Q: How can we set and maintain sustainable standards and make sure you are buying from sustainable primary, secondary and tertiary suppliers?
Michael: Once you engage in that sustainability process, one of the most important things is looking at your Scope one, two and three emissions. Then engage with your supply chain. That starts with an understanding of where you are, as well as where you want to go, engaging in the process and getting some basic metrics right. The most important thing is starting the dialogue because it will take at least six to twelve months to engage with your supply chain and help get them up to speed. At Topcon, we’re just beginning that process.
Q: How do you start the dialogue?
Michael: It might start with a survey, so we know where everybody is on the sustainability journey. A benchmarking survey will show where you are and the most important issues to you. It might be human rights, it might be materials and sourcing, or the treatment of people or the extended supply chain and the supplier interface. It could be about water or environmental risk for different locations.
Jeremy: We produce engines and powertrains so my replies will be angled towards that. We are very focused on emissions from our equipment and how our products are used in the field. The key is that the standards are practical and realistic to implement, and widely applicable. We see pocketed things which are really hard to navigate. Not to say that we sit still but we want to ensure that we’ve got the right things to work on in the right time frames.
Previously, we’ve talked about scale, particularly how hard it is to build in an off-highway world where the volumes are not on-highway. Being able to build scale on solutions and being able to manage those is a problem, not just for us but for OEM partners as they think about chassis proliferation etc. It comes down to good collaboration between the regulators, suppliers like ourselves, the rest of the industry and trade associations. Through those conversations you tend to pick up a lot more detail concerning infrastructure, how we make sure that we’re covering all the challenges of this diverse market, while we’re getting work done.
Q: Jeremy highlights the importance of having a relationship with regulators. How crucial is that to moving forward on sustainable workflows?
Michael: Very important. We’re here in the state of California which has in many cases, for better or worse, led some of those initiatives, for example, with the Tier 4 and Tier 5 emission standards and the California Air Resources Board. Topcon’s been engaged in elements of those conversations as a member of the Association of Equipment Manufacturers, as well as with the [Agricultural Industry Electronics Foundation] and we’re really working to align with elements of adopted standards. One of the biggest things when interfacing with the regulators is providing information. One of the biggest challenges is that you don’t know what you don’t know and a lot of this stuff can become very technical. We really work on transparency, to be able to share information. As an industry, each of us has a voice but together that choir can really sing and make music if we’re coordinated in our approach. Once we establish some basics of vocabulary, that really helps. I don’t want to use the word ‘lead’ but I’ll use the word ‘influence’. If we provide information to regulators and other stakeholders then we begin to frame where we are as a company.
Q: On the question of the carbon produced by the construction industry and various transportation and production processes, how can you help customers reduce Scope 3 supply- chain carbon emissions?
Jeremy: We work with OEMs; we don’t deal directly. We work through OEMs who move earth or transport goods, depending on the market, and that’s true for both on- and off-highway. We’re making sure we partner with them as we head towards reduced emissions. We’ve talked previously about intermediate steps making a big difference now, while we’re focusing on that long-term realistic approach about how we’re going to get from A to B. Current engine systems are much cleaner than those from a decade ago.. We’ve used an example in our communications comparing the current US spec to a Tier 1 machine. It’s something like 25 to one from an emissions perspective – a bit extreme because there’s not a lot of Tier 1 out there but there probably is still a lot of Tier 3 equipment out there.
Beyond the engine system, another big focus for us is this integrated powertrain mindset. The more integrated -- and that doesn’t necessarily have to mean hardware but could include electronics features - and collaborate with customers and other powertrain producers, the more efficient and productive we can be. You probably need look no further than our Meritor acquisition a couple of years ago. We are trying to expand from just an engine and an aftertreatment to other components . The more pieces you put together, the more optimized you can get the system. The Cummins Meritor portfolio is going to serve customers globally. It does serve customers globally. It could be a combustion-based powertrain, or it could be electrified powertrains. We’re spreading that investment around and covering many different scenarios, depending on the use case.
Q: So, a lot of choice, a lot of variation … How can Topcon help customers reduce transport costs?
Michael: Our business is fundamentally different from Jeremy’s. When customers head down the sustainability journey one of the first things you look at is your Scope 1 and 2 emissions. For people who construct buildings and surfaces, move dirt or grow crops there are a lot of issues about what you burn and where you start with inputs. That can be, for example, the difference between hot-mix asphalt and warm-mix asphalt. In many cases, it starts with elements of the inputs because that is the low-hanging fruit. It’s ‘what is the carbon footprint of those materials?’ Topcon sensors and technology can be used to create those digital data layers, whether that is understanding vehicle tracking of what you moved and didn’t move, or showing how you moved less. It’s showing how you did the job right. It’s the proof of placement. As more people go to warm-mix on the front end, that really amplifies the need for things like intelligent compaction and smoothness standards to make sure you are getting the longevity and Scope 3 emissions out of the life of that structure. We work with clients to understand how the digital data layers can be captured within the workflow. Then those digital data layers serve as proof of practice for what they’re doing.
Q: How do you make the best possible use of renewable energy in manufacturing waste, management techniques etc. and how do you help customers capture some of those sustainability gains?
Jeremy: Somebody once said the greenest energy is the one you don’t use. For an engine system or a manufacturing facility, the goal is to make it more effective … to use less. It’s about an increase in efficiency. Once you’ve got that efficiency optimized, you can focus on how you pivot over to making sure that that energy is coming from a renewable source. We obviously have very specific business and sustainability targets for the manufacturing sites. In 2023 the company invested a little over $40 million on energy waste and water-reduction projects.
With manufacturing facilities, a lot of the power comes from solar, so we’ve continued to expand solar capability at the sites. I believe we’re up to 66 locations that have some form of solar arrays on site for power generation. Where we can’t do that, we look for other ways to make a difference. In northern Indiana there is the Meadow Lake wind farm. Since 2017 Cummins has worked as part of a virtual-power purchase agreement to make sure we’re helping to expand that and offset the energy that we use in other facilities. There are a lot of different ways you can go about it. For the 2030 goals its going to require action across the company. We publish a sustainability report every year. The key part for corporations is coming up with goals based on science, articulating what those are and focusing on their execution. It’s one thing to say it, it’s another thing to put the proof down and put the work in. That’s what we’re striving to do.
Q: How is Topcon embracing the idea of renewable energy and helping customers here?
Michael: Like Cummins, for many years we have published an integrated report that includes sustainability metrics. This year, our report includes Scope 1 and 2 from all our manufacturing facilities, as well as Scope 3 on the input side from our Japanese manufacturing facilities. We’re expanding that to include all 45, if not all 81 Topcon locations worldwide. One of the first things you begin to understand is where you are. It was a pleasant surprise to find that about 4% of our electricity came from renewable sources. We’ve added solar at a number of facilities. Looking at our Scope 1 and 2, that number of our inputs coming from renewable sources increases to about 7% because in many cases our facilities, for example in the Netherlands, are all powered by wind.
Our Finland facility is 100% renewable, through local initiatives. It uses wind as well as hydroelectric power, and even heat from the earth and from the local utility sanitation area. We’re increasingly finding those proof points as we continue down our sustainable journey. Once you understand where your Scope 1 and 2 is, it helps you do a better job to help your clients understand where they are on the sustainability journey. We’ve found that helpful as well as educational.
Q: What is Cummins working on in the sustainability area in terms of new developments, technologies, software solutions etc …and with regard to your recent acquisition, Meritor, and new brand, Accelera?
Jeremy: It’s a long list. We continue with record levels of investment in combustion technology. I would be doing a disservice if I didn’t mention that. We believe wholeheartedly that technology has a long runway still, on-highway and off-highway, but much more so on off-highway. If you look at off-highway historically, we have always benefitted from the activity in the on-highway space, both from product learning, as well as from a technology perspective. As on-highway markets continue to evolve and bring new platforms or requirements that drive new platforms, that opens up a lot of opportunity for companies like Cummins to bring new things into the off-highway world that, even if they are still combustion engines at the same emissions, are going to get the jobs done more efficiently than their counterparts and predecessors.
We launched the Next Gen X15 for Stage 5 and Tier 4 markets at Intermat last year. That’s coming to production, I believe, in the fourth quarter of 2026 or the first of quarter 2027. Looking at what’s going on in on-highway, there’s clearly a 2027-round of emissions coming. We’re looking at that product and that technology and are already reading ahead to 2030-timeframe emissions for off-highway. The planning work has already started.
We’re not going to stop at engine systems so, again, it’s great to have an engine and an aftertreatment solution that meets emissions targets and does the job. If you think powertrain, think a little bit more broadly - hybrid activity is on the rise. We have a lot of projects right now but, there’s also a lot of applications you could buy today. You don’t have to look too hard to find them. There are definitely options that are starting to emerge in the market. Those don’t necessarily show up from a government’s perspective. They probably would show up from an end-user perspective on fuel consumed. It starts with an engine system that people want. Once you get that, you start thinking beyond that and about what control feature sets etc., we can integrate to make that equipment more efficient, more productive, and more enjoyable to operate. There are things out there that are not necessarily new. We’ve talked about it before but even just digital connectivity. I’m sure my co-panelist would confirm that data is power. The more data we get, the more intelligent a decision we can make and, from our perspective, the better we can integrate because we get insights on how people are using the equipment and where we can really make an impact.
Q: Can we talk about hydrogen which is very much part of the mix for Cummins’ sustainability path?
Jeremy: We’ve talked about our electrolyzer business and our Accelera by Cummins division. Work continues on fuel cells although these are farther out for a lot of markets. More near-term, we’ve launched what we call the HELM platform, which is a base engine system. You can swap some key parts out on assembly line and burn different fuels in them so hydrogen is a combustion-engine solution – something a little bit more near-term for some markets. It’s a big part of the plan moving forward.
Q: From Topcon’s perspective, what are the up-and-coming technologies and development solutions which are really helping customers on the sustainability side?
Michael: It starts with the data from the machine, being able to use basic systems like telematics etc. to get data off the machine, as well as feed data to the machine. Once you get those data layers off the machine, that data serves as proof of practice and then it comes down to what software system you are working with. Then you can share the data with your stakeholders or use it for your governmental reporting processes. We are working on getting the data layers from the machine to the software platforms, focusing on the interoperability and the sharing ability within those software platforms as a recording system for proof of practice.
On the Topcon side, for civil engineering it’s our ClearEdge3D for measuring and using data to understand how I use, for example, concrete versus green concrete and how that reduced my carbon footprint. On the construction side it’s our Aptix platform where we can track how we move less dirt, burn less fuel and are on target. On the agricultural side it’s our TAP platform where we can make the choice between formulated fertilizers or organic fertilizers and show how that is reflected as best management practice in the carbon footprint of the crop’s eventual output.
Q: How optimistic are you about a carbon-neutral construction and off-highway equipment industry? What is a realistic time frame – 2030, 2050?
Jeremy: I would say, long-term, optimistic but with a time-frame qualifier put around that. From our off-highway perspective, a combustion engine runway is a long one. This is definitely the case when you get outside of markets like the US and Europe so we tend to focus on those. What we don’t always talk about is markets like Africa, South America and Southeast Asia, where it’s going to be a lot longer. It’s hard to give data and it’s going to vary by which plot of land you’re on. Often, you’re doing construction because the area needs developing but from an infrastructure perspective, the power isn’t there and the fuel has to be brought to the equipment. It’s not like a truck where it pulls into the station. The power density on this equipment is very high. We continue to stress pragmatism.
The best thing we can do is continue to invest, make solutions available and continue to expand into a powertrain supplier, and be able to drive further reductions. As far as 2030, 2040, 2050, that’s hard to say. It’s probably no problem in the US and Europe markets – there are some challenges but we’ve all got a common mission. Elsewhere in the world, where a lot of the construction happens, it’s going to take longer.
Q: Crucially, it’s about helping contractors when they’re bidding for work. It’s a big factor in driving this agenda if they say they have a low-emissions Cummins powertrain when bidding for work, isn’t it?
Jeremy: How it shows up in bids is interesting. In a job bid you could probably spec-out an equipment-emissions level. That’s an easy first step. Fast-forward a few years, if somebody wanted to go as far as to spec out that it had to be a hybrid, it’s probably ok in some cases. My guess is you limit what OEMs or contractors are going to be able to do in that job. There may or may not be a solution at that time. Flexibility has got to be part of it. We’re all working toward lowering emissions s and eventually BEV and fuel cells etc., are going to come but it’s got to be phased in. What you’re asking for at any given time, needs to be matched with what the market has to offer.
Q: How optimistic is Topcon that the construction industry will hit net-zero targets. Will you hit your own company targets and how can Topcon help customers in the bidding process by offering sustainable solutions?
Michael: We’re very bullish in the long term. We believe in where this is headed. We realise that different parts of the world move at different paces. In many cases, the developing world might even be adopting or moving faster than the developed world because they have fewer standards and they can jump straight to the newest, latest, greatest technology. They are not handcuffed.
Q: Can you give examples of where this is happening?
Michael: Japan is very climate-sensitive. In Europe and specifically northern Europe, we’ve seen it with a project in Norway that we have been working on 2017-2020. It’s a case of being able to provide those proof points. It comes down to being able to use those data layers as proof of practice as they begin to frame into that context. The pace of adoption moves at the speed at which incentives are provided because sustainability starts with profitability. Often, sustainability represents a cost reduction.
Being able to show best management practices so that you can prove you are reducing cost, as well as improving social sustainability from the social side and worker safety from the environmental side, and reducing your footprint, or either from the governance side, you then show how your process is beginning to fit into that. Using those digital data layers as proof of practice towards objectives that are being driven with incentives by the various stakeholders is absolutely where we see it. We’re very positive on that.
Q: So, you’re helping customers meet regulations and win contracts by showing them how sustainable your technology is?
Michael: It’s being able to use those data layers as proof of practice. That could be what emissions are specific to your engine or your powertrain, or the distance travelled or what you’re moving, and then showing that you are doing the right things and using those industry practices that truly represent the best, most innovative aspects of how technology is being used.
Q: Is there anything on the sustainable workforce agenda, not yet covered, that you would like to add?
Jeremy: For off-highway and on-highway, there’s not going to be one solution. We’re going to find avenues and opportunities to find scale and build and that will dictate how we’re able to execute. We looked at some quotes from our CEO. I won’t put them as well as she did but some of the key points are that customers need options and Cummins is here to provide them. Even within a given application, you’ve got a wide spread of size. Even within a common size, you’ve got a wide spread of use cases so there isn’t going to be just one solution for a 20-tonne excavator. You’re going to see multiples and all of them are probably going to make sense.
For the path to zero, the big part is the commitment to decarbonise and a big part of that commitment is going to be making choices and flexibility for OEMs who are going to, in turn, make that flexibility available to the end users actually doing the work. Profitability being a big part of it is a good comment. It‘s easy to have nice solutions that are very advanced, but if the person buying that equipment can’t make a living, we have a problem. We all have to bear that in mind.
Q: The bottom line has to see the benefit. That’s business. Mike, is there anything you would like to add.?
Michael: One of the biggest pieces is social sustainability – the idea of quality work, whether that is now safer, or higher value. Is it reducing operator fatigue, and increasing wages for decision based quality? It’s those pieces of the puzzle, then being able to have the proof points around that social sustainability. The second thing is, it’s elements of the work that matter. Sustainability and digitisation are intimately linked. It’s the elements of those digital data layers and how they fit into a workflow, how they can be used as proof of practice that you are doing the right things, not just for profit but also for the people, for the planet. It’s validating that triple win and aligning it with incentives to deliver value. Our tools and technologies are used as pieces that help customers validate and tell that story about what they are doing and how they’re doing it. That’s where we fit into the puzzle.
Q: Jeremy … How would you sum up what sustainability means to Cummins?
Jeremy: We’ve been at this for a long time. We’re 105 years old now and we would like to be at it for a long time to come. We are committed to delivering power solutions, not just one but a diverse portfolio, and that is core to our destination-zero strategy. That flexibility is, again, how we get from A to B. Our product range is going to span the core engine business - what we’ve done well for a long time. It goes all the way to the other end, to our Accelera business where we have our zero-emissions technologies. You’ve got the components and other business units in between. A lot of opportunity and optionality is there for customers and, again, with that push further into the powertrain strategy our destination-zero approach is going to meet diverse market needs. We’re going to bring real-world greenhouse gas reductions. Independent of how fast BEV adoption comes, there are things we can and will do. We continue to make significant investment. I think, tagline numbers, $1.4bn in R&D in 2023. $250m of that, I think, was Europe alone and I don’t see that slowing down for quite a while. We’re committed, we’re engaged and we’re going to be here all the way through the journey.
Q: Mike, can you sum up Topcon’s sustainability approach?
Michael: From my perspective it’s really around profit and being able to prove you are “doing more with less”. Sustainability is about the intricate balance of profit, people and the planet. Being able to drive that is the work that matters.
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