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What Does GHG Stand For? (And How Does it Relate to ESG?)


Greenhouse gas emissions from smokestack

If you’ve learned anything while researching sustainability reporting, it’s that this is a field in love with acronyms. You’ve got ESG for Environmental, Social, and Governance and CDP for the Carbon Disclosure Project. DEI for Diversity, Equity, and Inclusion and SDGs for Sustainable Development Goals.

And then there’s GHG. GHG refers to those greenhouse gasses that get mentioned everywhere from news headlines to government policy to boardrooms.

But what are GHGs exactly? Where do we find them and how do they get reported? For something that gets talked about a lot, they’re usually vaguely understood until you’re faced with having to count them.

What Does GHG Mean?

Greenhouse gas emissions, or GHGs, are a group of gasses that create a greenhouse effect in the atmosphere. They accumulate, trapping heat and reflecting it back to the planet’s surface. This additional heat is absorbed in land and particularly in water, creating an overall increase in global temperatures over time.

When we talk about GHGs, we’re referring to four different gasses and gas groups. These are:

  • Carbon dioxide – this is a byproduct of burning organic material and is of particular concern when burning fossil fuels like oil and natural gas. It can be absorbed by plants through photosynthesis.
  • Methane – methane is a byproduct of coal, oil and natural gas production, as well as livestock and agricultural activities. It’s also emitted from landfills as waste breaks down.
  • Nitrous oxide – nitrous oxide is emitted as part of agricultural and industrial activities, as well as during the burning of fossil fuels, solid waste, and during wastewater treatment.
  • Fluorinated gasses – unlike the other GHGs, fluorinated gasses are synthetic. They include hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride and nitrogen trifluoride. They are released as a by-product of various industrial processes, and while less commonly found than the other GHGs, have a much higher warming potential.

Why Do GHGs Matter?

Many GHGs are naturally occurring, and in fact they play an important role in helping to retain heat for the planet. The reason they get talked about so much now is that the amount of GHGs being released today from human-led activities vastly outpaces naturally occurring releases and the planet’s ability to absorb them. That’s leading to climate change.

The amount of carbon dioxide in the atmosphere has increased by 30% in the last 60 years, with the largest sources in Canada coming from oil and gas production, along with electricity generation and heavy industry. Left unchecked, those emissions will continue to accumulate and cause worldwide temperature increases, which will further lead to extreme weather events and disasters like hurricanes and wildfires. 

In fact, the climate crisis is already happening. Even if businesses were to cut their GHGs to zero tomorrow, the carbon dioxide in the atmosphere stays there for anywhere from 300 to 1000 years. It’s too late to stop the warming, but reducing emissions will slow the increase and help prevent future catastrophes.

Who Has to Report GHG Emissions?

The requirements for GHG reporting vary by jurisdiction. In Canada, annual GHG reporting is required by industries that emit at least 10 kilotonnes of carbon dioxide equivalent (also called CO2e) as well as manufacturers that include:

  • Aluminum Production
  • Ammonia Production
  • Base Metal Production
  • Cement Production
  • CO2 Capture, Transport, Injection or Storage
  • Electricity or Heat-Steam Generation
  • Ethanol Production
  • Hydrogen Production (Refineries or Stand-Alone)
  • Iron and Steel Production
  • Lime Production
  • Mining
  • Nitric Acid Production
  • Petroleum Refineries
  • Pulp and Paper Production

In the United States, the GHG Reporting Program, or GHGRP, is an annual initiative that targets 41 different sectors in the mining, natural resources and manufacturing industry. Generally, reporting is required where these facilities emit more than 25 kilotonnes CO2e each year. 

The term CO2e creates some confusion among reporting businesses, since they have to report on more than just their CO2 emissions. Not all GHGs are created equal. Carbon dioxide is more abundant and stays in the atmosphere longer than the others, but methane, nitrous oxide and the fluorinated gasses retain more heat. As part of GHG emissions calculations, totals are adjusted for Global Warming Potential (also called GWP) to better assess their overall climate impact.

In addition to federal GHG reporting programs, businesses may find they are subject to reporting at the state or provincial level, or that they have to calculate GHG emissions as part of a voluntary ESG program. While they are not legally required to implement an ESG program, it may be a condition of doing business with certain investors and customers.

How Does GHG Reporting Relate to ESG?

ESG reporting includes a whole host of elements under the umbrellas of environment, social and governance. The environmental component of ESG reporting includes GHG emissions, in addition to things like waste management and water stewardship.

Estimating GHG emissions is not as simple as looking at a business’s utility bills for the past year. Calculations use published emission factors that are specific to individual industrial processes and activities. 

In addition, while federal GHG reporting programs typically look at direct emission sources related to production and fuel combustion, reporting GHGs as part of an ESG program often considers indirect emissions up and down the supply chain, as well as financed emissions across a portfolio. Climate accounting data needs to be pulled from multiple sources, will often come in different units, and needs to be updated on an annual basis.

Looking for a GHG Management Platform?

Whether you’re looking to meet federal GHG reporting requirements or you’re building a comprehensive ESG program, calculating GHG emissions and keeping them up to date can be labor intensive and time consuming. A platform like FigBytes can help streamline your data collection and simplify updates in the future.

Using FigBytes, data can be populated directly from the source using internet-of-things (IoT) integrations, converted into standardized units, and run through published emission factors to determine your overall carbon footprint.

If you need platform support in your GHG reporting, learn more today about what FigBytes can do.

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