A manufacturer of industrial cleaning equipment might not be the first company that comes to mind when seeking a typical socially responsible investment. But Tennant is not a typical company. With products that reduce the need for harmful cleaning agents and plastics and aggressive CO2 emissions reduction targets set for 2030, Tennant has made sustainability a key element of its strategic planning and product development.
In fact, Tennant scores within the top 7% in the Electrical Equipment and Machinery peer group with the Carbon Disclosure Project, receiving a Leadership Score of A- compared to a sector average of D. As the largest global player in industrial cleaning equipment (with 20% market share), this level of climate and environmental responsibility can have significant impact. Tennant is currently working on 19 emissions reductions projects totaling 1,185 of CO2 reductions and 2,850 of renewable energy generation. This has not only allowed the company to set targets of 25% scope 1 and 2 emissions reductions for 2030, compared to a 2016 baseline (scope 1 emissions are generated directly by the company; scope 2 are generated through purchased energy sources); it already drove a 6.3% reduction from 2016 to 2017.
But Tennant is not only a leader in its focus on emissions reductions and energy use; Tennant’s product strategy also targets reduced environmental impact. Tennant offers a technology in its scrubbers called ec-H2O Nanoclean that electrically converts water into a chemical-free, “nanobubble” cleaning solution, as well as a technology called “Orbio” that uses the electrolysis of tap water and salt to produce both a cleaning and microbial solution. Both products improve the health and safety of Tennant’s customers and the spaces they use, and can even help with LEED building certification.
Finally, Tennant gets high marks for corporate responsibility and ethics, with Corporate Responsibility Reports (CSRs) published since 2009–an unusual track record for a company of its size ($1.2B market cap). Tennant’s 9-person Board has 8 independent directors and 3 women directors, and the company targets 3-4% of its annual spending on R&D, reinvesting in products that provide health and safety benefits to people and reduce environmental impact.
Our bottom line on Tennant’s ESG profile results in extremely high marks. With a strong balance sheet and cash dividends paid for 74 years, there’s a lot to like about Tennant.