Sustainability as a Driver for Sustainable Growth

At Trane Technologies, sustainability isn’t a feature—it’s our growth strategy.

As our Chair and CEO, Dave Regnery, stated in our 2024 Sustainability Report, “Our ability to consistently deliver leading financial performance while advancing our bold sustainability commitments demonstrates there is no trade-off. Sustainability is at the center of our strategy and drives strong financial results over time.”

Making sustainability real

Because sustainability is embedded in our purpose, culture and operating system, it’s mirrored in our day-to-day actions and decisions.

How we integrate sustainability:

• Our purpose: To boldly challenge what’s possible for a sustainable world
• Our growth strategy: Product development and innovation
• Our business operating system: Annual goal setting, targets to reduce impacts in our operations and supply chain
• Our people: Employee-led Purple Teams, Sustainability Ambassador Network, Business Resource Groups

In 2024, the sustainability index in our annual employee engagement survey hit an all-time high, with a score of 82 out of 100, highlighting that behind our success is a belief that the work we are doing matters – and propels our success.

A purpose and strategic focus on climate

For our business, climate is a driver in multiple ways. We are positioned at the nexus of global megatrends like climate change, urbanization, resource scarcity, demographic shifts and digital connectivity. Add to that the fact that buildings account for over 30% of global emissions, and transportation contributes another 20%. With our global businesses centered around heating and cooling and energy optimization for buildings, industry and refrigerated transport solutions, we are at the epicenter of need and opportunity.

Based on our own materiality impact assessment we know that climate risk, GHG emissions and energy efficiency are critical topics for us to manage. They are for our customers—who increasingly rely on our innovations to address their challenges and enhance their business resilience.

Our Board of Directors and Executive Leadership Team view climate change not as a compliance issue and risk to mitigate, but as a disruptive platform for innovation. This important shift in perspective has driven alignment in goal and strategy setting and resulted in consistent growth.

A climate for innovation

In 2019, we created the Gigaton Challenge to address our largest area of impact within our Scope 3 emissions—customers’ use of our products—and to help achieve our near-term and long-term science-based Scope 3 product use emissions targets.

Through the Gigaton Challenge, we aim to reduce 1 gigaton of GHG emissions (1 billion mtCO2 e) from our customers’ carbon footprints by 2030 from a 2019 baseline. When we set the goal, it was a first-of-its-kind climate commitment related to customer product use of any business-to-business company. It covers our entire product portfolio and rallies our team members to innovate.

To reduce product use emissions, our product development strategies focus on:

• innovating higher efficiency products,
• increasing system-level efficiency,
• scaling electrification of heat, and
• integration of next-generation, low-GWP refrigerants.

We evaluate new products based on their efficiency compared to older models and assess how much we can replace in the installed base by 2030.

The Gigaton Challenge also accounts for emissions our customers avoid through our services, another frontier of innovation. Through digital services and AI-powered automation and analytics, we’re addressing energy demands in real-time and at a scale with the potential for significant impact.

Enhancing resilience and embracing opportunities

As we’ve innovated we’ve also identified new growth opportunities. In 2024 we deepened our commitment to creating a business ecosystem that is more resilient and less carbon intensive.  With commitments to design systems for circularity and reduce embodied carbon by 40% across our product life cycle, we’re accelerating change across our value chain and for our industry as a whole.

Participation in initiatives like WBCSD’s Circular Products & Materials Pathway action group allows us to collaborate with other leaders and partners in developing strategies, models and metrics—enhancing our sustainability efforts.

Cultural and operational momentum

One of our biggest advantages is alignment across our leadership team on our goals and how to achieve them. Outlined in our Climate Transition Plan, our carbon emissions reduction strategy is managed at the enterprise level, with senior leaders directly involved in setting year-over-year reduction goals and the longer-term strategy for achieving carbon neutrality. These goals are applied to each strategic business unit and location and monitored monthly.

To create an even stronger connection to our purpose and contributions that advance our strategy, our salaried team members commit to a sustainability-oriented objective as part of annual goal setting. Executive compensation for nearly 3000 leaders includes an annual incentive matrix calculated from a financial score, a sustainability modifier and individual performance factors to determine the annual variable cash incentive.

Trane Technologies Global Business Operations Leader, Alessandra Hammond, shares how she and the supply chain team help operationalize and drive sustainability-grounded decisions.

Bottom line proof. Top-quartile performance.

Sustainability is not just a part of our strategy; it is our strategy and our track record of consistent performance over time is a testament to its success.

Since 2020, we’ve delivered a compound annual revenue growth rate of 12%, with 2024 marking our fourth consecutive year of adjusted earnings per share growth exceeding 20%. Over the last five years, we’ve reduced our customers’ carbon emissions by 237M metric tons and reduced our own operational emissions by 44%, both compared to a 2019 baseline.

Looking ahead, global demand for our solutions is strong. Our investment in sustainable and cutting-edge innovation continues. Our people are engaged. Our brightest days are ahead.