Sustainability for Growth

There does not have to be a tradeoff between building a sustainability strategy and a strong bottom line. Trane Technologies is proof. Following on the heels of our third consecutive year of 20%+ earnings per share growth in 2023, we have also managed to reduce our absolute energy use by 4% as we’ve simultaneously grown our business. These successes didn’t happen in isolation but are the direct result of our strategy for sustainability. We are showing that you can be a growth company, meet your big sustainability commitments and add value to your customers by helping them meet theirs.

A clear strategy

We launched Trane Technologies over four and a half years ago. From the onset, our investors really valued our focus as a climate innovator and our clear investment strategy, but our sustainability trajectory had already been set more than fifteen years before. We embraced regulation early on, using it as a catalyst for new ideas. We made the decision to relentlessly invest in sustainable innovation despite market risks and industry performance. Now, 100% of our portfolio is focused on sustainability and reducing energy intensity.

Our thermal management systems in our commercial HVAC portfolio are 70% more efficient than they were even five to six years ago. That doesn’t happen in one or two years. It comes from creating a clearly defined strategy and sticking to it. For example, transport markets are currently down in the Americas. Are we still investing in that business? Absolutely. We want to be ready when those markets recover, not starting again from scratch. We maintain a strong market position because of our consistent investment in sustainable innovation. Sustainability is not an offshoot of our strategy. It is the strategy and what’s driving our financial performance.

A growth culture

The way we continue our growth trajectory is by continuing to deeply embed it into our company culture. We seek to foster a culture built on our purpose, diverse in perspective that can grow with our business. To build a culture of growth, you have to have a clear long-term direction. Our consistency is our strength. When you change your strategy and then shift it again in one or two years, it’s disruptive and not in a good way. It can lead to a lack of buy-in from employees and them wondering where you’ll head next. I believe people know what we stand for and because of that, they can rally behind our mission.

Another important piece is encouraging and seeking out diverse perspectives. We believe the unique backgrounds and perspectives of our team members strengthen our business and increase innovation, resulting in better financial performance and business decisions. With the rate of change in our industries, a collaborative environment with diversity of thought is a requirement to keep up. That’s why we’ve worked to have our 2030 Sustainability Commitments—including our commitment to create Opportunity for All—as a central part of our operating system.  

We are creating an inclusive, uplifting culture where people feel they belong and can boldly share their ideas, and we invest in the well-being and career development of our team members so they can thrive. Because of this, we see stronger retention rates than our industrial peers. Having people who want to stay at the company allows us to actively promote from within. And growing with people that already know our mission and direction allows us to keep moving at speed toward our goals. 

Unlocking value for customers

The world is getting warmer. Laws and regulations are requiring our customers to decarbonize. We have the solutions and the people to help them on that journey and address 25% of global greenhouse gas emissions in the process.

Our customers look to us as trusted advisors to help them balance short- and long-term financial, operational and sustainability goals. I believe our product portfolio, direct sales and service workforce and transport and residential dealer networks are second to none. Together, we can partner with our customers to achieve their decarbonization goals, reduce global greenhouse gas emissions and grow our business.

But first, we have to help our customers overcome the misconception that sustainability is more expensive. For example, our hybrid electric Thermo King© Advancer unit in Europe is 30% more efficient than our previous unit. While the initial cost may be more, the total cost of ownership will be less over time, and paybacks are very attractive and accretive to the bottom line. In markets with regulations and fines, sustainability can even help avoid costs. As a CFO, I can appreciate the value of lower operating costs and acknowledging that there doesn’t have to be a tradeoff between sound financial returns and fulfilling commitments to decarbonization.

Sustainable growth

Sustainability is about the long game, and so is growth. This company has a reputation as a strong operator, dedicated to continuous improvement. We are known for credible action on climate and the very real way that our employees are committed to our purpose. We are seeing this consistency translate into growth.

One of our top analysts phrased it this way: “Right place, right time, right culture to capitalize.”

I want us to be thankful for where we are today but always hungry for more. That’s how we’re going to continue to grow the good we can do and advance our business.

We have bold ambitions with many challenges yet to overcome. Even with the advancements we've made already, we still have the opportunity to disrupt ourselves through continued innovation. With our strategy, culture and value offering, we are showing that a sustainability growth company is both possible and profitable.

Discover more about our sustainability strategy in our 2023 ESG Report.