Social Performance of Caterpillar Inc.

Free «Social Performance of Caterpillar Inc.» Essay Sample

Corporate social responsibility is an obligation in an organization to maximize its affirmative impression to stakeholders. Its focal objective is to minimize the undesirable impressions of the organization. Caterpillar Inc. is a prominent producer of mining and building facilities, engines, industrial gas turbines, and locomotives. The company is well known for its machineries, such as wheel dozers, tractors, backhoe loaders, and off-highway trucks. In 2010, the company attained global revenue of about US $1 billion with over US $13.4 billion coming from exported machineries. Due to its extensive merchants and facility settings, the company is unable to manage the intricate stakeholders’ network. Despite some hiatuses in various ethical values, Caterpillar Inc. has become popular due to its distinctive and unique products. The company is also popular due to its role in facilitating social responsibility and great ethical principles. Caterpillar Inc., as a worldwide company, engages in social responsibility roles of helping the needs in the society. Its voluntary responsibilities have allowed the company to demonstrate its commitment to the environment, people, and community . In this case, Caterpillar Inc. has adopted numerous philanthropic practices through showing dedication to the community stakeholders. It is mainly through the formation of Caterpillar Foundation, involvement with the United Way, and its matching gift program. This critical essay examines the ethical conduct of Caterpillar Inc. in enhancing sustainability to stakeholders and other people in the community.

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Case against Caterpillar Inc.

Despite the achievement of Caterpillar Inc., the company has faced ethical issues that affect the social welfare of people. It has experienced ethical challenges that stream from its own operations. One of the key challenges Caterpillar Inc. (CAT) has faced is a trouble for violating the laws guarding the environment. In 2000, Caterpillar Inc. was named ‘the clean air villain of the mouth’ by the Clean Air Trust. CAT had violated the Clean Air Act by selling defective diesel engines that emitted about three times the limit of Nitrogen Oxide allowed. It was estimated that these engines were involved in emitting pollutant that could be compared to 60 million cars. In this case, Caterpillar Inc. was fined over US $128 million. To refurbish its reputation, the company began to manufacture environmentally friendly machines that met the standards of Environmental Protection Agency. In addition, the company engaged in the production of engines with Advanced Combustion Emission Reduction Technology (ACERT). Although these engines meet the standards as provided in the federal emission guidelines, the company still faces challenges in other nations since it is an international company. Caterpillar Inc. is still facing stringent emission laws in nations under the European Union. These laws together with other policies in the United States, known as Tier 4 Standards, have forced Caterpillar Inc. to conduct an extensive development program and research in order to re-engineer its non-road machineries. The re-engineering is aimed at reducing emission of nitrogen oxide and other particles to almost zero percent.

Another major ethical challenge the company has faced is trouble from its unionized employees. Although the company has not experienced employees’ strikes over the years, the management and the union has undergone an intensive period of negotiation over the problems of salaries and benefits. It clearly indicated that the company has undermined its employees through underpaying them and denying them benefits. Their negotiation indicated that the newest contract of six years would provide additional benefits. However, the company indicated that it would not increase the wages of workers who were hired six years ago. Despite the fact that union of CAT and employees approved the contract, the UAW claimed that the preliminary scheme from the company had downturns, such as wage decrease and removal of some benefits. Despite the fact that economic decline has forced many businesses to reduce their expenditures, Caterpillar Inc. needs to strive to treat its workers justly and fairly. The company should also work together with the union in order to enhance smooth relationship.


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Caterpillar Inc. has also faced a trouble related to the safety implications of its machinery. Although the company cannot have a full control of how their customers use their machineries, it can limit whom to sell the product. Over the years, Caterpillar Inc. has been criticized since the Israel Defense Forces used their bulldozers to destroy homes of the Palestinians . These machineries are also used in executing other violent actions. In 2003, an American activist was killed using a Caterpillar tractor that was operated by the Israel Defense Forces. Despite the controversy about the death, the fact that a product from Caterpillar Inc. was used has raised an ethical dilemma. Most people argue that the complacency of Caterpillar Inc. has aided the abuse of human rights. However, Caterpillar Inc. claimed that the US government purchased the bulldozers and transferred to Israel through the sales program of Foreign Military.

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