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Supply Chain Transparency & Performance

Partnering with suppliers

who share our

sustainability goals

Key Stats

100%

direct material spend assessed for risk quarterly

0

suppliers identified as having negative environmental or social impacts in our supply chain

50%

reduction of logistics dwell time in North America in 2021

GRI 103-1, 102-9

Trane Technologies is a global company with a broad product and service portfolio. Our brands bring sustainable, efficient heating and cooling solutions to buildings, homes, and transportation. All of our manufacturing facilities are located across several countries and we ship products to customers globally.

We source raw materials from more than 25,000 suppliers across the globe. In 2021, our combined annual spend was $8.6 billion for direct and indirect suppliers. We work systematically to ensure that our suppliers share our values and continually improve their environmental and social conditions for the benefit of local communities and our entire planet.

Risk Assessment Process

We assess our supply chain for risk on an ongoing basis through our enterprise and category risk assessment processes. These processes help us assess for risks related to quality and supplier dependency using numerous data, including third-party data from Dun & Bradstreet and Amber Road (critical listing and sanctions). In 2021, 100% of our direct material spend was assessed for risk every quarter. For more information about risk factors associated with our supply chain, see page 14 of our Form 10-K.  

GRI 103-3, 308-1, 308-2, 414-1, 414-2

Trane Technologies uses our On-Site Assessment (OSA) audits to evaluate sustainability and business continuity risks on a supplier-site specific basis. A team of nine engineers manages the OSA process. Evaluated risks cover several categories including quality management, environmental protection, human rights, labor relations, cyber security, product & safety compliance, and sub-supplier management. Approximately 28% of the OSA focuses on ESG-related topics. Our engineers complete and review these audits on a rolling basis, and every three years, we evaluate approximately 1,200 of our existing suppliers with an OSA. We evaluate all new direct suppliers using an OSA; suppliers must receive a minimum score of 80% to do business with us. In 2021, 209 suppliers, making up about 93% of our direct material spend, were evaluated. None were identified as having significant actual or potential negative impacts on the environment.

Supply Chain Assessments

Supply Chain Assessments
2019
2020
2021
Direct material spend subject to On-Site Assessments
86%
69%1
93%
Direct material spend assessed on a quarterly basis for risk
100%
100%
100%

1Due to COVID, we were unable to go on-site to conduct many of the planned OSAs.

Procurement Process

Our Global Procurement leadership team, led by our Senior Vice President Supply Chain and Operational Services, designs and oversees our strategic sourcing process so that Trane Technologies receives the highest quality goods and services possible while rewarding and supporting suppliers who operate ethically and sustainably. In 2021, we formalized our procurement practice into a Sustainable Procurement Policy that we will continue to enhance in the coming months and years.

During supplier selection, we use an innovative supplier decision matrix that empowers our procurement officers to consider not only price, but also a range of ESG factors such as supplier diversity, sustainability, quality, and risk in their decision. A cross-functional team determines the weight of each factor within the matrix based on the type and criticality of ESG to the purchase. 

We also maintain a Preferred Supplier Program through which world-class suppliers receive additional growth opportunities while helping us build a supply base aligned with our core values. We streamlined the criteria for becoming a preferred supplier into five categories, including sustainability expectations and consistent reporting on sustainability metrics. At the end of 2021, 35% of direct spend was with preferred suppliers.

Logistics

At Trane Technologies, we work to optimize our logistics from beginning to end to create best-in-class efficiencies in terms of carbon footprint, cycle time, labor, and visibility. Various technologies allow us to optimize delivery routes and track shipments in real-time to monitor disruptions and minimize the time spent by drivers waiting at our facilities to pick up or deliver products. In 2021, we have reduced this dwell time by 50% for dedicated truck routes in North America.

We participate in freight marketplaces that use machine learning, automation, and other software services to identify real-time available capacity and efficiently connect shippers and domestic carriers to reduce transportation costs. SmartWay carriers ship many of our products, achieving a 10% reduction in emissions per mile by using the most advanced fuel-saving technologies available. We also partner with ocean freight providers who use sustainable marine fuel, which reduces GHG emissions up to approximately 19%.

For our residential business, we transitioned from using the services of one-way carriers to a dedicated fleet. In this transition, we improved truck utilization and used optimized routes, which resulted in a 10 to 15% reduction in fuel consumption and near 100% on-time performance. Since implementation, the Dedicated Carrier Program reduced miles driven by empty trucks by 16%, representing an average of 211.36 metric tons of avoided CO2.

Achieving Shared Sustainability Goals with Suppliers

The Trane Technologies Business Partner Code of Conduct (BPCoC) communicates our expectations that suppliers operate ethically at all times. The BPCoC is written and approved by legal and procurement leadership and all policies are approved by Global Procurement leadership. The BPCoC is part of our standard terms and conditions, and we require all new suppliers to agree to it for our onboarding standard work. The BPCoC covers ESG topics and is aligned with the UN Universal Declaration of Human Rights. We expect that all suppliers operate with full compliance themselves, as well as hold their own suppliers to the same high standards. Compliance with the BPCoC is measured during the OSA process.

In addition to adhering to the ethical operating principles outlined in the BPCoC, we ask suppliers to strive toward the goals outlined in our Trane Technologies Supplier Sustainability Expectations for the benefit of our customers and the environment. We manage supplier EHS and sustainability data through Benchmark ESG/GensuiteTM, a reporting platform that provides visibility into supplier performance against our standards. At the end of 2021, 100% of preferred suppliers were enrolled and 33% were successfully reporting through the platform. Recognizing that sustainability is a journey, we actively assist our suppliers to apply best practices in resource conservation, packaging, and other topics listed in our expectations; we offer trainings and workshops designed by in-house experts based on the need and interest of our suppliers. We also meet with suppliers regularly to help them understand their OSA score, develop action plans for improvement, and consider them for our Preferred Supplier Program.

Read about our supplier diversity.

Conflict Minerals Statement

Trane Technologies seeks to responsibly source conflict minerals, as defined by the U.S. SEC, and avoid supporting armed groups causing human rights violations. We expect our suppliers to do the same. Currently we use the standard Electronic Industry Citizenship Coalition/GeSI template to survey suppliers and require them to provide sufficient data on their own operations and that of their suppliers, including supporting due diligence records, conflict minerals compliance policies, and evidence of the origin of any conflict minerals contained in products supplied to Trane Technologies.

On an annual basis, we conduct reasonable country of origin inquiries (RCOI) about the minerals specified by Rule 13p-1 of the Securities Exchange Act of 1934, as amended (Conflict Minerals Rule) that are necessary to the functionality or production of products manufactured by the Company. Through due diligence, we identify the source and chain-of-custody of conflict minerals using the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (OECD Framework). Read more about our approach to conflict minerals.