David N. Farr
Chairman and Chief Executive Officer

Dear Shareholders,

For more than a century, Emerson’s history has been filled with achievements and challenges that have driven innovative thinking and bold transformations, molding us into the company we are today.

After all, an organization cannot grow and create long-term value for 130 years without a rigorous, disciplined management approach that enables the flexibility to adapt to changing markets and customers. In that regard, our 130th year was no different. 2020 will be long remembered as a defining moment in the history of our company. This year brought obstacles of a magnitude that were impossible to foresee, but it also opened up new opportunities to adapt and rise to the needs and expectations of our employees, customers, communities and shareholders.

The COVID-19 pandemic transformed the global economic landscape and brought to the foreground the importance of prioritizing the health of employees and customers to a successful business. The pandemic also highlighted the immense responsibility we have to support critical industries around the world: life sciences, water, food and beverage, power and energy, the cold chain, and indoor air comfort and quality, just to name a few. In my two decades as CEO, never has a single external shock had such far-reaching and lasting effects on the world – and never have I been prouder of our company’s ability to meet and overcome the toughest of challenges.

Supporting Our Communities through the Pandemic

Families around the world have been impacted by the uncertainty and upheaval surrounding COVID-19, and we moved quickly in the first 30 days of the crisis. To strengthen our hometown community, we provided financial support to address food, housing, health care, mental health, senior care and child care needs in our headquarters location of St. Louis.

My core leadership team, the Office of the Chief Executive and 20 additional leaders, remained in our offices every day throughout the challenging and dynamic days of the spring and summer. Our priorities were to keep our 83,500 employees safe, ensure business continuity and serve customers in essential industries with our critical technologies and services. We stressed and tested every aspect of the Emerson Enterprise Risk Process and it stood up well. The global supply chain and regionalization strategy we had put in place long before the pandemic began ensured we were prepared to sustain our business, enact the appropriate safety measures for each region, and pivot quickly and efficiently to meet our customers’ needs. We shifted manufacturing facilities to enable development of critical medical devices and personal protective equipment. We protected the integrity of testing kits with our cold chain technology. And we innovated technologies that helped our customers adapt to social distancing guidelines and operate efficiently at lower capacities.

I am tremendously proud of how Emerson employees stood up to help the world and each other through this pivotal time. For additional color on some of these remarkable efforts, please visit the Pandemic Support page.

$2.55B

Free Cash Flow

$2.15B

Returned to Shareholders

$1.7B+

Strategic Acquisitions*
*Open Systems International, Inc. closed on October 1, 2020.

Amid the evolving market dynamics and uncertainties, we quickly shifted and accelerated our cost containment and restructuring actions to address the new demand environment. And, thanks to our disciplined management process, we continue to deliver strong and consistent performance even in the most challenging of conditions, marking in 2020 our 64th year of consecutive increased dividends. We returned $2.15 billion to our shareholders in 2020 and invested over $1.7 billion in strategic acquisitions for the future prosperity of Emerson.

Our ability to adapt and rise to the call of our customers reflects a core dedication to leave the world in a better place than we found it. It’s this purpose-focused mindset that drives us to achieve our full potential. In January of 2020, before COVID-19 hit, we started the process to define Emerson’s purpose and reimagine the causes we work toward every day. Guided by input from more than 17,000 employees around the world, we aligned on our Purpose: We drive innovation that makes the world healthier, safer, smarter and more sustainable. This report is structured around those four focus areas, and it includes more information about what this purpose means to us and how we strive toward living it every single day. Derived from this Purpose, our new set of Causes speaks to our commitment to responsibly steward our customers, employees and communities in everything we do.

Our Purpose

We drive innovation that makes the world healthier, safer, smarter and more sustainable

Our Causes

Planet

Planet

Humanity

Humanity

Champion

Champion

Inclusion

Inclusion

Future

Future

Our Values

Integrity, Collaboration, Safety & Quality, Continuous Improvement, Customer Focus, Innovation, Support Our People

Our people are our most valuable asset and source for sustained success. And as a global technology organization, we’ve seen firsthand the energy and innovation that come from encouraging and honoring diverse perspectives and backgrounds. Tragic events of the past year brought into clear view the inequities that exist in our society. Let me be clear – there is no place for racism or discrimination of any form at Emerson or in any modern business community. We remain committed to efforts aimed at continuous improvement in fostering a culture of diversity and inclusion at every level of our organization. Our leadership team continues to work in close partnership with our Blacks Reinforcing Diversity Employee Resource Group, as well as our Women in STEM, Veterans, LGBTQ+ Allies and Somos (Latin and Hispanic) employee resource groups, to identify ways to improve diversity, create opportunity and efforts to ensure our workforce reflects the industries and world we serve.

We also continue to emphasize and advance our strategy and dialogue around environmental, social and governance (ESG) issues. We are committed to ensuring our business practices are sustainable in every sense of the word, and we recognize our integral role in enabling customers and suppliers to do the same. At our core, Emerson is all about sensing, measurement, control, data management and optimization. We are dedicated to leading the industry in more efficient solutions and developing technologies that enable a better, cleaner future. We are focused on helping customers navigate regulatory changes and technical complexity in their work to manage resources and care for customers, employees, communities and the planet. This has been a key aspect of Emerson’s DNA for a long time – at least the last 40 years in which I’ve been a part of this organization.

Our commitment to a better future – leading through all market conditions, ensuring business continuity and driving long-term sustainability – is something we are passionate about for Emerson and our customers. The accelerated growth and adoption of technology over the past two decades has transformed the ways Emerson and our industries operate. Simply stated, the events of 2020 have catapulted digital transformation technologies from basic measurement, monitoring, control, data management and optimization opportunities into critical investments for sustaining and future-proofing businesses.

As a trusted partner to our diverse industry customers around the world, Emerson is well-positioned to provide solutions up and down the technology value pyramid – from devices, instruments and sensors, to control systems, to data management, analytics and services. Software enables each of these critical value layers. In fact, as part of our ongoing work to guide customers through their individual digital transformation journeys, we are reinforcing our commitment to software as a key value driver with our $2.4 billion software-enabled innovation portfolio. These solutions, rich with opportunities for growth, consist of organic innovation and development efforts as well as acquisitions that broaden and complement Emerson’s unique, scalable offerings. In 2020, our investment strategy included acquisitions such as Open Systems International, Inc. (OSI Inc.), strengthening our ability to help customers incorporate renewable energy sources and improve energy efficiency and reliability; Verdant, broadening our energy management and optimization capabilities for multifamily residential and commercial applications; American Governor Company, building our technology capabilities and expertise in the renewable hydroelectric power industry; and Progea Group, expanding our robust embedded software and control portfolio for manufacturing, infrastructure and building automation applications. We are excited to welcome this new expertise and talent to the Emerson family and to further develop and scale these technologies across even more industries and customers.

In addition to strategic acquisitions, Emerson remains committed to both organic product and technology development as well as partnerships. We’re continuing to build our technology capabilities by cultivating our partnerships with Microsoft for key cloud infrastructure, with Dragos for robust cybersecurity solutions and with AspenTech for digital twin and analytics solutions. In 2020, we expanded our collaboration with Mitsubishi Hitachi Power Systems Americas (MHPS) to develop solutions that drive operational excellence and create cleaner, more reliable power. These valued partners strengthen our overall offering to customers, enabling optimized operations, improved performance and protected assets.

Partnering to Help Grow Emerson’s Software Expertise and Infrastructure

We’re continuing to build our technology capabilities by cultivating our partnerships with Microsoft for key cloud infrastructure, with Dragos for robust cybersecurity solutions and with AspenTech for digital twin and analytics solutions.

As we build our software and other capabilities, we are also helping customers prepare for another significant change. Industries across the globe are grappling with the effects of a skills shortage resulting from a trifecta of challenges: retiring workers, a smaller skilled labor pool and a shift in required expertise from high-tech operations. We are committed to advancing technologies that prepare the workforce of the future. Tools such as our digital twin solutions are allowing operators to be trained through dynamic high fidelity simulations that do not affect the current running processes. This year, I am pleased that our digital twin and Industrial Internet of Things technologies were selected by one of the largest refineries in India to support workforce upskilling, process optimization and plant safety. This is one of many examples of our growing digital twin installed base, which now comprises more than 4,000 systems deployed across the globe.

Advancing STEM Education in Schools

Through our “We Love STEM” initiative, Emerson partners with industry and academic organizations to build a greater pipeline of talent and grow students’ appreciation of science, technology, engineering and math (STEM). As schools confronted new remote learning formats in the fall, we delivered more than 7,000 STEM activity kits to elementary and middle schools in our St. Louis headquarters community, providing students with hands-on learning opportunities.

We are also advancing education at the professional level through a new innovation center in Boulder, Colorado, that focuses on industry training, research and new product development for our flow measurement technologies. This $100 million investment will create 250 new jobs in Colorado and is the latest example of our commitment to customer-driven innovation and high-tech manufacturing, as well as to attracting the best and brightest talent to work for Emerson.

Our progress this year would not have been possible without the work and commitment of our experienced Board of Directors, who remained dedicated to Emerson’s success throughout even the most challenging moments. I want to extend a special welcome to our newest board member, W. H. “Bill” Easter III, who was elected in October. Bill will bring a wealth of business acumen and wisdom to our ranks. On behalf of the Board and the full team at Emerson, we thank you, our shareholders, for your continued support and trust. We remain committed to creating long-term value for you every day, as we work to make the world healthier, safer, smarter and more sustainable.

As I finish my 20th year as the leader of Emerson, I am exceptionally proud of this global organization that has driven Emerson to extraordinary performance and has returned over $36 billion in cash to our shareholders during this 20-year period.

I am certainly eager for the day when we can all see each other again, face-to-face. Until that time, please be safe and stay well.

David N. Farr
Chairman and Chief Executive Officer

Insights from the Office of the Chief Executive

As a global company with broad market reach, a strong foundation of governance allows us to keep up with the challenging pace of change across the industries we serve. We are focused on being transparent, consistent and fair — especially as we navigate important issues and opportunities in these changing times. Our goal is always to serve Emerson’s many stakeholders, while protecting our assets and people.

Sara Yang Bosco
Senior Vice President, Secretary and General Counsel

Emerson’s drive to recognize and anticipate industry direction is part of our disciplined approach to value creation. We aim to understand customer preferences and evaluate macrotrends when building strategy, developing projects and identifying potential investments. All of this is made possible with the help of our successful ecosystem of partnerships and acquisitions, which complement our technology capabilities, infrastructure and analytics to provide a unique competitive advantage.

Mark J. Bulanda
Senior Vice President, Planning and Development

Emerson’s rigorous management process fosters a culture that is inherently focused on driving financial performance. We strive to improve profitability and cash generation through all economic conditions. As a result, we have the flexibility to make balanced capital allocation decisions that both invest in Emerson’s future and provide attractive cash returns to share owners. We are proud of our record of increasing dividends for 64 consecutive years through good and difficult times, including the COVID-19 crisis our world is battling now.

Frank J. Dellaquila
Senior Executive Vice President, Chief Financial Officer

Our customers value a trusted partner they can constantly rely on, with a legacy of excellent operational performance and efficient supply chain to help them navigate everevolving market demands. Emerson’s operational strength has truly shone this year, especially as we’ve diligently served essential industries and supported customers during the COVID-19 pandemic.

Steven J. Pelch
Executive Vice President, Chief Operating Officer

As global leaders, we collaborate with our partners and customers to navigate complex challenges facing society and our environment. We help them operate more efficiently, reduce emissions, protect resources and support communities where we all work and live. We step up when the unexpected happens, such as jumping into action to maintain the resilience of critical infrastructure supply chains and essential services. Our capabilities add both short- and long-term value to our customers and industries, something that was particularly important as COVID-19 swept the globe.

Michael H. Train
President

We deliver practical, innovative approaches to challenges and opportunities across the commercial and residential markets. Our tools, home product offerings, cold chain technologies and environmentally responsible comfort solutions help customers be more productive, improve efficiency, reduce emissions, safeguard the world’s food supply and conserve vital resources amid a fast-evolving regulatory landscape.

James (Jamie) Froedge
Executive President, Commercial & Residential Solutions

Emerson’s distinctive Purpose is beyond business; it’s about making a positive impact on society. It promises to energize employees, support customer loyalty and deliver long-term value to our investors. Our ESG focus is embedded here as we drive innovation to make the world healthier, safer, smarter and more sustainable.

Katherine Button Bell
Senior Vice President, Chief Marketing Officer

Many of our customers have actively considered embarking on a digital transformation journey for years. The COVID-19 pandemic created a new urgency, accelerating automation as industries quickly pivoted to continue meeting needs with a reduced and distanced workforce. Our teams have decades of experience in digital transformation and are adept at demonstrating real return on investment and value to customers. When our customers needed to optimize operations, enhance productivity and achieve unprecedented levels of safety this year, our digital innovation and deep domain expertise empowered us to help.

S. Lal Karsanbhai
Executive President, Automation Solutions