Carbon in Our Value Chain
Our commitment to a reduced-carbon future is long-standing.
From 2006 through 2020, in pursuit of our previous goals, we achieved a reduction of 33% in energy intensity and 51% in GHG emissions from our operations. Today, we are building on these efforts as we work toward our 2030 goals. We have also enhanced our understanding of Caterpillar’s broader carbon footprint by reporting Scope 3 emissions for the first time in our 2022 Sustainability Report.
Emissions in Our Operations
Increasing the efficiency of our environmental management practices at our facilities aligns with our strategy for operational excellence across the enterprise. We work to reduce GHG emissions in our operations while also minimizing water use and waste generation. Caterpillar manages hundreds of facilities worldwide, and some of these operations, especially our manufacturing sites, are energy-intensive.
The Journey to 2030
We have set a science-based Scope 1 and 2 goal to reduce absolute greenhouse gas emissions from our operations by 30% from 2018 to 2030.
35%
reduction in absolute GHG emissions from 2018
Progress includes:
- Implementing energy/GHG reduction iniatives at our facilities
- Improving operational efficiency of our global footprint
Implement water management strategies at 100% of facilities located in water high-risk areas by 2030.
57%
facilities have achieved the goal of water strategy implementation
Progress includes:
- Continued progress in our third year of implementing water management strategies at our facilities in water high-risk areas
- While 57% of our impacted facilities have implemented all 9 of the required management elements, over 75% of all management elements have been completed by in-scope facilities
Reduce landfill intensity by 50% from 2018 to 2030.
44%
reduction in landfill intensity from 2018
Progress includes:
- Continued to increase the percentage of non-metals recycled, improving by 4% in 2023 from our 2022 performance
- In addition to reducing the landfill intensity of our operations, we have also reduced our overall waste (recycled and landfilled materials) intensity by 18% compared to our 2018 base year by focusing on waste reduction and improved operational efficiency
To reduce our energy consumption and GHG emissions, we are improving energy efficiency, investing in renewable energy technologies, and continually evaluating new solutions for feasibility and implementation. Likewise, we are making other environmental improvements to conserve water by implementing best management practices, notably at facilities located in water-stressed regions and managing waste through improved waste minimization, reuse and recycling activities. Examples of these initiatives in 2023 included:
- Implementing energy conservation projects at our San Luis Potosi, Mexico, facility, now using 100% on-site renewable solar electricity. In total, the site has been able to reduce its overall energy consumption by more than 35% from a 2018 baseline. This improvement allowed for 100% of the electricity required for operations to come from on-site, renewable solar power in 2023.
- Increasing cafeteria waste composting, remanufacturing electronic components, recycling plastic and reusing oil absorbents at our proving ground in Peoria, Illinois, to exceed the facility’s internal 2030 target for non-metal recycling.
- Reducing approximately 625 tons of GHG emissions annually at our Grimbergen Parts Distribution Center through solar electricity and geothermal heating and cooling, implemented from 2019 through 2022.
Our enterprise energy management team builds awareness, encourages action and develops improvements in energy efficiency and renewable energy power generation. Solutions include renewable energy procurement and on-site installations. For example, photovoltaics (PV) or microgrid installations supplement and offset electricity generated with diesel fuel at off-grid locations. Operating combined heat and power (CHP) systems at some of our facilities has also significantly contributed to our conversion from traditional to alternative energy sources. The energy management team evaluates opportunities for replicating renewable energy power purchase agreements and CHP, PV and microgrid installations at other locations. We continue to assess new ways to upgrade systems and make facilities more efficient.
Environmental, Health and Safety Management System
We maintain high standards for environmental, health and safety (EHS) throughout the company. Caterpillar’s EHS management system, documented in our EHS Assurance Manual, establishes foundational requirements and best management practices for all workplaces globally, including those of majority-owned subsidiaries and joint ventures. Our facilities assess compliance with our requirements annually, and our EHS assessment team reviews those self-assessments while conducting in-depth audits of select facilities each year.
Beyond meeting standard expectations, facilities implement initiatives to enhance safety, improve energy efficiency and increase productivity. As facilities evaluate potential environmental initiatives, they also consider the annual investment required, total anticipated cost savings and average pay-back period. We encourage facilities to report emissions reduction activities through internal awards and recognition processes.
Understanding Our Scope 3 Emissions
2023 marks our second year disclosing Scope 3 use of sold products emissions. Our Scope 3 emissions are estimated to be more than 95% of the company’s total Scope 1, 2 and 3 GHG emissions inventory. Given the company’s large, global customer base covering a diverse set of industries, including construction and mining equipment, off-highway diesel and natural gas engines, industrial gas turbines, diesel-electric locomotives and others, Category 11 — use of sold products — is our largest Scope 3 category. The remaining 14 categories of estimated Scope 3 emissions are either not relevant to our business or are immaterial, representing collectively less than 5% of total enterprise GHG emissions.
The six-year trend of Caterpillar’s estimated Scope 3 use of sold products emissions, which utilizes guidance from the GHG Protocol, illustrates annual emissions at the enterprise level and by primary segment — Construction Industries (CI), Resource Industries (RI) and Energy & Transportation (E&T) — as well as emissions intensity (MT CO2e divided by enterprise sales and revenues). Most of Caterpillar’s Scope 3 emissions come from products with high power output, high fuel consumption, high runtime and long product life. In some cases, product life extends decades through service life extension activities, including rebuilds, remanufacturing and overhauls.
The impact of macroeconomic conditions on global markets, including the COVID-19 pandemic, had an effect on enterprise emissions due to product mix changes and lower unit volume shipped in 2020 and 2021. Caterpillar’s sales and revenues reflected strong growth from 2020 through 2023. While emissions remained essentially flat from 2020 through 2022, they increased in 2023 primarily due to product mix and volume changes across our portfolio. The resulting product mix change was dependent on market and customer trends, especially in certain emissions-intensive industries that changed significantly during that period.
As previously reported, Scope 3 use of sold products emissions were expected to increase in 2023 based on customer demand, as well as anticipated shifts in product mix and customer and business trends. The 2023 emissions reported align with that prior expectation. In E&T, emissions increased due to higher sales of products with high power output and runtime as compared to 2022. This led to an increase in both emissions and intensity. In CI, emissions decreased due to lower sales of larger construction machines. In RI, emissions remained essentially flat. As of the date of this report, Scope 3 use of sold products emissions are expected to increase in 2024 based on customer demand, as well as anticipated shifts in product mix and customer and business trends.
Now more than ever, our customers rely on us to provide diverse products, services and technology that can help lower GHG emissions, improve efficiency and productivity and deliver energy flexibility. New product introductions focused on AACE technologies across our CI, RI and E&T segments, as highlighted throughout this report, demonstrate how we are meeting this need.
Read more about products, services and technologies that are helping our customers achieve their climate-related objectives.
1The annual estimates for lifetime use of sold products GHG emissions are calculated from the GHG Protocol expression: ∑ (total lifetime expected uses of product x number of products sold in reporting period × fuel or electricity consumed per use (kWh) × emission factor for fuel/electricity (kg CO2e/kWh)). The inputs to this equation are specific to construction machines, mining machines, off-highway diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives, applied at the product-level to calculate lifetime emissions, then aggregated across the full enterprise portfolio. Included in the calculation are GHG emissions from combustion of fuels and/or use of electric power until the estimated point of final disposal covering rebuild, remanufacturing and overhaul events that extend the service life of the product. While we continue to grow lower-carbon intensity, alternative fuel offerings, given the difficulty predicting customer fuel switching, all liquid fuel is assumed to be diesel and all gaseous fuel is assumed to be natural gas. Excluded from this calculation are emissions from upstream production of fuel consumed in Caterpillar products, fuel efficiency and emission factor changes through the life of the product, refrigerant emissions, and others considered insignificant to Caterpillar’s enterprise number. The inputs to perform this calculation were integrated from many data sources including but not limited to: Operation and Maintenance Manuals (OMM), product design data, telemetry data, public data sources (U.S. EPA, IEA, industry data), and internal engineering, product, marketing, and other subject matter expertise. These inputs are refined yearly as needed based on telemetry data, product design data, and/or internal expertise, considering industry best practices, consistency and accuracy, data maturity, and regulatory/policy change. Data for prior years has been revised to reflect updated product life and energy consumption estimates. Our company’s total enterprise Scope 3 use of sold products emissions calculation was verified by a third-party assurance firm (ERM CVS); see the assurance statement.
