Environmental impact has increasingly become a focus in recent years, and many companies have been trying to integrate sustainability and business strategy as a result. With increased regulation and demand for sustainable products, OEMs are constantly looking for ways to include sustainability while advancing their operations and their products.
AEM’s recent ‘Strides in Sustainability – A Panel of Your Peers’ webinar featured sustainability representatives from John Deere, Caterpillar and Cummins for a roundtable discussion on sustainability in the equipment manufacturing industry. Hosted by AEM’s Senior Director of Workforce and Industry Initiatives Julie Davis, speakers included Sustainability Program Manager Kim Noe from John Deere, Sustainability Manager Kirsten Mauritzson from Caterpillar and Director of Global Environmental Sustainability Karen Cecil from Cummins.
Davis: What is sustainability? What does it mean to you and your respective companies?
Noe: That word can mean a lot of different things. When you think about that term, it’s really about ‘what are we doing to leave in a better state than what we received it in’. And it’s more than just the environmental aspect, it’s the social aspect as well. When we talk about what sustainability means to John Deere, we recently released our LEAP ambitions. Those LEAP ambitions are where we really integrate our business strategy and sustainability together. When we made our transition to smart industrial a few years back, these are now the goals to make sure we are achieving what we want to in smart industrial- which is really where sustainability lies. These goals cover different topics from what are we doing for our customers to ‘what we are doing in our operations and our supply chain’.
“Can you turn sustainability into a value for your customers? That is truly where the opportunity lies.” -- John Deere's Kim Noe
Cecil: When I first started in the field a lot of people asked how we define sustainability. Honestly, we worked on it for months. And then I found this quote from J. Irwin Miller, who was our CEO in 1972. “We believe that our survival in the very long run is as dependent on responsible citizenship in our communities and in society, as it is on responsible technology, financial and production performance.” It’s this internal value; what is the internal value that the company holds for its stakeholders, including the planet. It’s about thinking long term and thinking about value creation and value protection.
We have a mission statement: making people’s lives better by powering a more prosperous world. And to be honest, we have to have a healthier planet for a more prosperous world. So, sustainability is actually how we are going to meet our mission statement. It’s what Kim (Noe) said- we are starting to marry business strategy and sustainability strategy, which is where everyone is aiming to be. We are really excited about that.
Mauritzson: And likewise at Caterpillar, sustainability is a part of who we are and what we do. It is one of our five values in action, part of our code of conduct and the foundation of our business. Similar to what we just heard from Deere and Cummins; we have formally made sustainability part of our enterprise strategy. When we look at that strategy and commitment, we demonstrate that in a number of ways. Whether that be significant progress in reducing greenhouse gas (GHG) emissions from our own operations or continuing to invest in products and solutions that are supporting our customers in achieving their own environmental, social and governance (ESG)-related objectives.
We have seven sustainability goals that are set for achievement in 2030. Five of those are focused on the environment and climate, and two of them are focused on safety for our employees as well as those who are working in, on and around our product.
Davis: Why is sustainability important to your company? What factors are pushing companies towards sustainability goals?
Cecil: In the stakeholder model of understanding, you are only as strong as the communities in which you live and work. Understanding that we are all interconnected is important. You are only as successful as your stakeholders. It’s important; investors care about this, employees care about this and they’re almost demanding sustainability at this point. And now, you’re starting to see governments start to say, “We are going to start expecting more from you” as well. It's important in terms of true sustainability in your company, and also in the external factors that are approaching us now.
“We have a mission statement: making people’s lives better by powering a more prosperous world. And to be honest, we have to have a healthier planet for a more prosperous world. So, sustainability is actually how we are going to meet our mission statement.” -- Cummins' Karen Cecil
Noe: One thing that I want to add, is can you turn sustainability into a value for your customers? That is truly where the opportunity lies. When we think about the historic change in sustainability it was all about risk mitigation, and what you’re finding is companies that are pushing the boundaries and turn it from a risk into an opportunity for our business, which turns into an opportunity for our customers. If you go and ask your customers what they’re working on surrounding sustainability, I think you’ll be interested to find that a lot more of them, whether they are publicly traded, or small or medium enterprises- they’re beginning to work on it as well.
Mauritzson: I would echo what both Karen (Cecil) and Kim (Noe) said. We see customers, shareholders and employees are interested in our sustainability performance and progress, and we believe that the energy transition presents an opportunity for long term profitable growth. Now more than ever, we see customers that rely on Caterpillar to have that diverse portfolio of products and services that can support their own ESG goals.
Davis: What types of actions are member companies taking to address sustainability? What are your expectations as OEMs do you have for your supply chains?
Mauritzson: We are partnering more with others to work on things. An example I would give you is that we just demonstrated our first prototype battery electric 793 large mining truck at our Tucson (Arizona) proving grounds, and this is something that we are doing with key mining customers. We call that collaboration our early learner program working together to understand both the product and how our mining customers are going to be operating at their mining sites in the future.
Cecil: For Cummins we’ve been doing this for a long time. We set our first goal in 2006 and we’re on our fourth facility’s GHG goal. We’ve completed over 1,000 energy efficiency projects, and the thing that I want to say is that it saves money! A lot of this is very good for business. We have created this huge strategy called Planet 2050, with aspirational targets in 2050, and milestone goals in 2030. It takes a lot of partnerships and I think you’re starting to see people do that. Our new business unit is made up of partnerships that are focused on helping customers with their zero emission journeys. We even have a strategy called “Destination Zero” looking at how we can expand low and no carbon fuel use, and how we can drive zero emission solutions.
Most of all, we are looking at how we can provide the right solution at the right time. All of this is probably the world’s largest group project! I think it’s going to be mostly partnerships that get us there. Whether it be a government regulation to push price points, or the infrastructure needed for some of these zero emission projects. I think we will be seeing more and more of these partnerships.
Noe: I think that the way we’ve done it at Deere is taking the opportunities to look up and down your value chain. Then, the real question becomes what you can do past that. If you are a supplier, whether it be for Deere, or for Caterpillar or for Cummins, we are going to start asking you questions. What are you doing to help us achieve our (sustainability) goals? I think that is going to be really rewarding from a business partnership perspective. It’s all about how we can work together to achieve greenhouse gas emissions goals, circularity concepts and even safety within facilities. All of that plays a part!
“We see customers, shareholders and employees are interested in our sustainability performance and progress, and we believe that the energy transition presents an opportunity for long term profitable growth.” -- Caterpillar's Kirsten Mauritzson
AEM's Commitment to Sustainability
AEM and our member companies recognize that social and environmental challenges are complex and require transformation at all levels of an organization. Our association is committed to supporting a sustainable world by serving as a catalyst for conversation in the equipment manufacturing industry. While everyone may be at a different stage of their sustainability journey, it is clear that expectations from customers, employees, and from regulators continue to increase. Finding ways to continue forward in the sustainability journey by aligning sustainability strategy and business strategy increases opportunity for business and societal success. For more information on sustainability at AEM, contact Julie Davis at jdavis@aem.org.
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