Green Supply Chain Principles & Supplier Expectations

Green Supply Chain Principles & Supplier Expectations

Background

Cummins is committed to building a sustainable, resilient, and low-carbon value chain. In response to intensifying global climate challenges, emerging environmental regulations, and increasing expectations from our customers and stakeholders, we have updated our Green Supply Chain Principles & Supplier Expectations. 

Our sustainability strategy commits to helping our customers navigate the energy transition by focusing on decarbonization, materials and communities. Suppliers are critical of this vision, especially in addressing upstream supply chain impacts and Scope 3 emissions.

This document outlines Cummins’ environmental sustainability expectations for all suppliers. It is intended to ensure alignment with our corporate sustainability goals and emerging global regulations. Suppliers are expected to take immediate action in the areas of compliance, emissions reduction, circularity, and data transparency.

Our Approach

To build a resilient, transparent, and low-carbon supply chain, Cummins takes a structured and scalable approach to supplier sustainability.

We recognize that success requires a balance of setting clear expectations, enabling continuous improvement, and fostering long-term collaboration.

Therefore, our strategy is anchored on three pillars that define how we work with suppliers toward shared environmental goals:

• Compliance with all relevant environmental regulations and standards.
• Performance improvement through energy efficiency, emissions reduction, and circular economy practices.
• Partnership with high-impact suppliers to develop long-term decarbonization and transparency capabilities.

We are prioritizing traceability, data quality, and supplier capability building to meet current and future ESG regulations and customer expectations.

Key Initiatives

• Supplier Data Transparency and Traceability

  • Priority suppliers are expected to provide accurate, auditable data on emissions, energy use, materials, and water, reported through recognized frameworks. This includes, where applicable, information related to material disclosures, PPAP (Production Part Approval Process) documentation, Packaging Data Management Systems (PDMS), and sustainability-related data to support compliance and performance tracking. Cummins is enhancing its digital systems to improve traceability and performance monitoring.
  • Cummins is committed to continuously improving supplier data transparency by tracking participation in emissions reporting, benchmarking disclosure accuracy, and adapting expectations based on supplier progress and regulatory changes.
  • We actively monitor supplier readiness and segment our approach based on maturity levels to provide tailored support. When participation or data quality is low, we work to close the gap through targeted guidance, training, or alignment with evolving policies.
  • These efforts reinforce Cummins’ long-term vision of a transparent, accountable supply chain built on data integrity and continuous learning.

• Upstream Supply Chain Decarbonization

  • Cummins is working with critical suppliers to identify upstream emissions hotspots, evaluate reduction opportunities, and co-develop practical decarbonization roadmaps. These initiatives support Cummins’ Scope 3 reduction goals.

• Supplier Capability Building

  • We offer training, technical guidance, and pilot collaboration opportunities to help suppliers enhance environmental performance and align with international best practices.

Green Supply Chain Principles and Expectations 

Suppliers shall align with the following environmental sustainability principles:

Principle 1: Environmental Compliance and Responsible Operations 

Suppliers must adhere to all applicable environmental laws and regulations at the local, national, and international levels. This includes maintaining necessary permits, fulfilling reporting obligations, and implementing proper controls on emissions, effluents, and waste.

• Chemical and Waste Compliance

  • Supplier shall submit Full Materials Disclosure (FMD) via Cummins preferred tools posted on Supplier portal, prior to PPAP, to ensure full compliance with Cummins’ Engineering Standard 10903, Prohibited and Restricted Substances, and relevant global chemical regulations (e.g., REACH, RoHS, TSCA). Also, submit Material Safety Data Sheets (MSDS) for materials if necessary.
  • Supplier shall revisit their submissions upon changes to CES10903 and/or regulatory changes to maintain on-going compliance
  • Supplier shall collaborate with Cummins’ initiatives to comply with PPWR-type and EPR-type regulations or comply independently if Cummins does not have initiatives available to do so.
  • Ensure full compliance with prohibited substances and proper handling of chemicals and hazardous waste.
  • Implementing controls to prevent pollution and manage emissions, wastewater, and solid and hazardous waste in a safe, legal, and transparent manner. 

• Due Diligence and Audits

  • Deploying due diligence practices to identify, assess, and mitigate environmental risks across operations and supply chains.
  • Supporting third-party audits to validate compliance with regulatory and customer requirements.
  • Preparing documentation and responding to audit findings in a timely, accurate, and transparent manner.

• Risk Mitigation

  • Stay informed and comply with emerging regulations, such as the Carbon Border Adjustment Mechanism (CBAM), deforestation prevention laws, and SEC climate disclosure rules.
  • Establish certified management systems (ISO 14001, ISO 50001) to support structured environmental performance and business continuity under climate risks.
  • Identifying and mitigating climate- or regulation-related risks (e.g., supply disruptions, price volatility) and establishing business continuity plans for resilient operations.
  • Deploy due diligence practices and support third-party audits as needed.

Principle 2: GHG Emissions Reduction

Priority Suppliers shall measure, report, and reduce Scope 1, 2, and 3(if applicable) emissions in alignment with GHG Protocol standards. Suppliers are encouraged to set science-based reduction targets and support Cummins' Destination Zero strategy.

• Measurement and Reporting 

  • Measure and disclose GHG emissions using the GHG Protocol Corporate Standard and Scope 3 guidance, where applicable.
  • Report emissions data via credible platforms such as CDP or M2030 to ensure transparency and consistency.
  • Establish internal systems for data accuracy, validation, and traceability across operational boundaries.

• Target Setting and Risk Management 

  • Set internal GHG reduction targets and, where feasible, adopt science-based targets aligned with Cummins' Destination Zero strategy.
  • Assess climate-related physical and transition risks (aligned with TCFD or equivalent frameworks) and implement risk mitigation or adaptation plans.

• Energy Transition and Collaboration 

  • Transition toward low-carbon or renewable energy sources, such as solar, wind, green hydrogen, or renewable electricity procurement (e.g., RE100 participation).
  • Improve energy efficiency by upgrading facilities, equipment, and processes with a focus on emissions reduction ROI.

• Product and Value Chain Decarbonization 

  • Design products, services, and systems to lower emissions over the entire product life cycle—including manufacturing, usage, and end-of-life.
  • Engage with upstream and downstream value chain partners on decarbonization roadmaps, material substitution, and logistics optimization.
  • Participate in Cummins-led or third-party collaborative initiatives to share best practices, pilot low-carbon solutions, and address industry-specific challenges.

Principle 3: Circular Economy Practices

Suppliers shall reduce environmental impact through circular economy practices and responsible product and packaging design across the full value chain—from material sourcing to end-of-life recovery. Cummins encourages suppliers to adopt practices appropriate to their operational scale and maturity.

• Design for Circularity

  • Design products, parts, and components for durability, easy disassembly, repair, reuse, and recyclability
  • Embed end-of-life considerations in product development to facilitate reuse or material recovery.

• Material Efficiency and Substitution

  • Design products, parts, and components for durability, easy disassembly, repair, reuse, and recyclability.
  • Prioritize recycled, renewable, or certified sustainable materials wherever feasible.
  • Identify material efficiency opportunities throughout the product lifecycle.

• Product and Packaging Recovery Systems

  • Support takeback programs, reverse logistics, and core/component harvesting.
  • Develop capabilities for remanufacturing, rebuilding, or repurposing used parts or equipment.
  • Reduce packaging waste by adopting returnable, reusable, recyclable, or low-impact solutions
  • Collaborate with Cummins returnable packaging initiatives to implement returnable packaging in place of expendable packaging and treat returnable packaging as the “default” with respect to shipping lanes within the same region.

• Risk Management and Collaboration

  • Provide traceability and disclosure of material content to support regulatory compliance and customer expectations.
  • Explore joint innovation opportunities with Cummins and industry peers to develop circular solutions aligned with Cummins Circular Economy strategic areas shown in the picture below.

 
Principle 4: Transparency, Continuous Improvement, and Collaboration

Transparency is essential to building a responsible and accountable supply chain. Suppliers should demonstrate commitment to continuous improvement and maintain open, proactive communication with Cummins.

• Data Transparency and Reporting

  • Provide timely, accurate, and auditable data on emissions, energy, materials, water, and waste through recognized frameworks (e.g., CDP, GRI, EcoVadis, SASB).
  • Respond promptly to Cummins’ information requests and engage in assessments, surveys, or self-reporting exercises as requested.
  • Maintain data accuracy and documentation to support traceability, assurance, and stakeholder trust.
  • Provide complete, accurate packaging data via prescribed packaging data management systems (links on Supplier Portal).

• Governance and Disclosure Alignment

  • Establish internal systems for environmental data governance, ownership, and quality control.
  • Ensure that traceability is embedded across facilities and supplier tiers, not just at the corporate level

• Performance Monitoring and Joint Collaboration

  • Develop internal environmental performance targets and KPIs, covering carbon, energy, water, and waste.
  • Track and evaluate progress annually, identifying gaps and prioritizing areas for improvement.
  • Work with Cummins to explore joint decarbonization, circularity, or traceability initiatives where appropriate.
  • Demonstrate leadership by sharing best practices and participating in knowledge-exchange workshops with Cummins and peers.

Special Requirements for Capex and Technical Service Suppliers

Cummins recognizes the critical role that capital equipment providers, engineering firms, and project service suppliers play in shaping the long-term environmental performance of our operations. To support Scope 1 and Scope 2 emissions reduction and overall operational sustainability, we have established the following expectations for suppliers involved in facility design, equipment procurement, system upgrades, and capital projects. 

• High-Efficient Equipment Design

  • Suppliers shall prioritize the selection and proposal of equipment and systems that maximize energy and resource efficiency while minimizing environmental impact. This includes options such as variable-speed drives, heat recovery systems, high-efficiency chillers and boilers, electrified or hybrid solutions, and infrastructure that enables future renewable energy integration.

• Environmental Impact Evaluation

  • Engineering service providers are expected to assess the energy consumption, emissions, water use, and waste implications of proposed designs or system configurations. Proposals should include recommendations to reduce life cycle environmental impacts, with consideration for both installation and operational phases.

• Technology and Standards Alignment

  • Suppliers should apply industry-relevant environmental standards, local or international green building frameworks (e.g., LEED, China 3-Star, ASHRAE), and recognized best practices when designing or delivering capital or technical solutions. Proposals should reflect alignment with Cummins' sustainability strategies (e.g., Destination Zero) and demonstrate innovation in sustainable design.

• Data Simulation and Scenario Analysis

  • Suppliers shall provide simulations or modeled data that illustrate the sustainability benefits of their solutions. These may include comparisons of capital cost, operating cost, energy or water savings, waste reduction, emissions avoided, and expected return on investment (ROI). Such data enables Cummins to evaluate alternatives and make informed, sustainability-aligned decisions.

• Collaborative Planning

  • Early engagement is encouraged to jointly identify opportunities for improved performance and cost savings. Cummins welcomes collaboration on pilot projects, lifecycle design evaluations, and continuous improvement efforts in support of long-term operational resilience.

Additional Requirements and Links

To support consistent implementation of the Green Supply Chain Principles, Cummins suppliers must also comply with additional environmental standards and process guidelines. These foundational documents outline specific expectations for materials, logistics, and compliance:

• Supplier Code of Conduct 
• Prohibited Substances Standard (PDF)
• Material Safety Data Sheets (MSDS)
• Shipping Requirements
• Transportation Expectations
• Packaging Requirements

Call-to-Action Summary Table