Trane Technologies Ties ESG Metrics to Executive and Employee Compensation as it Accelerates Bold 2030 Sustainability Commitments

The company's revised annual incentive plan, which starts this year, holds top executives and thousands of senior leaders accountable for meeting the company's ambitious social and environmental sustainability goals. In addition to tying leaders' annual cash incentives to ESG metrics, all salaried employee performance plans now must include at least one goal tied to the company's 2030 sustainability commitments.

"We are leading with a bold purpose to challenge what's possible for a sustainable world, and have embedded leading environmental, social and governance practices into our strategy and operations," said Mike Lamach, Trane Technologies chairman and CEO. "Solving major global challenges like climate change and creating a more diverse and inclusive workplace requires courage, innovation, and accountability. Having everyone pull in the same direction toward our sustainability goals reinforces the right behaviors and decision-making to build a sustainable future for our customers, communities and the planet."

The annual incentive plan for leaders, historically based on financial performance metrics, now also includes an ESG factor based on several sustainability metrics, which alone could decrease or increase leader incentive payments by up to 20 percent.

Employees' performance rating and annual merit increase above base compensation are affected by their performance on sustainability objectives, as well as other business goals. "Everyone plays an important role in our shared purpose as a climate innovation leader," said Lamach.

The ESG factor in the annual incentive plan for leaders connects to the following three categories:

The Gigaton Challenge (Scope 3 Emissions)

Trane Technologies' Gigaton Challenge is aimed at reducing customer carbon emissions by a billion metric tons. This will require reducing emissions from products and services by nearly 50% by 2030, an ambitious target that has been validated by the Science Based Targets initiative (SBTi). The incentive plan includes an annual greenhouse gas reduction target toward the gigaton goal.

The company has made significant progress against its Gigaton Challenge, as reported in its annual ESG report, "Bold Action for a Sustainable Future," released last week. In 2020 the company reduced customer greenhouse gases on track with its gigaton goal through sustainable innovation for heating and cooling buildings and transportation of food, medicines and vaccines.

Trane Technologies also has joined the United Nations Framework Convention on Climate Change (UNFCCC) Race to Zero international campaign for a healthy, resilient, zero-carbon recovery.

Leading by Example (Carbon Neutral Operations)

The incentive plan also includes an annual target in support of the company's "Leading by Example" commitment to achieve net-carbon neutral emissions across its global footprint by 2030.

In 2020, the company made progress toward this goal, including meeting 39% of its electricity demand with renewable energy and achieving significant carbon savings from operational efficiencies and returnable packaging projects.

Opportunity for All (Gender, Racial and Ethnic Diversity)

In addition, the incentive plan includes an annual target for increasing women in management roles globally, and a target for increasing racial and ethnic diversity in the U.S. salaried workforce. These goals support the company's "Opportunity for All" 2030 commitments to achieve gender parity in leadership, workforce diversity reflective of our communities, and community initiatives that support equitable education and pathways to green and STEM careers. The company has made strides toward its diversity goals, with leadership positions held by women at more than 2x the average for S&P 1500 companies.

To accelerate progress in this area, the company was the first in its industry to join Paradigm4Parity, a business coalition to close the gender gap in corporate leadership. Trane Technologies is also a founding member of OneTen,a corporate coalition that aims to upskill, hire, and advance careers for Black Americans.

In addition to measuring results on the specific annual targets, the Compensation Committee of the Trane Technologies Board of Directors will assess the company's overall accomplishments on Environmental, Social and Governance leadership and the degree to which the company has met, exceeded or fallen short of expectations.

To read Bold Action for a Sustainable Future, or learn more about Trane Technologies' 2030 Sustainability Commitments, please visit our 2030 Sustainability Commitments website page.

About Trane Technologies

Trane Technologies is a global climate innovator. Through our strategic brands Trane and Thermo King, and our environmentally responsible portfolio of products and services, we bring efficient and sustainable climate solutions to buildings, homes, and transportation. Learn more at tranetechologies.com.

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