Driving Business Value: Embracing Circularity

This article is authored by Jenelle Shapiro, Sustainability and Circularity Leader, Trane Technologies.

We live in an era where finite materials and critical resources are being depleted at an alarming rate. To ensure the long-term health of our business and a thriving planet, we need to rethink how we leverage our limited resources while reducing our emissions. But how do we achieve that goal? Enter circularity – a system designed to maximize the functional life and value of products and materials while tackling climate change and biodiversity loss.

At Trane Technologies, we’ve embarked on a pioneering journey to build circularity into the core of our business, implementing circular systems throughout our value chain to drive innovation and impact at all levels.

By rethinking traditional design and production processes, we’ll spark the development of new materials and technologies. By expanding our internal systems and external supplier processes for material repurpose and repair, we’ll safeguard the environment and our supply chain. And by integrating circular systems throughout our operations, we’ll create improved business models that deliver long-term value.

A circularity definition

At its highest level, circularity is a system that maintains the value and usability of products, materials and resources for as long as possible while minimizing waste. To achieve this goal, we source products, equipment and materials efficiently and preserve their value to the fullest extent by reusing, redistributing, remanufacturing or recycling.

By embracing circularity, we’re creating a business ecosystem that is both more resilient and less carbon-intensive. The result? A future where the full transition to a circular economy helps scale profitability.

Six key circularity pillars

Our circularity strategy focuses on six key pillars that touch every stage of our value chain, from initial product design to end-of-life.

• Sustainable & circular design: We plan for the full equipment lifecycle during the product design stage, creating systems that are easily repaired, refurbished or recycled.
• Material selection: As we select materials, we prioritize those with low environmental impact, incentivizing a circular and sustainable supply chain.
• Maintain, prolong, share: We keep products and materials in use by maintaining them to extend their useful life while minimizing upgrades and unnecessary replacements.
• Reuse, redistribute: We use products and components multiple times for their intended purpose without significant modification, conserving valuable resources.
• Remanufacture, repair: Instead of disposal, we return our products or components into good working order by prioritizing upgrades, repairs, refurbishments or replacements of disassembled parts.
• Recycle: Whenever possible, we transform our scrap and end-of-life products back into their base materials to reprocess them into new products, minimizing waste and maximizing material quality and value.

Measuring impact: our circularity goals and key performance indicators 

Our primary goal is to increase our circularity capabilities throughout the business and reduce embodied carbon in our products and operations. Achieving this will help us reduce waste, conserve resources and create shared value with our customers and suppliers.

These circularity approaches will help us achieve our bold 2030 Sustainability Commitments - specifically our targets to reduce embodied carbon in our products by 40%, increase circularity in our systems design and send zero waste to landfills.

We’ve created several key performance indicators (KPIs) that will help us stay on target, including measuring the use of circular materials, tracking circular services and solutions and quantifying our greenhouse gas emissions impact. These high-level indicators are designed to help teams across our business set their own specific circularity targets to drive a circular transition at deeper levels of the organization.

Walking the walk: our circularity strategies, tools and resources

From design concept to end-of-life, our circularity strategies touch every facet of our value chain. Our core strategies include:

• Increasing our ability to integrate circularity considerations during the product design phase, integrating repairability, ability to remanufacture and recyclability from day one
• Reducing use of virgin, primary material while increasing and optimizing use of secondary, recycled or renewable alternatives
• Incentivizing suppliers and third-party organizations throughout our value chain to reuse, repair and remanufacture whenever possible

To implement these strategies, we’re facilitating cross-functional collaborations within our organization and outside collaborators. Internally, 19 leaders representing every Trane Technologies business and region serve on our Circularity Council, working to align our sustainability goals with our business strategies. Many more participate in our circularity working groups, breaking down silos and barriers across our organization to implement the most impactful activities and business models.

Externally, we’re working with key suppliers to create reverse logistics models and extend their remanufacturing capabilities. In addition, we’re collaborating with industry alliances like the REMADE Institute and the Remanufacturing Industries Council, and engaging with coalitions that facilitate stakeholder and policy engagement, like the Circular Economy Coalition, the World Economic Forum and the World Business Council for Sustainable Development.

We’re also giving teams across our business concrete tools and resources to make progress and measure their impact. In 2024, we conducted a groundbreaking circularity maturity assessment, evaluating our entire business to assess what we are doing well today and where we want to scale tomorrow. This resource will serve as our baseline, helping us measure our progress.

Innovative new tools, like our Design for Sustainability and Circularity (DfSC) module, will help us leverage design as a mechanism for change. By utilizing the DfSC tool, business teams - including product management, engineering and operations - are expected to make design decisions reflective of both quantifiable and actionable product-level decisions.

Circularity outcomes: reducing emissions for our business and our customers 

The circularity work we do around resource efficiency, waste reduction and product life reduces our upstream and downstream Scope 3 emissions as we transition our business to a circular economy. For example, rethinking our product design may reduce our raw material needs. Using scrap waste at our facilities or integrating remanufactured or repaired components into our products decreases reliance on virgin inputs.

Our circularity work also helps our customers reduce their Scope 3 emissions by addressing the indirect emissions throughout the lifecycle of the products they use. For example, equipment containing recycled content, recovered components or remanufactured parts decreases these emissions. Design for durability and repairability helps reduce new material needs. Our support with asset recovery at end-of-life helps minimize disposal emissions.

Implementing these innovative circular systems will require hard work, investment and shifts in both our way of thinking and our business processes. But this hard work will create value in multiple ways. The beauty of circularity is that it’s not an “either/or” proposition: integrating these practices into our core business operations will achieve better environmental and better business outcomes.