Introduction
Sustainability development goals (SDGs) have gained significant proliferation in the business world. In 2015, the 2030 sustainable development agenda was adopted by the United Nations (UN), which sets out seventeen goals as initiatives toward environmental and socio-economic growth (Rosati & Faria, 2019). The increasing importance of sustainability stimulates companies and governments to positively impact society. Businesses essentially use SDGs as a framework to take action, communicate performance, gain market access, and engage with stakeholders in handling different issues. Firoiu et al. (2019) contend that the seventeen SDGs are an urgent call for global partnership to recognize issues like climate change, energy, science and technology, peace, justice, inequality, transport, plus environmental degradation. Typically, the success of the SDG agenda must translate into stakeholders’ commitment to achieving a more sustainable future.
The precedent of the business world and SDGs expands market opportunities for companies in various industries, including fashion, food and agriculture, transport, and transportation. However, opportunities for sustainable, inclusive, and resilient impact vary by industry. The transportation industry has particularly made significant strides toward sustainable development, as evident in Caterpillar Inc. (Thilakshan & Bandara, 2019). The company positions itself as a renowned manufacturer of electric and diesel locomotives, plus agricultural, mining, and transportation equipment. Since its conception, CAT has continued to drive sustainable progress to help stakeholders support growth and progress through innovative services and products. Additionally, the company’s strategy focuses on providing stakeholders with new opportunities to deliver long-term and profitable growth. The transportation industry makes the SDG agenda a reality through coordination, convergence, and making global issues central to its operations.
Sustainability Development Goals (SDGs)
In an age of immense opportunity, there has been significant progress in meeting various development challenges. The 2030 SDG agenda is primarily an action plan for prosperity, people, and the planet. According to Rosati and Faria (2019), the goal is to strengthen global actions in areas of critical importance: poverty, hunger, education, inequality, health and well-being, clean water and sanitation, energy, climate action, peace and justice, economic growth, global partnership, production and consumption, life on land and below water, innovation, infrastructure, and industry (Firoiu et al., 2019). SDG integrates a balance of environmental, economic, and social development. In its scope, the agenda recognizes the fundamental role of diverse industrial sectors in achieving sustainable development. For example, technological and scientific innovation has accelerated progress and bridged the digital divide. Sustainable industrialization help mitigates problems and provide solutions for monitoring and expanding effective and efficient products and services. In that view, the technology, creativity, and resources from the industrial sector are imperative to achieving the SDG agenda.
Caterpillar Inc. (CAT)
Caterpillar Inc. principally operates through three industrial segments: construction, resource, plus energy and transportation industry. In addition, the company provides financial services through its Financial Products sector. Since 1925, the firm has made heavy machinery used in transportation, mining, industrial warehousing, and agriculture, and makes electric and diesel engines for locomotives, trucks, boats, and ships (Caterpillar, n.d.). The company has maintained its prominent position by ensuring effective coordination between its departments, from finance to marketing and from operations to strategic planning. Apart from a strong base of reliable customers and suppliers, CAT has successfully built expertise in diversifying the economic cycle in existing and new markets. New customer trends and innovation further provide CAT with an opportunity for a differentiated strategy. While John Deere, Komatsu, JCB, and Volvo CE produce large equipment, CAT maintains a strong foothold against its competitors.
Furthermore, Caterpillar holds a competitive edge because of its long-standing commitment to supporting global efforts toward a sustainable future. Caterpillar’s sustainability mission is “to improve the quality of the environment and the communities where we live and work and provide products and services that help our customers fulfill society’s basic needs” (Caterpillar, n.d.). The firm further aims at economic growth through energy and infrastructure while providing global solutions and achieving seven sustainability goals by 2020, including remanufacturing, employee health and safety, energy efficiency and product emission, operations energy, customer safety, and operations waste (Caterpillar Sustainability Report, 2020). Caterpillar aspires to support stakeholders to a more sustainable future through investment in new technology, products, and services.
Sustainability Issues in the Transportation Industry
The transportation industry must formulate sustainable strategies to remain relevant in the current economy. Subsequently, Ji and Ma (2020) outline that this necessitates incorporating sustainability goals for efficiency and enhanced performance. Caterpillar can continue providing value through innovative products and services to help achieve the SDG agenda. The strategic opportunities relevant to CAT include climate action, responsible production and consumption, clean and affordable energy, sanitation and clean water, and community sustainability. For instance, among the ways toward affordable energy and reduction of greenhouse gas emissions is by maximizing renewable energy. Sustainability for transportation companies can imply providing leadership for customer and employee health and safety.
Sustainability Issues
Despite the numerous opportunities for purposeful business, CAT faces key sustainability issues interlinked and often heighten each other. Among these issues is corporate responsibility (CR) which entails the improvement of a company’s response to stakeholders’ needs (El Akremi et al., 2018). Stakeholders’ demands constantly change and corporations must adopt an effective CR strategy to positively impact innovation, financial performance, and risk management. Additionally, clients, suppliers, investors, and other stakeholders can assess a company’s marketplace, workplace, environment, and community through the CR approach. Consider greenhouse gases (GHG) from the manufacture, transportation, and maintenance of transportation materials, for example, which contribute to global warming, consequently resulting in extreme weather conditions (Ridley et al., 2019). Other sustainability issues within CAT’s industrial sector include pollution, loss of biodiversity, and global warming.
Moreover, Caterpillar Inc. relies heavily on diesel and gasoline for energy, which poses a challenge. The mining of mineral resources increases social and environmental impacts like regulatory challenges, depletion of resources, and risks to water resources. Anenberg et al. (2019) highlight that improper disposal of mining and transportation waste results in pollution and toxicity. Air and water pollution by transportation material further alter the hydrological cycle and harms plants and animals. Transportation and mining demand a large land area that results in the depletion of forest land, loss of natural habitat and biodiversity. Therefore, understanding the risks created by transportation companies is an important step in tackling sustainability issues.
Solutions
Companies are increasingly prioritizing SDGs in their investment decisions, and Caterpillar Inc. must adapt to higher responsibility standards. An effective response to sustainability issues requires a focus on operations, performance management, and competence framework, plus the dependence on resources, suppliers, manufacturers, and other partners (Sachs et al., 2019). Additionally, the translation of the issues into real and strategic opportunities will include an approach to innovation, specific projects, performance management, leadership, or governance (De et al., 2020; Kurniawati & Sulaeman, 2022; Moslehpour et al., 2018). In the long-term, contribution to a more sustainable future will result in more efficiency and bring several benefits to the company. Enhanced brand image and investor support include some of the benefits. A sustainable business automatically creates value for stakeholders, including employees, shareholders, suppliers, and the community.
While the sustainability issues critical for CAT are similar to those of other organizations, their approach can often differ. For one, Caterpillar Inc. should define priorities and focus its efforts on identifying the relevant sustainability issues. As implied by Kurniawati and Sulaeman (2022) and Nagy et al. (2018), the company must map its value chain, engage its stakeholders, and assess key impact areas plus the vital issues to the company and its stakeholders. Through regular stakeholder engagement, the company can anticipate and better respond to social, economic, and environmental issues as they arise. Plus, the successful implementation of sustainable practices translates to innovation resulting in more efficiency. Based on these approaches, CAT must align its corporate strategy with identified sustainability issues to solve them.
The Transportation Industry and SDG Agenda
The SDG agenda offers the transportation industry new strategic opportunities to expand its sustainability focus. Essentially, the SDGs must be embedded into the industry’s success criteria, practices, project setting, and design. Furthermore, this approach has the potential to manage project complexity and create social and economic value (Taghvaee et al., 2021). For instance, the transportation industry generates large amounts of waste that require innovative practices to maximize reuse and reduce waste generation to improve production efficiency. Today, global GHG emissions and energy consumption are attributed to transportation, making it a significant sector in terms of emissions. Thilakshan and Bandara outline that the resources used in transportation projects influence the achievement of certain SDGs like SDGs 2, 3, 7, 9, 11, 12, and 13 (2019). Despite the variations in environmental consequences of the industry, there is an increased need for sustainable transformation.
In particular, transportation has a crucial role in biodiversity, but the effort is expected. Therefore, the sector can lead the agenda toward preserving biodiversity as sustainable development. Transportation projects should integrate biodiversity programs like creating habitats by providing living landscapes for wildlife. Wang et al. (2020) and Martins et al. (2019) posit that integrating biodiversity schemes into the management and planning process of key infrastructure promotes sustainability. Furthermore, technology, sustainability, investment, and development are crucial in the future of the transportation sector. Within these opportunities are key trends like the global expansion of transportation organizations, financial help to close the infrastructure gap, plus political and regulatory reforms concerning transportation. The transformations in governance, processes, and strategies must further be complemented with government- and sector-level transformations, including coordinated collaboration and communication, plus changes in transportation policies and regulations. Therefore, given the critical issues in the transportation industry, organizations must engage in approaches that embrace sustainable development and innovation.
CAT and the SDG Agenda
Caterpillar Inc.’s values in action and code of conduct, including integrity, teamwork, commitment, sustainability, and excellence, are the foundation of its culture. In 2006, CAT set its first SDG concerning its product stewardship and operations (Caterpillar Sustainability Report, 2020). In terms of operational goals, the company has made significant progress in customer and employee health and safety, operations water and waste, material sourcing, manufacturing, capital management, energy efficiency, and product emissions. CAT’s 2020 annual report revealed that the company attained its goal of using renewable sources to meet some of its energy needs. For example, CAT has increased energy efficiency and performance through the Microgrid system that contains energy storage and solar modules (Caterpillar Sustainability Report, 2020). Similarly, the company exceeded its aim of reducing recorded injury frequency and GHG emission by introducing battery-electric drive technologies with built-in monitors that provide comprehensive fault protection (Caterpillar Sustainability Report, 2020). Caterpillar has gone further to design new facilities to meet Leadership in Energy and Environmental Design (LEED) requirements.
Nonetheless, the most significant progress has been in the reduction of the lost-time case frequency rate, ultimately improving customer and employee safety. Furthermore, Caterpillar Inc. recognizes that product stewardship represents a substantial strategic business opportunity. The company’s product stewardship goals include customer safety, remanufacturing, system optimization, and product sustainability (Caterpillar Sustainability Report, 2020). CAT often introduces new products and services while leveraging innovation and technology to increase productivity, lower emissions, and improve fuel economy, and the sustainability of its products, services, and solutions. Customer safety is achieved through leadership in and around CAT’s products and services. Furthermore, all stakeholders collectively achieve effective solutions, including retailers, manufacturers, consumers, suppliers, and investors. Businesses today recognize corporate citizenship and maximum productivity as essential components for competitive advantage and increased stakeholder wealth, and transportation companies is no exception.
Industry-Wide Initiatives
Sustainable development is gaining pace and the transportation industry must practice this normality by adopting industry-wide initiatives. The transportation industry is renowned for its massive environmental impact because of its resource consumption and waste production. Therefore, the sector must have initiatives that embrace efficient manufacturing and eco-friendly technology, including building materials, to ensure transportation companies head toward a sustainable future. As witnessed in China’s transportation services, the sector can embrace is the green initiative that can reduce environmental impact and improve employee health and safety (Luo et al., 2021). Furthermore, the green initiative focuses on forging strategic partnerships and policy responses at national and international levels, plus advanced research and development to address sustainability challenges and opportunities.
SDG Metrics
SDG agenda implementation in the transportation industry for a sustainable future requires a comprehensive framework to ensure stakeholders’ accountability. Robust metrics is complementary to monitoring progress, identifying gaps, ensuring accountability, and understanding key sustainability challenges. The selected matrix should translate into vital performance indicators and stakeholders rewarded against goal fulfillment.
These metrics should translate into key performance indicators that drive behavior in different parts of a business, and employees should be evaluated, rewarded and promoted against their fulfillment of them (British Academy, 2019). An ESG (Environmental, Social, Governance) metrics can help Caterpillar Inc. and other transportation companies to monitor environmental, governance, and social performance by outlining the risks, opportunities, and goals the industry aspires to achieve (Widyawati, 2020). Environmental factors determine the amount of waste and pollution produced and the organization’s share of resources. In contrast, social factors focus on company products, work environments, and employee health and safety, while governance determines how authority structures and government decisions shape the business (Khan, 2019; Widyawati, 2020). The transportation industry can integrate ESG metrics, including environmental policy, health and safety records, carbon emission estimates, ESG policy, and code of ethics into its operations through benchmarking. Addressing ESG in annual sustainability reports updates investors and stakeholders on the opportunities and risk factors affecting the efforts toward a sustainable future.
Corporate Strategies and Initiatives
Corporate standards and initiatives help improve processes and systems and ensure consistency, from cutting costs to reducing waste. In transportation companies, reporting, benchmarking, accounting standards, and initiatives help support sustainable development. Napier and Stadler (2020) state that accounting standards like IAS 11 outline requirements on costs and revenue relating to transportation contracts. Likewise, benchmarking initiatives aim at improving project performance through systematic approaches that help transportation organizations improve product and service efficiency. Mahmoud et al. (2021) concur that internal benchmarking helps analyze a company’s internal performance and processes. Additionally, competitors’ insights and strategic benchmarking help transportation firms develop innovative systems and processes to improve their standard procedures. Caterpillar Inc.’s benchmarking assessment focuses on improvements that create a framework for measuring change plus compares performance with rival companies.
Moreover, reporting initiatives like the incident reporting system can be used by transportation companies to address potential incidents and implement health and safety measures. Caterpillar uses injury frequency rates, including the recorded injury frequency (RIF) and the lost-time case frequency rate (LTCFR), to help monitor accidents across the company (Caterpillar sustainability report, 2020). While corporate standards and initiatives offer several benefits, they can be refined. Accounting, reporting and benchmarking standards keep changing, and conducting internal improvements can help transportation companies keep pace. For example, Caterpillar Inc. can improve its financial reporting transparency by investing in accounting and management software that is critical in improving speed and accuracy (Bishop, 2018; Maruschak, 2021; Puspitawati, 2021). Standard updates further spur enhanced collaboration among stakeholders to help identify the resources needed for sustainability. Benchmarking can be improved by developing a management improvement plan to check for improvements. Continuous improvement of corporate standards and initiatives increases productivity and efficiency, which is critical for sustainable development.
Communication and Stakeholder Engagement Strategies
A sustainable business is built on successful stakeholder engagement, including customers, investors, suppliers, retailers, shareholders, and government departments. Stakeholders usually have individual goals and objectives that affect an organization’s operations, from management to finances. Mella and Gazzola (2018) state that multinational corporations mainly operate to maximize profits by engaging stakeholders. Engaging a network of goal-oriented individuals boosts the chances of success and encourages companies to develop corporate responsibility that fosters sustainable development. Additionally, the experience and expertise of every stakeholder is valuable for identifying sustainable challenges and opportunities. Most importantly, stakeholder engagement creates sustainable change through informed decision-making and needed support for proposed solutions. Following Ihlen’s (2018) arguments, stakeholder engagement and corporate responsibility have emerged in the practice and theory of strategic communication. Plus, corporate governance must establish accountability among stakeholders through board structures (British Academy, 2019). For this reason, the company should incorporate stakeholder engagement and communication strategies for sustainable business outcomes.
Strategies
Core company values have widely been used as effective engagement strategies. Stakeholders must establish a sense of belonging by having a code of values to follow, consequently creating a cohesive and positive work culture that encourages sustainability. For instance, Caterpillar Inc.’s communication and engagement platform helps stakeholders learn and practice the company’s core values. The company further provides growth opportunities and promotes transparency. Involving stakeholders through decision-making and providing growth opportunities demonstrates that the company values its employees, investors, plus shareholders, which boosts engagement and communication. Other effective strategies include accountability and honest feedback. Creating a platform that allows stakeholders to share their thoughts is efficient when assessing sustainable solutions. According to Avidar (2018), engagement values trust, interpersonal interaction, empathy, plus mean making. Caterpillar Inc. has a robust system that creates a safe and open feedback environment paired with accountability to heighten communication and engagement. Sachs et al. (2019) assert that stakeholders should effectively organize interventions like improved regulations and policies to achieve sustainability goals. Nevertheless, key measures will help ensure that engagement and communication strategies keep pace with stakeholders’ diverse needs and interests.
Measures for Future Communication Strategies
Communication and engagement strategies are crucial in building commitment, cooperation, and mutual understanding between stakeholders. Therefore, the company should incorporate monitoring and evaluation schemes for future communication strategies. Matsiliza (2018) asserts that monitoring and evaluation must link strategic plans with business outcomes. Monitoring seeks to ensure a consistent approach for integrated and strategic communication to all audiences at every level. Likewise, an evaluation will provide a systematic approach to assess whether potential communication strategies are tailored to stakeholders’ interests and identify adaptations needed for an organizational structure (Matsiliza, 2018). In addition to sustainable change, engaging stakeholders has a massive benefit for the company and the industry as a whole.
Conclusion
The changing business landscape forces companies to embrace sustainable practices. In addition to increasing efficiency, sustainability helps meet stakeholders’ demands, attracts talent, creates new opportunities, builds the brand image, and encourages innovation. An effective, sustainable development initiative can help organizations expand existing markets and explore new ones. In that respect, the SDG agenda calls on universal action to address global issues like inequality, poverty, peace and justice, food security, education, health, and well-being, plus climate action, to mention a few. The agenda typically addresses environmental, economic, and social issues affecting society. Given the severity of global issues, the industrial sector plays a crucial role in achieving the SDG agenda.
In particular, the transportation sector plays a vital role in sustainable development in the context of efficiency, affordability, convenience, infrastructure, reduction of GHG emissions, and safe delivery systems. Plus, the attention on sustainable transport has continued in recent years to improve social equity, integration, and global productivity. The agenda has further been recognized by Caterpillar Inc. to provide sustainable products, services, and solutions, especially those regarding health and safety, energy, economic growth, and climate action. In addition to achieving its goal of using renewable sources, CAT has provided innovative solutions to improve health and safety. The company’s success in executing the SDG agenda is attributed to effective stakeholder engagement for transparency and accountability.
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