Paccar : ESG Report

PACCAR SASB-ESG Report

May 2021

SASB Disclosure Table: Industrial Machinery & Goods Sustainability Accounting Standard Version 2018-10

Topic

Metric

Disclosure

Energy Management

Total energy consumed	951,832 MWh (TCFD/CDP
	Report: C8.2a)
Percent grid electricity	42.8% (TCFD/CDP Report:
	C8.2a)
Percent renewables	8.6% (TCFD/CDP Report:
	C8.2a)

Employee Health &

Safety

Total recordable incident rate	This document: p. 9
Fatality rate	Zero
Near miss frequency rate	Not disclosed but consistent
	with Total Recordable Incident
	rate.

Fuel Economy &

Emissions in Use-Phase

Sales-weighted fleet fuel efficiency for medium- and heavy-duty vehicles (Gallons/1,000 ton-miles)

The latest models of Kenworth, Peterbilt, and DAF trucks have improved fuel efficiency by up to 7% compared to previous models (This document: p. 6-8). Kenworth and Peterbilt trucks will improve fuel efficiency by at least 14% by 2021, 19% by 2024, and 25% by 2027 when compared to 2017 levels. DAF trucks will improve fuel efficiency by at least 15% by 2025 and 30% by 2030 when compared to 2020 levels.

Sales-weighted fuel efficiency	Not applicable to PACCAR's
for non-road equipment	business.
(Gallons/hour)

Sales-weighted fuel efficiencyfor stationary generators (Watts/gallon)

Sales-weighted emissions of NOx for Marine diesel engines, locomotive diesel

Not applicable to PACCAR's business.

PACCAR products are low NOxand compliant with all NOx emissions regulations in all its

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engines, on-road medium- markets.

and heavy-duty engines, and other non-roaddiesel engines

Materials Sourcing

Sales-weighted emissions of particulate matter for Marine diesel engines, locomotive diesel engines, on-road medium- and heavy-duty engines, and other non-road diesel engines

Description of the management of risks associated with the use of critical materials

PACCAR products are low PMand compliant with all PM emissions regulations in all its markets.

This document: p. 12-13

Remanufacture Design &

Services

Activity Metrics

Revenue from	PACCAR's aftermarket parts
remanufactured products and	division sells remanufactured
remanufacturing services	engines and many other
	remanufactured components.
Number of units produced by	PACCAR delivered 133,300
product category	new trucks in 2020
Number of employees	26,000 as of December 2020

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PACCAR Environmental, Social and Governance (ESG) Report

PACCAR is a global technology leader in the design, manufacture and customer support of premium light-, medium- and heavy-duty trucks under the Kenworth, Peterbilt and DAF nameplates. PACCAR also designs and manufactures advanced powertrains, provides financial services and information technology, and distributes aftermarket parts related to its principal business.

PACCAR conducts business to achieve above-average market returns for stockholders, reflect the highest ethical standards, fulfill our legal obligations, and meet our social responsibilities. We strive to gain the favorable regard of customers, shareholders, employees, regulatory authorities, and the general public through superior performance and effective communications.

PACCAR's ESG approach is focused on environmental leadership, social responsibility, ethical business conduct, and corporate governance practices that enhance shareholder value.

The ESG disclosures in this report and at paccar.com are consistent with the SASB Industrial Machinery & Goods Sustainability Accounting Standard Version 2018-10.

Environmental Leadership

Reducing the environmental impact of our activities and products is an integral part of our process of continuous improvement. Our commitment to the environment is demonstrated in our energy efficient operations and technologically advanced products.

PACCAR's global industrial leadership includes addressing the environmental challenges facing our own and future generations. PACCAR's environmental management system and policy are designed to focus on the reduction of the environmental impacts of the company's activities, products and services. A key premise of PACCAR's environmental policy can be stated simply: It is more environmentally prudent and cost effective to identify a problem before it occurs, than to correct or clean it up afterwards.

The following principles are used to implement PACCAR's environmental policy:

• Commitment to full compliance with environmental laws.
• Development and implementation of prudent practices in company facilities around the globe that often go beyond regulatory compliance.
• Comprehensive industry leadership in policy, procedure, training programs and operation audits at all company facilities.
• Commitment to continual improvement.
• Prevent pollution by continued evaluation of our industrial processes and procedures.
• Proactively seek new information and training in order to create, initiate and advance new ideas and approaches to manage environmental exposures before they are mandated by regulations.

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Operations

PACCAR is committed to environmental responsibility in the vehicle production process. Finding ways to reduce waste, reuse materials, conserve energy and reduce the environmental impact of our activities occurs daily in both small and significant ways across the Company. PACCAR is driving clean manufacturing into every aspect of its business because it helps the environment and makes good long-term business sense.

PACCAR discloses greenhouse gas emissions and energy usage per unit of revenue. This normalizes the data for fluctuations in our business that occur due to industry cyclicality.

From 2013 to 2019, PACCAR reduced greenhouse gas emissions 38% on a per revenue basis as shown below:

PACCAR has disclosed greenhouse gas emissions through CDP (formerly Carbon Disclosure Project) since 2014. In 2020, PACCAR achieved an A- score from CDP, placing in the top 15% of over 9,500 companies reporting and demonstrating a robust approach to reducing greenhouse gas emissions in Kenworth, Peterbilt and DAF vehicles and from our global facilities. PACCAR has earned an "A" or "A-" rating for six consecutive years. CDP has aligned its questionnaires with the Task Force on Climate-Related Financial Disclosures' (TCFD) recommendations. Therefore, PACCAR's CDP disclosures are consistent with TCFD's recommendations. PACCAR's CDP report is publicly available on the CDP website (https://www.cdp.net/en/PACCAR) and attached to PACCAR's TCFD Report at https://www.paccar.com/media/3122/paccar-tcfd-report-march-2021.pdf.

PACCAR announced that it has established new emissions reduction targets in partnership with the Science Based Targets Initiative (SBTi). SBTi works with more than 1,000 companies worldwide to create a clearly defined path to reduce greenhouse gas emissions, with the goal to help limit global warming to below 2 degrees Celsius compared to pre-industrial levels. PACCAR's targets are publicly disclosed at https://sciencebasedtargets.org/.

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From 2013 to 2019, PACCAR reduced its energy usage 32% on a per revenue basis as shown below:

PACCAR's hazardous air emissions have been reduced by over 200 tonnes per year in paint and other processes. The new state-of-the-art DAF Westerlo and Kenworth Chillicothe Cab Paint facilities will reduce hazardous waste emissions even further.

PACCAR has focused on responsible environmental stewardship since its founding in 1905.

Over 90% of PACCAR manufacturing locations are ISO 14001 certified and more than 80% are zero- waste-to-landfill.

Innovative Products

A key element of PACCAR's environmental strategy is to offer our customers commercial vehicles that reduce environmental impacts. The company invests in technologies that reduce greenhouse gas emissions such as highly fuel efficient diesel engines, natural gas and biofuel engines, as well as next generation electric, hybrid, and hydrogen fuel cell powertrains. To develop these industry-leading products and technologies, PACCAR makes significant research and development and capital investments every year.

PACCAR's commitment to making the highest quality, most sustainable vehicles begins with product design. Our engineers use "Design for Environment" or Eco Design software to identify non-hazardous, lighter weight materials while improving overall vehicle recyclability.

PACCAR's Zero Emission Trucks

PACCAR's research and development efforts include several demonstration and development projects for Kenworth, Peterbilt and DAF vehicles, including battery electric, hydrogen fuel cell, and hybrid technologies. More than 60 of these vehicles in customer field testing have accumulated more than 500,000 miles, which helps PACCAR understand the economics and customer usage of these technologies, and inform future production vehicles.

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