PRODUCTSFACILITIES & COMMUNICATIONS 2017 PROGRESSOPERATIONS • 90 PERCENT GOALS UPDATE IN USE & MARKETING CORPORATE RESPONSIBILITY

SUPPLIER EMPLOYEE HEALTH & SAFETY EnvironmentalZERO Icons DISPOSAL ENGAGEMENT ENGAGEMENT Here’s a look at Cummins’ progress toward its environmental goals. ENGINE FUEL RAW DIVERSITY & INCLUSION EFFICIENCY2020 GOALMATERIALS 30 SITES

FACILITIES & Environmental performance includes all consolidated OPERATIONS KEY RAW FINANCIAL operations and joint ventures subscribing to Cummins’ 2017 PROGRESS 10 SITESLOGISTICS MATERIALS INNOVATION INDICATORS Enterprise Environmental Management System. EnvironmentalREDUCE Icons DIRECT WATER USE INTENSITY CUSTOMER SUPPORT ENGINE FUEL RAW PRODUCTSEFFICIENCY COMMUNICATIONSMATERIALS ETHICS & GOVERNANCE 2020IN USE GOAL 50& MARKETINGPERCENT ENVIRONMENTAL PERFORMANCE 2014 2015 2016 2017 2017 PROGRESS • 44 PERCENT 1 Energy consumption (thousands of MMBtu) 12,743 13,959 13,015 13,804 SUPPLIER RAWEMPLOYEE LOGISTICS ENGAGEMENT MATERIALSENGAGEMENT

GHG emissions (thousands of metric tons CO2e) 788 774 763 777 WATER NEUTRALITY

Generated waste (thousands of metric tons) 183 186 186 208 PRODUCTSFACILITIES & COMMUNICATIONS INOPERATIONS USE 2020 GOAL& MARKETING 15 SITES Disposed waste (thousands of metric tons) 17 18 21 22

Recycled waste (thousands of metric tons) 165 168 165 186 SUPPLIER EMPLOYEE 2017 PROGRESS 8 SITES ENGAGEMENT ENGAGEMENT Environmental Icons ENGINE FUEL RAW Recycling rate (%) 90 90 89 90 EFFICIENCY MATERIALS REDUCE ENERGY USE INTENSITY IN FACILITIES

FACILITIES & Hazardous waste (metric tons) n/a n/a 3,100 3,989 OPERATIONS Environmental Icons 2020 GOAL 32 PERCENT ENGINE FUEL RAW RAW LOGISTICS Water use (millions of gallons) 972 947 930 962 EFFICIENCY 2017 PROGRESSMATERIALS • 25MATERIALS PERCENT Enterprise ISO 14001 certified entities 102 112Environmental108 Icons108 ENGINE FUEL RAW

EFFICIENCY PRODUCTS MATERIALS COMMUNICATIONS Manufacturing sites certified to ISO 14001 / OHSAS 18001 (%) 92 92 96 95 REDUCE CO PER KG OFIN GOODSUSE SHIPPED & MARKETING 2 2020 GOALRAW 10 PERCENT Net sales (millions U.S. dollars) 19,221 19,110 17,509 20,428 LOGISTICS SUPPLIER MATERIALSEMPLOYEE ENGAGEMENT ENGAGEMENT 3 Water intensity reduction since 2010 (%) 35 41 42 44 RAW 2017 PROGRESS* LOGISTICS MATERIALS Energy intensity reduction since 2010 (%) 3,4 19 24 24 25 *Progress not available for 2017 due to baseline data changes FACILITIES & OPERATIONS 3,4 REDUCE CO FROM PRODUCTS IN USE ANNUALLY GHG intensity reduction since 2010 (%) 22 29 30 33 PRODUCTS 2 COMMUNICATIONS INGOAL USE 3.5 MILLION METRIC& MARKETING TONS (MMT) 1 Primary energy excludes sold electricity and associated fuel usage PRODUCTS COMMUNICATIONS 2 Includes global CMI managed facilities and 50:50 JV non-managed facilities IN USE & MARKETING 3 Intensity defined as adjusted for hours worked for energy, GHG and water 2017 PROGRESS • 3.4 MMT 4 Reduction includes consolidated entities only

SUPPLIER EMPLOYEE SUPPLIERENGAGEMENT EMPLOYEEENGAGEMENT CUMMINS SUSTAINABILITY ENGAGEMENT ENGAGEMENT PROGRESS REPORT 2017 20

FACILITIESFACILITIES & & OPERATIONSOPERATIONS ENVIRONMENT

to implement the requirement in company products. The first phase BUSINESS COALITIONS PARTNERING TO goes into effect in 2021. AND COUNCILS SOLVE COMPLEX Cummins is also advocating Cummins is a member of several key CORPORATE RESPONSIBILITY for separate engine standards organizations that promote sustainability HEALTH & SAFETY around the world as other regions and responsible technology, including: DIVERSITY & INCLUSION PROBLEMS consider GHG regulations. »» The DIESEL TECHNOLOGY FORUM, which is dedicated to raising Cummins’ partnerships and its policy The company also continues awareness about the importance of clean diesel engines, fuel working to achieve lower levels FINANCIAL advocacy efforts play key roles in the and technology. Since its founding in 2000, the forum has INNOVATION of oxides of nitrogen (NOx) and company’s environmental strategy and emerged as a leading source of information on agriculture, CUSTOMER SUPPORT particulate matter (PM) in its product economics, energy, the environment, transportation and trade ETHICS & GOVERNANCE performance. emissions globally. Over the next issues impacting diesel technology. five years, India, China, Mexico, They help Cummins meet product TIGHTER REGULATIONS Brazil and other countries will move »» The HEALTH EFFECTS INSTITUTE, which is a non-partisan emission goals, use energy more GLOBALLY to the very low emissions levels organization founded by the EPA and industry leaders, efficiently and bring environmental Cummins has a long history of contained in the Euro VI and EPA including Cummins, to provide high quality, impartial, and solutions to the marketplace. Four demonstrating its leadership in 2010 emissions standards for relevant science regarding the effects of air pollution on health. of the company’s 10 environmental developing the technologies needed on-highway products. »» BSR (formerly Business for Social Responsibility), which works sustainability principles focus on to meet tough emissions standards with member companies to develop sustainable business partnerships with legislative and and improve fuel efficiency. strategies through research and cross-sector collaboration. regulatory entities to develop sound CUMMINS COMMITMENT public policy that reduces Cummins’ Emissions regulations will continue This is a challenge and a great step »» The ROCKY MOUNTAIN INSTITUTE’S BUSINESS impact on the environment. to get tighter globally and the new forward – the number of people RENEWABLES CENTER, which is a member-based platform frontier is around greenhouse gas living in markets regulated at these that works to streamline and accelerate corporate They are: (GHGs). With emerging technologies, stringent levels will increase from procurement of off-site, utility-scale wind and solar energy. » Help develop the landscape on regulations is also » 1 billion today to more than 3 billion. »» The INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION, responsible regulations. shifting. For example, more local which is an initiative to help 20 large cities around the world governments are setting emissions In the U.S., Cummins is »» Promote technology address air quality standards and combat climate change. requirements at a pace and rate committed to working with both development. Cummins and other manufacturers have committed to the Environmental Protection unlike national standards. making it easier for these major cities to purchase buses »» Advocate for incentives Agency (EPA) and the California equipped with low-emissions technologies. to accelerate progress. Phase 2 for U.S. GHG/fuel efficiency Air Resources Board (ARB) to regulations passed in 2016 contain »» Support a balanced maintain a national, heavy-duty separate engine standards. global approach. NOx and GHG program, Cummins continues to support determining the best path for this regulation and in 2017 worked achieving impactful reductions.

CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 21 ENVIRONMENT

STRATEGIC ACTIONS Here are some actions Cummins is taking to AT A GLANCE reach its goals in energy, waste and water. CORPORATE RESPONSIBILITY HEALTH & SAFETY DIVERSITY & INCLUSION Jamestown Engine Plant, in Jamestown, New York (U.S.A.), is Cummins’ showcase project in the Department of Energy's FINANCIAL Better Buildings Challenge. INNOVATION CUSTOMER SUPPORT ETHICS & GOVERNANCE

REDUCE REUSE RECOVER RECYCLE REPLENISH Cummins’ building standards are Cummins reduced waste We use 184 regenerative “Dumpster dives” are a Our definition of water neutrality based on international standards by 1.2 million pounds by dynamometers in Cummins Cummins best practice to is that we offset the company’s (ASHRAE 189.1*) regarding the changing from expendable plants around the world to visibly show employees own water use at a particular efficient use of energy and water. to reusable packaging. capture waste heat in engine the trash that could have location through conservation test cells and turn it into been recycled. and/or restoration of available *American Society of Heating, Refrigerating and productive energy. water sources. Air Conditioning Engineers

CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 22 SOCIAL // CORPORATE RESPONSIBILITY EMPOWERING PEOPLE TO BUILD STRONGER METRIC CORPORATE RESPONSIBILITY HEALTH & SAFETY DRIVEN DIVERSITY & INCLUSION COMMUNITIES In 2017, Cummins established metrics to measure the Corporate Responsibility at Cummins means empowering people to thrive in impact of its employee-based community engagement. These metrics align with the United Nations Sustainable FINANCIAL their day-to-day lives. The strong foundations of employee-led community Development Goals (SDGs) to end poverty, protect the INNOVATION problem-solving and direct leadership engagement in community work CUSTOMER SUPPORT planet and ensure prosperity for all by the year 2030. ETHICS & GOVERNANCE help Cummins build more prosperous communities around the world. Cummins’ community engagement work aligns to 10 or more of the goals. Cummins employees are the EDUCATION: Within these priority areas, underpinnings of the company’s Improving the quality and through Cummins’ Every responsibility to communities, alignment of educational Employee Every Community identifying community needs, systems to ensure the program, employees volunteer volunteering time to meet students of today are during the work day all throughout those needs and helping to make ready for the workforce the year. For four years in a row, their communities healthier and of tomorrow. more than 70 percent of Cummins stronger. Cummins employees employees participated in the engage in three global priority areas: ENVIRONMENT: program, investing thousands Ensuring everything of hours to build stronger Cummins does leads to communities around the world. a cleaner, healthier and safer environment.

EQUALITY OF 83% OPPORTUNITY: Increasing opportunity Employee engagement in and equity for those corporate responsibility most in need. See page 25 for some initial indicators. activities in 2017.

CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 23 SOCIAL // CORPORATE RESPONSIBILITY COMMUNITY LEADERSHIP CORPORATE RESPONSIBILITY HEALTH & SAFETY DIVERSITY & INCLUSION ENGAGEMENT

Cummins has a legacy of strong leadership dedicated to Today, Cummins leaders directly engage in community FINANCIAL responsible corporate citizenship. With the roots of employee involvement projects, serve as INNOVATION community engagement firmly embedded, Cummins CEO sponsors of community engagement CUSTOMER SUPPORT Tom Linebarger issued a call to action to all Cummins leaders: ETHICS & GOVERNANCE “Leaders do not delegate corporate responsibility.” teams and recognize employees’ volunteer efforts. Cummins Powers Women, Cummins TEC: Technical Education a $10.6 million investment in for Communities teaches employable skills to youth in more than 20 schools Direct leadership engagement the company’s most ambitious worldwide, including this school in Turkey. was the catalyst to launch the community initiative ever. Cummins company’s first global strategic Powers Women is the next phase community program, Cummins of Cummins’ commitment to stability through entrepreneurship, TEC: Technical Education large-scale community impact and leadership training, and strategic for Communities. The Cummins powering a more prosperous world. TEC program educates and trains guidance to non-profit leaders. low-income youth in employable Through Cummins Powers Cummins’ regional leadership technical skills and connects them Women, the company will teams will spearhead this global to good jobs in their communities. partner with a network of best- effort, working closely with the From a few pilots in 2012, in-class non-profit organizations non-profits in their regions the program has expanded to with existing, outcome-based to find solutions to gender programs working to advance inequality in the communities Students participate 22 TEC schools now operating Cummins serves. in the Curiosity Machine, around the world, including women in Cummins’ communities a hands-on initiative led the first U.S. site in Memphis, around the world. by Cummins engineers in The program is another Tennessee (U.S.A.). Columbus, Indiana (U.S.A.) to Cummins’ investment will example of Cummins living promote science, technology, engineering and math (STEM). Following the success of support a range of effective its mission to build a more Cummins TEC, in early programs, including grass-roots prosperous world. 2018 Cummins launched teaching and mentoring, financial

CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 24 CUMMINS EMPLOYEES IMPACT BY CUMMINS GIVING ARE ENGAGED THE NUMBERS Cummins financially supports community engagement projects around the world. In 2017, Cummins gave $18.7 million to communities through Community Cummins shows its commitment to the communities it serves in Cummins worked in 2017 Development Grants and other strategic community investments in Cummins’ CORPORATE RESPONSIBILITY three global priority areas. The vast majority went to not-for-profit groups. part through community engagement. Every employee can work to measure the impact of its HEALTH & SAFETY at least four hours on company time on engagement activities. community engagement efforts. DIVERSITY & INCLUSION This has benefits beyond helping build more prosperous communities. Cummins believes engaged employees help create the right environment for business success. 3.3 MILLION FINANCIAL The company had a record year for engagement in 2017: Estimated number $18.7 INNOVATION CUSTOMER SUPPORT of people served. ETHICS & GOVERNANCE MILLION 81% 46,968 80% Estimated metric tons of GRANT-MAKING greenhouse gas reduced through BY FOCUS AREA 73% community environmental work. Here’s a look at 2017 grant-making by Cummins by priority area: 68%

* Rate includes employees and eligible contractors participating in the Every Employee Every Community program. 34% 4,964,882 EDUCATION Kiloliters of water conserved by Cummins employees 4% engaged in community projects. ENVIRONMENT

Cummins employees in Malaysia used solar power to bring lights to villages without electricity in 2017. To learn more about this project, 56% and the company’s record setting EQUALITY OF year for engagement, click here. 2,429 OPPORTUNITY Jobs secured through Cummins education and equality of 6% opportunity outreach efforts. OTHER

CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 25 SOCIAL // HEALTH & SAFETY DISTRIBUTION ERGONOMICS CUMMINS WORKS TO BUSINESS SEES PROGRESS DRAMATIC Cummins had a remarkable BECOME WORLD CLASS CHANGE year for ergonomics in 2017, CORPORATE RESPONSIBILITY with nearly 1,000 ergonomic HEALTH & SAFETY Perhaps no change in safety improvements made across the DIVERSITY & INCLUSION IN HEALTH AND SAFETY culture has been as dramatic company. These improvements as the change in Cummins’ can be partly attributed to the areas ranging from driver safety, At Cummins, our employees’ health Distribution Business. rollout of the Risk Reduction hand safety, and lockout / tag-out FINANCIAL and safety are the company’s highest The segment’s Incidence Index (RRI) metric. The RRI is procedures, to machine guarding INNOVATION Rate is down four-fold from a leading indicator measuring priorities. Our employees are Cummins’ and working safely at heights. CUSTOMER SUPPORT its recent peak. Major injuries the reduction of ergonomic risk ETHICS & GOVERNANCE most important asset and critical to By taking direct action through are down 80 percent from through physical improvements. the company’s sustainability. training and by establishing the their high and Lost Work Days right culture, Cummins believes it have been reduced by over In Cummins’ first year using this For much of the past decade, By comparison, Cummins' Injury / can best protect its most important 2,000 days per year. metric, the company experienced several improvements in its Cummins has been on a journey Illness Rate, also known as its asset – its employees. Work began several years ago lagging metrics, including: to become world class in health Incidence Rate, was 0.691 for The company has proven this to change the safety culture and safety. The company’s employees in 2017 and 0.926 in the business. Supported »» A 12 percent improvement historically, reporting over the past Corporate Health & Safety team for contractors. There were no by new training and other in the Ergonomics decade a 47 percent reduction in has led a multi-year effort to develop employee fatalities in 2017. steps, a team led by Health & Incidence Rate. Cummins’ overall recordable injuries a culture where employees are fully Safety began building a culture »» A reduction of ergonomic While the company’s average and an over 60 percent reduction in engaged and committed to making of interdependency, where injuries as a percent of total Injury/Illness Rate for employees injuries resulting in lost days. Cummins a healthier and safer place employees look out for their injuries from 28 percent in and contractors showed increases own safety and the safety of to work. While significant strides Cummins believes what matters 2016 to 22 percent in 2017. over 2016, Cummins believes the their co-workers. The team have been achieved, even one most to achieve an injury free »» Cummins also had company is strongly positioned to engaged leaders to support incident is too many. workplace is fostering a culture 143 ergonomic improvements achieve its long term goals, including the message and help drive of caring along with a spirit of submitted for the company’s According to the most recent a 38 percent improvement in the culture change. interdependence. Every employee internal ergonomic best U.S. Bureau of Labor Statistics Injury/Illness Rate over the next five must look out not only for their “Of course even one injury is practice competition, with data published in 2016, the years (see the goals on page 27). own safety, but for the safety of too many,” said Distribution an innovative mobile hoist average Injury/Illness Rate (per Business President Tony device being the winning The Health & Safety team offers their co-workers, family, friends 200,000 hours worked) is 3.6 for Satterthwaite, “but I’m project from the Cummins hazard prevention, control tools and and communities. manufacturing and 2.8 for the engine proud to say the culture in Distribution Business’ guidance in more than 15 different equipment manufacturing industry. the Distribution Business is South Pacific location. definitely changing.”

CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 26 SAFETY GOALS FOR 2023 CUMMINS INCIDENCE RATE PERFORMANCE Cummins’ Health & COMPARED TO INDUSTRY RATES INDICATORS Safety team believes progress can be driven CORPORATE RESPONSIBILITY Here’s a look at key trends in safety at Cummins since 2007. by setting aggressive, HEALTH & SAFETY Severity Case ate Indicator but achievable goals. DIVERSITY & INCLUSION SEVERITY CASE RATE 6 Here are the 2023 goals: 0. 5 »»Improve the FINANCIAL 4 INNOVATION 0.6 company’s average CUSTOMER SUPPORT Injury/ Illness Rate ETHICS & GOVERNANCE 0.4 (Incidence Rate) by 38 percent 1 CUMMINS MFG & GENERATOR US MOTOR VEHICLE MFG US MOTOR 0. 0 »»Improve the 010 011 01 01 014 015 016

0.0 company’s Major 00 00 009 010 011 01 01 014 015 016 01 Injury Rate by CENTER PROMOTES Incidence ate Indicator 30 percent INCIDENCE RATE HEALTHY LIFESTYLES 1.6 »»Improve the company’s Lost 1. Day Case Rate by 39 percent 0. »»Improve the Cummins’ LiveWell Center in Columbus, Indiana (U.S.A.) is off to a promising 0.4 company’s Lost start. The facility for employees and their families offers a broad range of Day Work Rate services to get to the root of health issues, treating the cause of disease rather

0.0 by 30 percent than just symptoms. Patients learn to prevent disease by addressing lifestyle 00 00 009 010 011 01 01 014 015 016 01 choices such as what they eat and how much activity they get. Company officials are looking for ways that lessons from the center, which is separate NOTE: The company’s Severity Case Rate is calculated based on the number of injuries and illnesses resulting in lost work days per 100 employees. Cummins Incidence Rate, also known as the average Injury/Illness Rate, from the company’s Health & Safety function, can be extended throughout is the relative number of recordable injuries and illnesses per 100 employees. the company. The center celebrated its first year in existence in 2017.

CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 27 SOCIAL // DIVERSITY & INCLUSION Truly making an effort to include, over the world speaking the local EMPLOYEE appreciate and value the unique language to better meet customer DIVERSITY AND backgrounds, skills and perspectives needs. As a result, the company’s RESOURCE that each employee brings is employees speak hundreds of GROUPS Cummins at its core. That’s when different languages. INCLUSION PLAYS Employee Resource Groups CORPORATE RESPONSIBILITY the company is at its best and can HEALTH & SAFETY In early 2017, Chairman and (ERGs) at Cummins are win for its customers, powering a DIVERSITY & INCLUSION KEY ROLE IN voluntary, employee-led CEO Tom Linebarger shared a more prosperous world. statement with employees about groups that serve as a SUSTAINABILITY Leaders understand the importance the many languages spoken at resource for members and FINANCIAL of diversity and inclusion to a global Cummins and the importance of the company by fostering a INNOVATION Cummins knows having diverse company. Employees provide effectively navigating language diverse, inclusive workplace CUSTOMER SUPPORT employees doesn’t drive business success Cummins with thousands of challenges when communicating aligned with Cummins’ ETHICS & GOVERNANCE mission, vision and values. alone. It’s how the company uses diversity – backgrounds, skills, thoughts and with one another. ideas. One of those differences is Cummins employees gather at the Cummins has more than valuing and fully including diverse ideas languages. As a global company, Commons Office Building in Columbus, 100 ERGs, which are Cummins needs employees all Indiana (U.S.A.), one of several buildings and perspectives in the company’s open to all employees and in the company’s headquarters city decision making – that makes an impact. designed to encourage collaboration. provide ample opportunities for leadership training, cross-cultural learning and professional development. ERGs can be site specific or they can cover a particular region. The groups are managed by the company’s Global Diversity and Inclusion team.

Established around the world, ERGs are organized by different facets of diversity like gender, generation, sexual orientation, ethnic heritage, mental/physical abilities and characteristics and race.

CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 28 Leaders like Chief Operating TOP 10 LANGUAGE DISTRIBUTION SPENDING ON Officer Rich Freeland shared their experiences with these challenges Cummins employees speak many languages. DIVERSE SUPPLIERS and how they approached them. Here’s a look at the most common ones: Cummins believes supplier diversity is critical to the company’s Most importantly, they reflected sustainability efforts. Using diverse suppliers* enables Cummins to CORPORATE RESPONSIBILITY on the lessons and takeaways that 2% tap into the power of diverse thoughts and approaches, increases HEALTH & SAFETY FRENCH 1% would help employees work through ROMANIAN competition for Cummins' business, and spreads the benefit of DIVERSITY & INCLUSION challenges when they exist. 2% economic development to a wider number of communities. PORTUGUESE 1% TAMIL Through this language initiative, 7% In 2016, Cummins was inducted into the Billion Dollar Roundtable, FINANCIAL 2% MARATHI Cummins is working to ensure every GERMAN a prestigious advocate for best practices in corporate supplier INNOVATION employee feels they can contribute diversity. Members must have exceeded $1 billion in annual CUSTOMER SUPPORT and is comfortable speaking up 8% 7% ETHICS & GOVERNANCE HINDI spending with diverse suppliers. when they don’t understand or CHINESE feel they haven’t been understood. 56% The company’s efforts are led by the Global Diversity Procurement 13% ENGLISH Collaboration among SPANISH team, which can be reached through the company’s supplier portal. global teams is a key driver of Here’s a look at spending since 2010. Cummins’ success, and without these different perspectives, 1400 $1.3 billion the company would lose its ability to innovate and ultimately, HEADCOUNT PER $1.2 billion $1.2 billion its position in the marketplace. 100 Simply acknowledging the LANGUAGES SPOKEN $990 million

challenge can often be the hardest More than 20 percent of Cummins 1000 $890 million $1.1 billion and most uncomfortable part. employees are proficient at $810 million more than one language. 00 By being aware and understanding Here’s a look: these challenges, and addressing $545 million them, Cummins is empowering each 76.76% 600 employee to make their voice heard 1 LANGUAGE

and work more effectively. It’s critical 400 14.70% 010 011 01 01 014 015 016 01 to unlocking the power of diversity 2 LANGUAGES and inclusion. 00* The eight categories of diverse suppliers are: Minority Business Enterprises, 6.76% Women Business Enterprises, Veteran Owned Businesses, Service-Disabled 3 LANGUAGES Veterans; Lesbian, Gay, Bisexual and Transgender (LGBT) Suppliers; 0SBA Small Disadvantaged Businesses; HUBZone Small Business Concerns 1.40% and Philanthropic Suppliers. 4 LANGUAGES CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 29 WOMEN AT COUNTRY OF BIRTH GENERATIONS CUMMINS As a global company Cummins wants to make sure it has global Cummins also has diversity in the ages of its employees. Cummins is working to bring representation among its leaders. Leaders and employees hail They are spread across a broad generational spectrum. more women to the company from all over the world, here’s a look at the top countries: CORPORATE RESPONSIBILITY 50 C and foster their development HEALTH & SAFETY into leadership. Here’s a look: ALL EMPLOYEES DIVERSITY & INCLUSION 40 N Y CNT FINANCIAL 24.40% MLYS A UND INNOVATION 0 CUSTOMER SUPPORT ETHICS & GOVERNANCE WOMEN IN THE WORKFORCE 26.41% 0 2010

REST OF WORLD* N 10 CNT WOMEN IN MLYS

THE WORKFORCE BRAZIL A T AUSTRALIA CHINA INDIA MEXICO UK UNITED STATES 2017 0 010 2017 010 2017 010 2017 010 2017 010 2017 010 2017 010 2017 010 2017 0 LEADERS BMS 60 16.42% CNT MLYS A AND AB 50 WOMEN LEADERS IN THE WORKFORCE 23.22% 40 2010 0 WOMEN LEADERS IN THE WORKFORCE 0 2017 REST OF WORLD* 10 CHINA MEXICO BRAZIL AUSTRALIA

0 INDIA UK UNITED STATES 010 2017 010 2017 010 2017 010 2017 010 2017 010 2017 010 2017 010 2017

CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 30 ASSIGNMENT COUNTRIES 2.4% EMPLOYEES Cummins has employees in more BRAZIL than 50 countries around the world. 2.8% GET THE TOOLS Here’s a look at the top locations AUSTRALIA CORPORATE RESPONSIBILITY as of the end of December 2017: HEALTH & SAFETY DIVERSITY & INCLUSION TO SUCCEED 8% CHINA 46.2% AT CUMMINS UNITED STATES FINANCIAL 12.6% INDIA INNOVATION WORKFORCE 8% CUSTOMER SUPPORT 10.8% UNITED KINGDOM ETHICS & GOVERNANCE Cummins provides employees with the MEXICO tools and feedback necessary to build a 9.2% career at the company – not just a stop REST OF WORLD along their career path.

The company offers many opportunities to help employees master their jobs and look ahead to their next positions, including extensive in-person and EMPLOYEE STEM INFLUENCE online training as well as the constructive feedback necessary to advance. REPRESENTATION About a third of Cummins’ exempt (non-union) employees have a background in Science, Technology, Engineering or Math. Cummins also believes great leadership is critical to an employee’s Just over a third of the Cummins Here’s a look: experience. The company offers extensive training to develop leaders workforce is represented who have mastered key skills. by unions under collective bargaining agreements expiring 17% Compensation and benefits are designed to be competitive within the between 2018 and 2022. markets where Cummins does business. And the company establishes ENGINEERS wages independent of a person’s gender or any other demographic trait. 35.5% 3% UNION EMPLOYEES INFORMATION TECHNOLOGY 12% OTHER ENGINEER OR SCIENCE

CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 31 ECONOMIC // FINANCIAL CUMMINS SALES / EARNINGS SALES CUMMINS BY YEAR In 2017, Cummins earned ACHIEVES RECORD $999 million* on revenues of CORPORATE RESPONSIBILITY HEALTH & SAFETY DIVERSITY & INCLUSION REVENUES IN 2017 $20.4 Cummins believes sustainability starts with BILLION FINANCIAL financial success. In 2017, the company * Excluding charges totaling $777 million INNOVATION in connection with tax reform in the U.S., delivered record revenues of $20.4 billion, full year net income attributable to CUSTOMER SUPPORT Cummins was $1.8 billion. ETHICS & GOVERNANCE a 17 percent increase over 2016.

Net income attributable to Cummins Earnings Before Interest and Taxes for the full year was $999 million (EBIT) for the year was $2.4 billion ($5.97 per diluted share), compared or 12 percent of sales – 12.2 percent to $1.4 billion ($8.23 per diluted of sales excluding charges related share) in 2016. Excluding charges to tax reform. This compares to totaling $777 million in connection $2 billion or 11.4 percent of sales with tax reform in the United States, in 2016. full year net income attributable “The company delivered strong to Cummins was $1.8 billion growth, solid profitability and ($10.62 per diluted share), with record operating cash flow in 2017,” a full year tax rate of 24.5 percent. said Cummins Chairman and CEO Tom Linebarger.

EXTENSIVE FINANCIAL Workers at the Jamestown INFORMATION Engine Plant in Jamestown, is available in the New York (U.S.A.) build the Cummins 2017 Annual new Cummins X15 engine, Report on Form 10-K. one of the cleanest, most efficient engines Cummins has ever built.

CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 32 Looking at 2017 briefly by business segment: 2017 REVENUE BY SEGMENT On-highway revenues increased primarily due 2017 REVENUE ENGINE BY PRODUCT to higher industry truck production and market CORPORATE RESPONSIBILITY BUSINESS share gains in the medium and heavy-duty HEALTH & SAFETY 34% NIAY truck markets in North America. Off-highway DIVERSITY & INCLUSION ENGINE revenues increased as a result of increased ATS SIC global demand for construction equipment. 27% IAY FINANCIAL DISTRIBUTION INNOVATION CUSTOMER SUPPORT Sales increased in the Distribution segment 2017 REVENUE ETHICS & GOVERNANCE DISTRIBUTION BY PRODUCT 23% due to higher demand in North America and COMPONENTS Asia for both off-highway engines and parts ATS and services. NINS 16% N POWER SYSTEMS SIC

2017 REVENUE BY Sales in the Components segment increased 2017 REVENUE COMPONENTS BY BUSINESS MARKETING TERRITORY due to higher truck production in North America and China, the inclusion of Eaton MISSIN SLUTINS Cummins Joint Venture revenues, and the sale TUB TCNLIS 3% ILTATIN MIDDLE EAST of new products to meet the Bharat Stage IV & AFRICA UL SYSTMS emissions regulations in India. 11% 8% AUTMATD TANSMISSINS EUROPE & CIS ASIA PACIFIC 4% INDIA 58% Industrial revenues increased due to improved 2017 REVENUE U.S. & CANADA POWER BY PRODUCT SYSTEMS demand in global mining and North American 10% oil and gas markets. Power generation sales NATIN CHINA 6% LATIN AMERICA also increased due to stronger demand in ATS & MEXICO Western Europe. INDUSTIAL NAT TCNLIS

CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 33 ECONOMIC // INNOVATION TAKING INNOVATION CORPORATE RESPONSIBILITY HEALTH & SAFETY DIVERSITY & INCLUSION FROM BUZZWORDS TO REALITY FINANCIAL INNOVATION CUSTOMER SUPPORT Autonomous trucks. ETHICS & GOVERNANCE Electrified powertrains. Big data. Telematics and connectivity. These are no longer just buzzwords. In 2017, Cummins announced ambitious plans to build on its strengths and add technologies and capabilities to capture new and emerging opportunities.

Cummins unveiled AEOS in 2017, a fully electric, heavy duty demonstration truck that will help the company study electrification.

CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 34 Here’s a quick look: NEW POWERTRAIN ELECTRIFIED MICROSOFT-CUMMINS LAB JOINT CORPORATE RESPONSIBILITY INNOVATIONS POWER The new Microsoft-Cummins Advanced Energy Lab VENTURE HEALTH & SAFETY Diesel engines will With the unveiling of in Seattle, Washington (U.S.A.) will deliver important DIVERSITY & INCLUSION remain the technology the concept Class 7 insights, not just on powering datacenters with Cummins announced in of choice in many Urban Hauler EV, AEOS, natural gas powered fuel cells, but on a host of 2017 a new joint venture Cummins’ markets Cummins introduced a other energy-intensive activities. with Eaton to develop FINANCIAL the most advanced for years to come. state-of-the-art battery The company expects the research work done at the lab will help INNOVATION automatic transmissions The company, however, pack, redefining energy- customers in diverse applications and market segments, creating CUSTOMER SUPPORT will continue to innovate efficiency and density for commercial trucks. ETHICS & GOVERNANCE power solutions that are cleaner and at a lower cost. and deliver diesel, as capabilities for the well as natural gas and electric vehicle market. The joint venture is named alternative fuel products, Eaton Cummins Automated providing significant The lighter, denser battery design Transmission Technologies. improvements in fuel allows AEOS to hold a longer charge efficiency, emissions, for improved range and faster It will design, sell cost-of-operation, charging, reducing down time. and support all future medium-duty and reduced weight and Cummins is committed to leading heavy-duty automated improved performance. technology in energy storage, power transmissions for the electronics, traction motor and Among its advances in 2017, commercial vehicle market. system and component control for Cummins began production of its commercial applications, and will X15 engine, one of the cleanest, introduce its first electrified product most efficient diesel engines the in 2019 for the urban bus market. company has ever built. And one

of the company’s joint ventures Cummins expects to spend about unveiled a natural gas engine $500 million over three years on its platform achieving emissions levels new Electrification Business segment far below EPA standards for nitrous as it ramps up production. oxide, a key contributor to smog.

Work on electrified powertrains Cummins’ Executive Director of Power Systems Engineering Gary Johansen (left) and bio and other renewable tours the Microsoft-Cummins Advanced Energy Lab in Seattle, Washington (U.S.A.). The lab opened in 2017, testing natural gas powered fuel cells for data centers. fuels will accelerate as well.

CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 35 PATENTS RESEARCH AND

DEVELOPMENT While year to year comparisons are difficult CORPORATE RESPONSIBILITY Cummins puts a big emphasis with patents, Cummins has been on an HEALTH & SAFETY on research and development to DIVERSITY & INCLUSION upward trend globally since 2013. meet customers’ future needs. In five of the past six years the company has spent in excess FINANCIAL COMPANY of $700 million in this area. INNOVATION RECORD 287 CUSTOMER SUPPORT YEAR R&D SPENDING ETHICS & GOVERNANCE 2017 2017 $752 million 259 2016 $636 million 249 2016 2015 $735 million 2015 OUT WITH THE OLD 2014 $754 million 217 AND IN WITH THE NEW 2013 $713 million In September of 2017, Cummins Repower™ was launched to provide 2014 more clean, efficient, and reliable turn-key crate engines to the market.

The first engine package released was the R2.8 Turbo Diesel — a small DIGITAL ACCELERATOR 4-cylinder engine with modern combustion technology and the emissions Customers are looking for convenient and responsive controls necessary to make it bring old vehicles back to life with ease. 175 interactions, real-time updates, and information that make products safer, more productive, and easier to use. Doubling the fuel economy while also reducing vehicle emissions is not uncommon in many of the typical installations’ daily driving routes. In May 2017, Cummins formed a new internal 2012 In off-road trail riding, R2.8 Turbo Diesel-powered vehicles have proven 156 organization led by Sherry Aaholm, Cummins Chief their superiority by consuming one third of the fuel of their gasoline Information Officer, called the Digital Accelerator. companions while providing unrivaled low-end diesel torque. 2013 This new organization seeks to streamline data-based innovation, bringing concepts from the idea stage to commercialization at the most efficient and effective pace.

CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 36 2017 JANUARY-MARCH GUIDANZ APRIL-JUNE BUS ENGINES Cummins launches a new mobile Cummins announces at a trade show app that uses advanced algorithms in Spain that its B4.5 and B6.7 bus X12 ENGINES and cloud computing technology to TRANSMISSIONS engines with a 112 kW to 224 kW CORPORATE RESPONSIBILITY Cummins unveils its highly efficient improve customers’ service experience. Cummins and power management ratings range, have 10 percent more HEALTH & SAFETY X12 engine for motor coaches. company Eaton announce a joint torque, extended service intervals and DIVERSITY & INCLUSION venture to produce automated a fully integrated stop-start option CONNECTED transmissions for heavy-duty capable of significant fuel savings. X15 ENGINES ADVISOR and medium-duty vehicles. Cummins begins full production FINANCIAL Cummins launches Connected NATURAL of its high efficiencyX15 engine. Advisor, delivering a new telematics- RECON ENGINES INNOVATION based solution to maximize uptime GAS ENGINES CUSTOMER SUPPORT and improve engine reliability. Cummins announces a customer case Cummins Westport, a joint OILGUARD study at a Malaysian shipyard showing venture between Cummins and ETHICS & GOVERNANCE significant increases in fuel efficiency Cummins provides the company’s Westport Industries, announces at a and uptime after a customer converted transportation expo that its 2018 L9N OilGuard program free of charge GENERATORS to Cummins ReCon engines. for the X15 Efficiency Series and the and ISX12N natural gas engines will Cummins announces the debut produce emissions 90 percent below X15 Performance Series for fleet of the C100N6 – the largest of the customers and owner operators. EPA standards for nitrous oxide (NOx), new 45-kW to 100-kW spark-ignited X12 ENGINE a key ingredient in smog. family of generators. A VERY Cummins announces its recently MIDRANGE launched X12 engine will set new ENGINES OFF-HIGHWAY industry standards for performance ELECTRIC PRODUCTIVE in fire and emergency apparatus. POWERTRAIN Cummins announces further Cummins announces trials of improvements to its MidRange future concept drivelines for Cummins pledges to have an engine lineup. off-highway equipment. RENEWABLE FUELS all-electric powertrain for the urban YEAR bus market on the market by 2019 Cummins announces its B4.5, B6.7 during a conference call with media. and L9 engines are compatible with Developing and launching paraffinic renewable diesel fuels new products to help customers meeting EN 15940 specification. succeed is critical to Cummins’ sustainability. Here’s a look at Metro, the Los Angeles County product developments in 2017, transportation system, awarded Cummins a $26.5 million contract a very busy year at the company: in June 2017 to begin supplying its new near-zero L9N engines. The engines will replace those in Metro’s current CNG fleet. Production started in (Image courtesy of Metro 2017 on Cummins’ high ©2018 LACMTA) efficiency X15 engine.

CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 37 2017 JULY- SEPTEMBER TELEMATICS OCTOBER – LONDON BUSES Cummins and Zonar announce the Cummins announces a clean diesel availability of Cummins’ Connected DECEMBER repower initiative to replace the engine POWERTRAIN Diagnostics to customers using Zonar’s and exhaust aftertreatment in older buses CORPORATE RESPONSIBILITY Cummins features the Eaton Cummins smart fleet management solution. BRAMMO with a fully certified, very low emissions HEALTH & SAFETY Automated Transmission Technologies’ Euro VI system. The repower will enable DIVERSITY & INCLUSION Endurant transmission at the North Cummins announces it is acquiring the pre-Euro VI legacy buses in London fleets American Commercial Vehicle Show. CRATE ENGINES assets of Brammo, which designs and to continue operating when the Ultra Low Endurant is more than 100 pounds lighter develops battery packs for mobile and Emission Zone (ULEZ) takes effect in the than other competing transmissions. Cummins announces its R2.8 stationary applications. city in April 2019. Turbo Diesel crate engine can FINANCIAL now be purchased by engine INNOVATION FUTURE VISION enthusiasts for conversion LOCOMOTIVES POWER GENERATION CUSTOMER SUPPORT projects at cumminsrepower.com. CUMMINS Cummins meets with the media to Cummins announces its QSK95 engine, Cummins announces a strategic ETHICS & GOVERNANCE APPROACH discuss its plans for clean diesel, the largest diesel engine the company partnership to deploy a resilient, near zero natural gas and electric ENGINE DESIGN produces, is in active service in cleaner and cost-effective distributed Cummins does not use power solutions and unveils a California, Illinois, Michigan, Missouri and generation platform for commercial concept electric truck. Cummins announces it has been Wisconsin, powering Siemens’ ultra-low and industrial customers. defeat devices and is awarded a contract to develop emission Charger passenger locomotive. committed to meeting and demonstrate a technologically advanced engine for the next GENERATORS emissions standards. generation of U.S. combat vehicles. GENERATORS Cummins unveils its new RS125 and Cummins unveils its new C125N6 Cummins has a long RS150 models in the QuietConnect and C150N6 models in the series, ranging from 13 kW up to history of working QSL8.9G generator series for 150 kW to back up larger homes stationary power applications. transparently and and small businesses.

collaboratively with regulators to develop ELECTRIFICATION Siemens’ Charger Locomotive Cummins reveals electrified power and meet emissions with a Cummins’ QSK95 engine technology for transit bus applications during testing. requirements. at a public transportation show in Atlanta.

Cummins unveils AEOS, the company’s all-electric concept truck.

CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 38 PARTNERING FOR PROGRESS Cummins believes in partnering with others to achieve innovation in its products. CORPORATE RESPONSIBILITY Here's a look at six public-private partnerships the company is working on HEALTH & SAFETY DIVERSITY & INCLUSION (agency is the Department of Energy unless noted): GOVERNMENT PARTNERSHIPS Cummins’ longstanding FINANCIAL PROJECT NAME PARTNERS TECHNOLOGY OBJECTIVE partnerships with the INNOVATION U.S. Departments of CUSTOMER SUPPORT ACE Achates Power Opposed Piston, Demonstrate low heat rejection, high Energy, Defense and ETHICS & GOVERNANCE Advanced Combat Engine - Two Stroke Engine Technology power density, high efficiency technologies Defense Department for future combat vehicles other federal and state agencies directly support ST2 Peterbilt, Advanced engine, drivetrain, and vehicle 55 percent engine BTE with strong focus international and national SuperTruck II Eaton technologies for Class 8 line-haul trucks on commercial viability; greater than goals of reducing 125 percent freight efficiency improvement greenhouse gas emissions, versus 2009 product petroleum consumption

ETREE Paccar, Argonne, Class 6 electric truck with diesel Greater than 50 percent petroleum and dependency, and Electric Truck with National Renewable Energy range extender engine reduction for 85 percent of Class 6 pickup improved air quality Range Extender Engine Laboratory (NREL), OSU and delivery applications as well as enhanced military readiness.

NEXTCAR Purdue, Peloton, Multiple controls concepts Class 8 truck fuel savings exceeding These partnerships Connected and Automated Peterbilt, NREL, ZF capitalizing on information and 20 percent with technology costing less Vehicle Technologies connectivity technologies to save fuel than $3,000 per truck help Cummins lead the U.S. and other markets CERC-TRUCK Argonne, Oak Ridge, Purdue Medium duty electric truck with Cost-effective achievement of more than in competitiveness, U.S.–China Clean Energy University, Ohio State University, spark-ignited range extender and other 50 percent freight efficiency improvement technology and customer Research Center University of Michigan, high efficiency vehicle technologies compared to today’s medium-and heavy- success while reducing Freightliner Custom Chassis Corp. duty vehicles criteria emissions from

SOFC Ceres, PNNL, Solid Oxide Fuel Cell technologies 60 percent electrical efficiency for the off-grid the global transportation Solid Oxide Fuel Cell University of Connecticut data center market and distributed power generation systems.

CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 39 ECONOMIC // CUSTOMER SUPPORT COMMITMENT TO CUSTOMERS IS CORPORATE RESPONSIBILITY HEALTH & SAFETY DIVERSITY & INCLUSION KEY TO SUCCESS That’s why the company takes CUMMINS CARE LOOKING Keeping customers on the job a multi-faceted approach to FINANCIAL Cummins answered about AHEAD customer support, ranging INNOVATION 384,000 customer service calls in and out of the repair shop is from Cummins’ 24/7 Customer Cummins is investing in CUSTOMER SUPPORT North America in 2017, merging Human Centered Design ETHICS & GOVERNANCE Solutions Center, implemented about 20 separate regional critical to Cummins’ business to better understand its in North America in 2017, service phone numbers into one customers and their needs. and sustainability. to the company’s Connected easy-to-remember number – Diagnostics and telematics, 1-800-CUMMINS™. Human Centered Design capable of sending signals calls for including the human directly over the air to improve Since the introduction of perspective in all steps of engine and vehicle efficiency. 1-800-CUMMINS in 2017, problem solving to leverage callers interact with a highly diverse perspectives, engage Cummins’ goal is three-fold: trained staff capable of answering customers and end-users, and prevent trouble, address problems many of their questions, and learn through iterative design quickly and completely, and partner elevating those they can’t to experts. to effectively deliver innovative, in our customers’ success, caring Calls had an average wait time of customer-centric products as much as they do about the 90 seconds in 2017 and 70 percent and services. challenges they face. of customer issues were resolved within 24 hours. Of course it’s easy to talk In 2017, over 100 Cummins employees were trained in about customer assistance. Customers have the option Human Centered Design with Here’s how Cummins to quickly and easily rate their Cummins’ Customer demonstrates its commitment: plans for 350 more in 2018. Solutions Center offers experience by simply grading the around-the-clock help in call at its conclusion on a 1-to- North America to keep customers working and 5 scale, which Cummins then out of the repair shop. uses for continuous improvement.

CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 40 The company is using what it Cummins’ Connected Diagnostics™, GUIDANZ™ INCREASES learns in North America to improve for example, enables the company UPTIME FOR SERVICE BY THE customer support capabilities to communicate with its engines to PROVIDERS globally, standardizing processes recommend actions the moment an NUMBERS Cummins Guidanz is a suite of where necessary while recognizing engine system fault occurs. Here’s a look at CORPORATE RESPONSIBILITY genuine service products, features local cultures and practices. Cummins’ customer HEALTH & SAFETY Launched in 2014, Connected and capabilities launched in 2017. support by the numbers: DIVERSITY & INCLUSION Cummins Care also developed Diagnostics instantly transmits It maximizes efficiency by programs in 2017 to answer key engine and GPS data streamlining processes associated questions sent via email and through a telematics connection, with a service event. FINANCIAL instant messaging. immediately applying Cummins’ 384,000 Guidanz enables service providers INNOVATION analytics to transform the data Number of calls in CUSTOMER SUPPORT to offer quicker and more accurate into actionable information. North America to ETHICS & GOVERNANCE TELEMATICS AND service for greater customer 1-800-CUMMINS in 2017. CONNECTIVITY A diagnosis of the fault, and clear satisfaction and improved uptime. The company is also using the recommendations regarding the There are more than 5,000 users convergence of telecommunications continued vehicle operation are utilizing Guidanz Web and the 70 and information technology to sent instantly to the operator Guidanz mobile app. provide customers the information or fleet manager. Percentage of customer Immediate Assessment, a feature Cummins is going to use what it they need to work more efficiently, calls to 1-800-CUMMINS Connected Diagnostics is part of a of Guidanz, allows service providers learns at its Customer Support increasing uptime and decreasing resolved within 24 hours. to pull prioritized fault codes – Center in North America (below) costly downtime. suite of products Cummins offers to improve customer support through the use of telematics. estimating repair time and indicating capabilities globally. Connected Advisor™, a service the most likely cause of failure – 20 enabled by Connected Diagnostics, wirelessly through their smart helps fleet managers and operators phones or tablets anywhere Internet Approximate number prioritize recommendations to service is available. Even if every of regional phone determine whether something service bay is full, an assessment numbers merged into a requires immediate attention or can be made so the service provider single customer hotline. can be scheduled a few days out. can more effectively schedule and triage service work. Connected Software Updates™ 120,000 deliver secure software updates Customer support lines, telematics Estimated number of for engine calibrations over-the-air, and helping service providers are just engines connected to without a trip to the repair shop. three ways Cummins demonstrates it is serious about customer service. Connected Diagnostics telematics system.

CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 41 ECONOMIC // ETHICS & GOVERNANCE

CORPORATE RESPONSIBILITY HEALTH & SAFETY DIVERSITY & INCLUSION

FINANCIAL INNOVATION CUSTOMER SUPPORT ETHICS & GOVERNANCE

Cummins believes a sustainable company While it has been renovated and expanded many times, the Columbus Engine Plant SUSTAINING is built on a foundation of good governance in Columbus, Indiana (U.S.A.) goes back to the earliest days of the company and that promotes ethical behavior at all levels. figures such as founder Clessie Cummins and longtime CEO J. Irwin Miller worked A CULTURE OF The Ethics & Compliance function focuses within its walls. They established Cummins on helping Cummins maintain its tradition as an ethical company. ETHICAL BEHAVIOR as an ethical company as it grows globally.

CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 42 All company employees worldwide, In 2017, 24,533 employees and CODE OF MAINTAINING regardless of position, are expected officers, including all members to observe high ethical standards of the Board of Directors, CONDUCT THE CODE and comply with the company’s completed Cummins’ annual PRINCIPLES Training and guidance are not enough to ensure compliance. Code of Business Conduct. Ethics Certification. The Ethics 01 We will follow the Cummins relies on its employees to speak up if they witness CORPORATE RESPONSIBILITY The code is built around 10 ethical & Compliance function reviewed law everywhere. behavior they believe violates the Code of Conduct. HEALTH & SAFETY principles the company reinforces any exceptions and worked with DIVERSITY & INCLUSION 02 We will embrace Once a potential issue is reported, Cummins has a global team through more than a dozen online Cummins’ Human Resources diverse perspectives of Master Investigators who investigate alleged Code of Conduct training courses. staff to ensure they were and backgrounds, and documented and investigated. treat people with dignity violations. In 2017, nearly 2,000 cases were investigated. FINANCIAL The courses touch on issues such and respect. Thirty-eight percent of those cases were substantiated and INNOVATION as anti-bribery, conflicts of interest, Ethics & Compliance also helps 38 percent of the substantiated cases led to terminations. 03 We will compete fairly CUSTOMER SUPPORT data privacy, export compliance, fair develop new policies, updates ETHICS & GOVERNANCE and honestly. labor standards and fair competition. existing policies, and provides 2014 2015 2016 2017 In addition, Cummins conducts an guidance on compliance issues 04 We will avoid conflicts of interest. annual ethics certification process around the company. In 2017, the to ensure employees around function played a key role in the 05 We will demand that Total cases 1,559 1,830 1,772 1,904 the world understand and follow drafting of a new Human Rights everything we do leads the code and its underlying policies. Policy and provided guidance on a to a cleaner, healthier and safer environment. Cases outside U.S. 45% 43% 48.5% 49.7% host of issues such as Sales Agents and Third Party Intermediaries, 06 We will protect our technology, CUMMINS HUMAN Governmental Sales and Fair our information and our Cases in the U.S. 55% 57% 51.5% 50.3% RIGHTS POLICY Competition and Anti-Trust. intellectual property. 07 We will demand that our Anonymous 33% 33% 33% 32% Cummins adopted its first Human Rights Policy in 2017, Cummins employees can financial records are accurate reports addressing human rights violations ranging from human report ethical concerns at and that our reporting trafficking and child labor to forced labor and indentured labor. ethics.cummins.com or by calling processes are clear Cases 48% 53% 43% 38% the company’s Ethics Help Line. and understandable. substantiated The company also commits to supply chain transparency, Phone numbers are available 08 We will strive to improve pledging to work with suppliers and partners in high risk at ethics.cummins.com. our communities. Terminations* 29% 27% 37% 38% locations to mitigate the risk of human trafficking and other The Cummins non-retaliation human rights violations. 09 We will communicate policy protects employees who honestly and with integrity. Average days to close 13 13 13 16 A story on the policy and the policy itself are publicly raise concerns in good faith. We will create a culture where Where allowed by law, employees 10 available in The Newsroom on cummins.com. employees take responsibility may report concerns anonymously. for ethical behavior. * Termination data based on percentages of substantiated cases.

See the full code.

CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 43 COMPLIANCE TRAINING CUMMINS Thousands of employees receive ethics and compliance training every year at Cummins. These figures are accumulated SUPPLIER CODE enrollments of active employees since 2005, when the oldest courses were first offered. The completion rates reflect the OF CONDUCT CORPORATE RESPONSIBILITY number of completions by the first quarter of 2018. HEALTH & SAFETY The Supplier Code of Conduct DIVERSITY & INCLUSION helps the company ensure it TRAINING ENROLLED COMPLETED % COMPLETED is doing business with other companies around the world Anti-Bribery 30,181 29,559 98 percent FINANCIAL sharing Cummins’ values for INNOVATION sustainable practices. Anti-Bribery Refresher 23,391 22,805 97 percent CUSTOMER SUPPORT It is built around seven principles: ETHICS & GOVERNANCE Global Anti-Bribery 31,282 28,355 91 percent 01 Obey the law everywhere. Careful Communications 31,283 30,654 98 percent 02 Treat people with dignity and respect.

Code of Business Conduct Refresher 26,927 25,741 96 percent 03 Avoid conflicts of interest.

04 Provide a safe and Conflicts of Interest 582 525 90 percent healthy workspace.

Data Privacy 6,721 6,316 98 percent 05 Protect Cummins technology, information and intellectual property. Doing Business Ethically 31,283 30,501 98 percent 06 Protect the environment.

Export Compliance 23,947 22,163 93 percent 07 Assist Cummins in enforcing the code. Treatment of Each Other at Work Refresher 19,908 19,328 97 percent Cummins requires a verification Fair Labor Standards 485 482 99 percent response from suppliers that they comply with the code before they Code of Business Conduct – New Hire 59,311 55,190 93 percent are added to the company’s supplier database. Cummins may visit Treatment of Each Other at Work – New Hire 59,311 55,139 93 percent facilities, review documentation and conduct an audit if necessary to Fair Competition 2016 28,312 25,120 89 percent ensure compliance.

CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 44 ECONOMIC // ETHICS & GOVERNANCE // BOARD OF DIRECTORS

BOARD PROTECTS BOARD GOVERNANCE INTERESTS OF AT A GLANCE CORPORATE RESPONSIBILITY Here’s a quick look at key governance matters regarding HEALTH & SAFETY Cummins Board of Directors. To learn more go to the DIVERSITY & INCLUSION SHAREHOLDERS governance documents website. The Board of Directors protects the BOARD PROCEDURAL FINANCIAL »» Size of Board: 12 members »» Super Majority Voting INNOVATION Threshold for Mergers: No interests of the company’s shareholders, »» Independent Directors: CUSTOMER SUPPORT 10 members » Proxy Access: Yes ETHICS & GOVERNANCE exercising sound and independent judgment » »» Average Age of Directors: »» Shareholder Right to on significant issues at Cummins. 62 years old Amend Bylaws: Yes »» Mandatory Retirement Age: »» Shareholder Called It includes 10 independent All directors are elected annually. Cummins’ board has six 72 years old Special Meetings: Yes directors, consistent with the The board has the freedom to standing committees: definition established by the determine the Chairman and »» Annual Election of Directors: »» Poison Pill: No »» Governance and Nominating U.S. Securities and Exchange Chief Executive Officer based Yes »» Audit Commission, and two members solely on what it believes is in »» Women and Minority Board POLICIES/ who are employees at Cummins. the best interests of the »» Compensation Members: 42 percent GUIDELINES company and its shareholders. »» Executive »» Code of Conduct for Two new members were elected »» Majority Voting in Director Directors, Officers to the board in 2017: Currently, the board believes »» Finance Elections: Yes and Employees: Yes the company’s interests are »» Safety, Environment »» Average Director Tenure: »»Karen H. Quintos, »» Stock Ownership best served by combining the and Technology 9 years Chief Customer Officer roles of Chairman and CEO Guidelines for Directors »» Board Meetings held in 2017: at Dell Technologies and appointing an independent You can learn more about the board and Executive Officers:Yes Inc., a global supplier 6 meetings Lead Director. The board reviews and governance at the company by »» Anti-Hedging and of personal computers. this decision annually. going to the board’s website. LEADERSHIP Pledging Policies: Yes »»Rich Freeland, »» Compensation President and Chief »» Combined Chairman Recoupment Policy: Yes Operations Officer and CEO: Yes at Cummins. »» Independent Lead Director: Yes

CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 45 CUMMINS BOARD MEMBERS

CORPORATE RESPONSIBILITY HEALTH & SAFETY DIVERSITY & INCLUSION

DR. ROBERT K. GEORGIA R. FRANKLIN R. FINANCIAL HERDMAN NELSON CHANG DIAZ Managing Director of President and CEO of INNOVATION Chairman and CEO of Ad STEPHEN B. Kalorama Partners, LLC, THOMAS J. PTI Resources, LLC, an CUSTOMER SUPPORT Astra Rocket Company, a a Washington, D.C.-based independent consulting firm. DOBBS consulting firm. He joined LYNCH She joined the board in 2004. ETHICS & GOVERNANCE U.S. spaceflight engineering company based in Houston, Retired Senior Group the board in 2008. Chairman, TE Connectivity Committees: Texas. He joined the board President at Fluor Corporation, Committees: Ltd., a global provider of Audit Committee; Compensation a Fortune 500 company offering Audit Committee; Compensation connectivity and sensor Committee; Governance and in 2009. Nominating Committee Committee; Governance and solutions. He joined the engineering, procurement, Nominating Committee Committees: board in 2015. Finance Committee; Safety, construction, maintenance, and ROBERT J. Environment and Technology project management services. Committees: N. THOMAS Committee; Governance and He joined the board in 2010. Compensation Committee; BERNHARD Nominating Committee Finance Committee; Governance LINEBARGER Committees: and Nominating Committee Vice President for Research Audit Committee; Safety, Chairman and Chief and a professor of Engineering Environment and Technology Executive Officer, Cummins at the University of Notre Committee; Governance and Inc. He joined the board Dame. He joined the board Nominating Committee in 2009. in 2008. Committees: Committees: Executive Committee of the Board Audit Committee; Safety, Environment and Technology Committee; Governance and Nominating Committee KAREN H. ALEXIS M. QUINTOS HERMAN Chief Customer Officer of Chairman and CEO of Dell Technologies Inc., a BRUNO V. New Ventures, LLC, a WILLIAM I. global supplier of personal DI LEO corporate consulting computers and other company. She joined the MILLER computer hardware items. Senior Vice President, board in 2001 and currently President of the New York- She joined the board in 2017. IBM Corporation, a global RICH J. serves as Lead Director. technology and consulting based Wallace Foundation Committees: FREELAND Committees: focused on K-12 education Audit Committee; Safety, company. He joined the Finance Committee; Safety, President and Chief Operating and the arts. He joined the Environment and Technology board in 2015. Environment and Technology Committee; Governance and Officer, Cummins Inc. He board in 1989. Committees: Committee; Governance and Nominating Committee Finance Committee; Safety, joined the board in 2017. Nominating Committee; Lead Committees: Environmental and Technology Director; Executive Committee Audit Committee; Compensation Committees: He does not serve of the Board of Directors. Committee; Governance and on any committees. Committee; Governance and Nominating Committee Nominating Committee; Executive Committee of the Board

CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 46 ECONOMIC // ETHICS & GOVERNANCE // RISK MANAGEMENT CUMMINS WORKS TO EFFECTIVELY CORPORATE RESPONSIBILITY HEALTH & SAFETY DIVERSITY & INCLUSION MANAGE RISK Managing risk effectively is another critical factor in Cummins’ sustainability. RISK AND THE FINANCIAL To get that job done, the company’s Enterprise Risk Management (ERM) team ENVIRONMENT INNOVATION works with the company’s top leaders, regional leaders in Cummins’ Area CUSTOMER SUPPORT Cummins considers ETHICS & GOVERNANCE Business Organizations (ABOs) and Cummins’ Internal Audit function. environmental risks among the top 100 The company’s approach to In 2017, ERM also worked with Sites are required to conduct table- reports on the 20 or so thought to the company faces. risk starts with its Enterprise the leaders of Cummins’ regional top exercises on a regular basis present the greatest risk to Cummins Risk Council, made up of the organizations, known as ABOs, to test how each would react in and reports regularly on them to Among its top 20 risks is company’s top leaders who, to take greater oversight of risk the midst of an emergency. ABO the company’s Board of Directors. uncertainty about product working with ERM, oversee management at individual locations leaders are responsible for ensuring regulations. This could include Cummins believes this multi-faceted risk management and provide within the company, especially these exercises are both robust and the regulations themselves or approach is critical to effectively direction on risk-related matters. those deemed critical to accomplished within their regions. enforcement of regulations. managing risk. Cummins’ operations. Cummins supports tough, clear The council, established in 2016, In addition, more extensive “stress and enforceable environmental is part of a framework designed As of 2017, every Cummins location, tests” are conducted at least regulations that drive innovation. to drive continuous improvement more than 600 in all, has a Business once every four years by a third TO LEARN MORE in risk management, where risk Continuity Plan. The plan directs party working with ERM and other The company also includes Find more on risks facing is recognized and responded to how each site would operate in the functions at Cummins at the more facility compliance with the company starting appropriately. Each company leader midst of a major disruption such than 70 sites deemed most critical environmental regulations on page 17 of Cummins on the council takes ownership of as a natural disaster affecting the to Cummins’ operations. a risk within the top 100. 2017 Annual Report on individual risks that could impact location or a major supplier. The company believes it has ERM also keeps a running list of the 10K form. the company’s growth plans or established a strong record nearly 100 top risks facing the long term sustainability. for compliance with the company. It works with the Internal most stringent environmental Audit function to prepare special regulations for facilities.

CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 47 ECONOMIC // ETHICS & GOVERNANCE // GOVERNMENT RELATIONS CUMMINS WORKS WITH POLICY MAKERS CORPORATE RESPONSIBILITY HEALTH & SAFETY DIVERSITY & INCLUSION TO BUILD A MORE PROSPEROUS WORLD FINANCIAL INNOVATION The company’s Government Relations staff advocates globally for CUSTOMER SUPPORT policies, legislation, government research funding and regulatory ETHICS & GOVERNANCE guidelines that promote products and technologies benefitting the environment and other matters important to Cummins.

Efforts in the United States include with technical advice, global best In Europe, Cummins is advocating working with Congress, the White practices and thought leadership in for future (post Stage V for non- House, state governments, trade preparation for the implementation road and Euro VI for on-highway) associations and industry to protect of new emissions regulations emissions standards that are tough, fuel efficiency regulations and (NS IV and CS IV). clear and enforceable and maintain develop next-tier pollution standards focus on the engine. Government With decentralization of the for heavy duty vehicles, and to Relations is also promoting the government approval authority, broadly educate policy makers idea of including an engine focused Cummins China effectively about how economic development element in the heavy duty vehicle created a grassroots outreach and competitiveness can flourish carbon dioxide (CO2) emissions effort engaging the company’s when regulations are tough, clear regulation, rather than solely a senior regional leadership with and enforceable. whole vehicle limit to enable local Chinese officials to establish further CO2 reductions. In China, Cummins continues Cummins as a strong resource to advocate for the adoption of in environmental and As the company continues strict emission standards across manufacturing matters. developing innovative technology all engines. The company has for customers, Cummins continues Cummins CEO Tom Linebarger has forcefully argued for free trade, testifying before a congressional committee in 2017 and appearing at a number of forums. provided the Chinese government to partner with policy makers and

He maintains trade can be good for everyone involved. regulators around the world.

CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 48 LOBBYING POLITICAL CONTRIBUTIONS POLITICAL Cummins belongs to a number of trade organizations to further business In the U.S., political contributions are made by the Cummins Inc. ACTIVITIES interests. While the company might not agree with these associations on every Political Action Committee (CIPAC), and funded solely by voluntary Cummins bans contributions CORPORATE RESPONSIBILITY matter, Cummins believes they help ensure government leaders know where employee contributions. CIPAC makes contributions to federal and state using corporate funds to HEALTH & SAFETY the company stands on key issues. Here’s a list of U.S. trade organizations candidates on a bipartisan basis and according to federal and state election candidates, political parties DIVERSITY & INCLUSION Cummins paid dues in excess of $50,000 during calendar year 2017, as well laws. CIPAC is governed by corporate policies and bylaws that state: and independent expenditures, as the U.S. Chamber of Commerce, which fell below the $50,000 threshold. including advertisements that »» CIPAC contributions are strictly voluntary. Listed with each entity is Cummins’ estimation of the portion of these dues support or oppose individual FINANCIAL »» Employees will not be reimbursed directly or indirectly for political used for lobbying or other political expenditures: candidates. INNOVATION Trade organization Lobbying estimate Key issues contributions. CUSTOMER SUPPORT The company also will not use American Benefits $1,560.00 Employer sponsored » Employees will not be pressured to contribute to CIPAC or make any other ETHICS & GOVERNANCE TRADE LOBBYING KEY » corporate funds to contribute to Council benefits ORGANIZATION ESTIMATE ISSUES personal political contribution. American Trucking $13,428.24 Trade, environment 501 (c) (4) and 527 tax-exempt »» Failure to contribute to CIPAC shall not disadvantage an employee’s career. Association Employer sponsored groups in the United States American Benefits Council $1,560.00 benefits Business Roundtable $237,150.00 Trade, taxes CIPAC contributions are based on: that are engaged in political activity or make payments to Diesel Technology Forum $31.75 Environment »» Public integrity of the candidate. influence ballot issues unless National Association of $40,429.50 Immigration, trade, American Trucking Association $13,428.24 Trade, environment »» Representation of a Cummins facility or employees. the issues are directly tied to Manufacturers manufacturing »» Support for issues important to Cummins. the company’s core values and The Truck and Engine $2,398.00 Truck and engine Business Roundtable Trade, taxes $237,150.00 business interests. Manufacturers manufacturing »» Timely and effective constituent service. Association National Association Immigration, trade, »» Political leadership or organization. In those cases, Cummins is U.S. Chamber of $7,500.00 Taxes, immigration of Manufacturers $40,429.50 manufacturing committed to publicly disclosing »» Support for the company’s values. Commerce any payments including TOTAL $302,497.49 The Truck and Engine Truck and engine All of CIPAC’s activities are disclosed to the Cummins Board of Directors in recipient names and amounts. Manufacturers Association $2,398.00 manufacturing an annual political contribution report. A complete list of the political action The company made no such committee’s contributions to candidates is available here. payments in 2017. U.S. Chamber of Commerce $7,500.00 Taxes, immigration

TOTAL $302,465.74

CUMMINS SUSTAINABILITY PROGRESS REPORT 2017 49 CONTRIBUTORS TO THIS REPORT CONTACTS

Cory Brandt, Brittany Calas, David Clark, Kelley Creveling, Susan Criswell, Laurie Counsel, Daisa Gilbert, Kevin Graham, Michelle Garner-Jana, CAROLE CASTO Rebecca Hewitt, Lauren Kastner, Brijesh Krishnan, Ramona Kudla, Vice President – Corporate Communications Jelling Lai, Anna Lintereur, Julie Liu, Monalisa Majumdar, Paul Miller, Jon Mills, 301 E. Market St. Terry Neff, Pramod Palat, Chad Pruitt, Meredith Sanders, Steve Sanders, Indianapolis, IN 46204 Adam Schumm, Mark Sifferlen, Jennifer Struffert Abon, Alexis Telfer, Katherine Vujovich, Erica White, Bindu Yadlapalli, Rich Whitney, MARY CHANDLER James Wide and Katie Zarich. Vice President – Corporate Responsibility Chief Executive Officer – The Cummins Foundation 301 E. Market St. Indianapolis, IN 46204

BRIAN MORMINO Executive Director – Worldwide Environmental Strategy and Compliance 500 Jackson St. Columbus, IN 47201 Cummins Inc. Box 3005 Columbus, Indiana CATHERINE VAN WAY 47202-3005 Head of Government Relations U.S.A. 601 Pennsylvania Ave., Suite 1100 Washington, D.C. 20004 cummins.com ©2018 Cummins Inc. BLAIR CLAFLIN (EDITOR) Director – Sustainability Communications ™ Products mentioned in this 301 E. Market St. report are covered by copyright Indianapolis, IN 46204 and trademark protections. [email protected]

CUMMINS SUSTAINABILITY PROGRESS REPORT 2017