The most important prerequisite for chartering (defining, selecting, and executing) meaningful projects and activities that deliver on aspirational commitments is an integrated sustainability strategy that shows how they will strengthen the core business. Trane Technologies is a purpose-driven company with deeply embedded sustainability aspirations.1
These aspirations propelled Trane Technologies’s leadership to set ambitious 2030 Sustainability Commitments, especially around greenhouse gas emissions (GHGs). The company is known for setting the “Gigaton Challenge,” which is designed to reduce its customers’ emissions by a gigaton of carbon dioxide equivalent (CO2e) between 2020 and 2030.2
It also developed a metric to measure a product’s lifetime emissions against its capacity (giving the industry a new Scope 3 standard to compare alternatives) and established a Science Based Targets initiative (SBTi)–approved goal to reduce the emission intensity of their products by 55% by 2030.3 These goals represent milestones in the company’s longer-term commitment to achieve net zero GHG emissions by 2050.
Moving from aspiration to clear strategy, the leaders at Trane Technologies developed a playbook to broadly map out how to successfully achieve the Gigaton Challenge. The playbook effectively addresses phase 2 (see sidebar “Trane Technologies Playbook for the Gigaton Challenge”).
Trane Technologies Playbook for the Gigaton Challenge
The strategy at Trane Technologies for achieving the Gigaton Challenge can be summarized using Roger Martin’s strategy cascade:
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Winning aspirations. Trane Technologies established clear 2030 commitments, including financial growth and reduced global carbon emissions.
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Where to play. In 2020, Trane spun off its industrial business from Ingersoll Rand, creating a pure-play climate-control company. Today, the company focuses on products and services that have a significant impact on global climate change, including commercial and residential HVAC and refrigerated transport solutions.
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How to win. Trane Technologies reinforced its competitive advantage by understanding its customers’ needs and translating them into products and services that improve energy efficiency and reduce carbon emissions. This translation enables its customers to decrease operating costs and reduce their carbon emissions for an environmental and economic win-win.
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Must-have capabilities. To deliver on these competitive advantages, Trane Technologies developed several must-have capabilities across its business, which can be grouped into two categories:
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The core processes needed to achieve the Gigaton Challenge, including engineering and product management, sales and lifecycle service, communications and marketing, and global integrated supply chain
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Resources and capabilities that fuel those processes, including product technology, human resources, information technology and data analytics, and process improvement capabilities
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Enabling management systems. These systems integrate sustainability throughout the company to the highest level: the board of directors. They include creating standard systems for defining, reporting, and monitoring progress on key non-financial metrics as well as financial performance. For example, an internal publication, “Doing Our Part: Reducing GHG Emissions in Operations and Across the Value Chain,” helps employees understand the key levers driving emission reduction across all emissions scopes within its value chain and how they can support the strategy.
Notes
1Trane Technologies is dedicated to integrated sustainability from top to bottom. Remuneration of top executives and leaders (approximately 2,300) is based on several metrics, including an ESG (environmental, social, and governance) modifier, performance factors such as GHG reductions internally and externally, and increasing gender and ethnic diversity in the company’s management. In addition, regional business sustainability councils develop business-specific sustainability strategies that support the company’s 2030 sustainability commitments; for more information, see: “Ambition. Action. Impact: 2022 ESG Report.” Trane Technologies, 2022.
2Trane Technologies’s 2030 commitments include Leading by Example, the Gigaton Challenge, and Opportunity for All. Leading by Example focuses on reducing the company’s environmental footprint. The Gigaton Challenge focuses on helping customers reduce their footprint. Opportunity for All focuses on uplifting the company’s culture and communities.
3The company’s 2030 Scope 3 target is to reduce product-use emissions by 55% per thermal ton below the baseline year of 2019 by 2030. This target is science-based and verified by SBTi.
[For more from the authors on this topic, see: “How to Deliver on Ambitious Sustainability Commitments.”]
