ANN UAL REP SUSTAINABILITY REPORT SUSTAINABILITY ORT 2020 2020 CNH Industrial N.V. SUSTAINABILITY Corporate Seat: Amsterdam, the Netherlands Principal Office: 25 St. James’s Street, London, SW1A 1HA, United Kingdom Share Capital: €17,608,744.72 (as of December 31, 2018) REPORT Amsterdam Chamber of Commerce: reg. no. 56532474 www.cnhindustrial.com CNH INDUSTRIAL 1 CONTENTS 2 4 Letter from the Chair 6 Resilience during the COVID-19 Pandemic 7 Long Story Short 18 Organization Profile 19 CNH Industrial at a Glance 22 Our Commitment to the Future 20 Financial Performance 23 Sustainability Model 21 Distribution of Value Added 24 Materiality Analysis OUR 28 Sustainability Priorities and Strategic Targets SUSTAINABLE COMPANY 31 Sustainability Plan 44 Our Governance Model 124 Engaging Local Communities 45 Management Framework 125 Management Framework 45 Governance Structure 126 Impact Measurement and Valuation 53 Governance System 129 Standing with Local Communities during 70 Risk Management the COVID-19 Pandemic 77 How We Manage Our People 134 Projects to Combat Climate Change and Reduce Environmental Impact 78 Management Framework HOW WE GET 136 Projects to Improve Food Availability 80 Employees in Numbers THINGS DONE 137 Projects to Support Youth Training 82 Labor Practices 139 Projects to Reduce Inequality 87 Occupational Health and Safety 140 Projects to Promote Health and Wellbeing 95 Digital Workplaces 142 Relationships with Public and Private Organizations 97 Human Capital Development 143 Management Framework 105 Employee Welfare and Wellbeing 145 Public Policy and Interest Representation 114 Employee Environmental Footprint 153 Political Parties 116 Industrial Relations 153 Relations with Public Organizations on Social Issues 156 Creating Value for Stakeholders 215 Logistics Processes 157 Management Framework 216 Management Framework 160 Meeting Customer Expectations 217 Monitoring of Environmental Performance 161 Management Framework 219 Initiatives to Reduce Environmental Impact 162 Customer Engagement 221 Sustainable Products OUR VALUE 163 Customizing for Emerging Markets 222 Management Framework CHAIN 165 Innovation and Product Development 223 Efficient Diesel Engines 166 Management Framework 223 Decarbonization Strategy 167 Innovation 229 Digitalization and Connectivity 169 Product Development 235 Automation 176 Product Quality Control 238 Sales and After-Sales 178 Purchasing Processes 239 Dealer Management and Partnerships 179 Management Framework 242 Financial Services 181 Supplier Profile 242 Spare Parts Distribution 183 Sustainability in Supplier Management 244 Customer Support and Satisfaction 191 Manufacturing Processes 248 End-of-Life 192 Management Framework 249 Management Framework 193 World Class Manufacturing 249 Remanufacturing 195 Environmental Management 251 Recovery and Recycling 198 Environmental Performance 206 Energy Management 208 Energy Performance 254 Report Parameters 290 Assurance Statement 255 Objectives 293 GRI Content Index 255 Scope 299 SASB Index 260 Methodologies 300 Contacts 263 Definitions 266 Performance Indicators APPENDIX 267 Human Resources 275 Environment 280 Energy 282 Other GRI Disclosures 3 LETTER FROM THE CHAIR LETTER FROM THE CHAIR DEAR STAKEHOLDERS We have come a long way in the last twelve months. Today we are stronger, wiser, armed with new skills and determined to face the future with vigor. COVID-19 forced us to re-evaluate every aspect of our working and personal lives. But our resolve to act rather than just react to the challenges it created, to be motivated rather than discouraged by adversity, and to seek opportunities, also led to important and positive changes across our organization. Ensuring business continuity while managing risks Our Company has proved to be resilient in facing the challenges of COVID-19, not least because we were conscious of the importance of our work for farmers, builders, transport providers, dealers and our local communities. We learned how to endure, adjust and evolve and how to do this more sustainably. We worked together to deliver the objectives that we set out at the start of the pandemic – keeping our people safe, supporting our dealers and customers, and strengthening our Company. Taking a holistic approach to health and wellbeing The pandemic has underlined something that we have long understood – the importance of thinking holistically about people’s physical, mental, and social needs. Early in the pandemic we closed our facilities while developing safety protocols that incorporated both scientific guidance and national requirements. When it was safe to return to the workplace, we implemented remote working and agile work solutions, which have protected our people’s wellbeing, and supported colleagues who struggled to balance work and home life, especially those caring for young children or vulnerable loved ones. Focusing on our employees and the role of our leaders Although we know that working from home creates its own pressures, we have learnt that, for many of our employees, flexible working is entirely possible, and often welcomed. In mid-2020, we therefore launched a program, the New Normal, to look at the future of work in our Company. This is looking at a range of issues including improving our wellbeing initiatives, supporting flexible working and updating our office spaces. GRI STANDARDS GRI 102-14 4 LETTER FROM THE CHAIR It was encouraging to see our senior leaders working so effectively Addressing our carbon footprint requires us to look at all aspects together to steer the Company through the crisis. As a reflection of of our business including the products we design, how we produce this, the former Global Executive Committee (GEC) was renamed them, how we undertake our logistics and how our customers use the Senior Leadership Team (SLT). The entire management team our products. For example, in developing new products, we prioritize also sacrificed part of their salary to support the Company. sustainable solutions including biofuels, electric drive, hydrogen, digitalization, connectivity and automation, which we find and Addressing social inequalities develop both through our own research and through the work we do The pandemic has also highlighted the depth of the inequality that with business partners, startups and industry experts. We welcome exists in our societies, and how this can impact people’s life chances. the recommendations of the Task Force on Climate-related Financial We therefore accelerated our efforts to increase the diversity and Disclosures (TCFD) and are committed to being transparent in how inclusion within our Company and to support communities and we manage our climate-related risks and opportunities. As part of individuals particularly impacted by COVID-19. this we are aligning our compliance reporting with the industry- specific requirements of the Sustainability Accounting Standards We believe that increasing diversity and inclusion is critical if we Board (SASB). want to attract and retain the best talent within CNH Industrial. We therefore asked two members of our Senior Leadership Team In 2020, our sustainability efforts were recognized when, for the to head a task force to address it, and as a result of their work, we 10th consecutive year, we were included as Industry Leader in the launched a set of new initiatives. These cover a range of issues, from Dow Jones Sustainability Indices (DJSI) World and Europe. The recruitment, through helping diverse colleagues accelerate their CDP Climate Change program also included us in their A list in careers, to appointing more diverse leaders. Every member of the recognition of our commitment to managing and cutting greenhouse Senior Leadership Team embraced personal diversity targets, they gas emissions along our value chain. In addition, we were given an A- all took part in a company-wide mentoring program for diverse in the CDP’s Water Security program and we again scored an MSCI colleagues, and undertook unintentional bias training, which was ESG Rating of AAA. then cascaded through the Company. This is not the end of our journey – we are conscious of how much we need to do. But it is a journey we have started with intention and effort and it is one that we will continue. In closing, I wish to thank you, our stakeholders, for standing with us during this very challenging period. I also want to thank our people Trying times can bring people together, motivated by a desire to for their tenacity and resilience in reinventing the way they worked help those in need, and we were proud to watch that sentiment in the face of a difficult year. We will continue to nurture and build permeate our Company last year. From early on in the crisis, we were on their commitment, as we prepare to seize the new opportunities determined to support our local communities in their fight against before us and keep powering sustainable transformation. COVID-19. We therefore established a $2 million Solidarity Fund to provide immediate help, with funds allocated to food, health, and education projects all over the world. We also donated ventilators, face masks, and personal protective equipment to clinics, hospitals and nursing homes, and supplied local healthcare facilities with CNH Industrial generators, ambulances and other support vehicles. Sustainability priorities SUZANNE HEYWOOD Reducing our carbon footprint is one of our four sustainability CHAIR priorities. The others, which we take equally seriously, are life cycle thinking, occupational safety, and people engagement.