Sustainability, ESG Reporting, & Your Refrigerant Impact

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Sustainability, ESG Reporting, & Your Refrigerant Impact

Table of Contents:

A Sustainable Climate Isn’t Out of Reach

At the recent COP26 climate summit in Glasgow, Scotland, the news about our current global warming trajectory and greenhouse gas emissions was fairly dire. We’ve already warmed the planet +1.2°C over pre-industrial averages (as of the summit in 2021). The Paris Climate Accord had set a goal for total warming of no more than +1.5°C by the year 2100. That would now mean limiting the next 79 years to only another +0.3°C.

This optimistic goal now seems improbable. Even under a best case scenario — if pledges are kept, targets are met, and everything goes according to plan — warming is projected to reach +1.8°C. If the policies in place today were to remain the status quo and no progress is made, we’d instead be looking at warming of +2.7°C.

The big takeaway here is that the public and private sectors must vastly accelerate our progress towards net zero emissions — or otherwise exceed warming targets by leaps and bounds. It will take a collective and coordinated effort. Only together can we help our businesses, governments, and economies create a more sustainable future.

 

The Environmental Impact of Refrigerants

Corporate sustainability efforts often center around reducing or neutralizing carbon impact, and harmful emissions make up a huge portion of the equation. The NEEP 2021 Summit found that 30% of all carbon emissions in the Northeast, for example, come from buildings. For this and other reasons, it’s critical that we collaborate on ESG (environmental, social, and governance) solutions to reduce emissions from the built environment and curb ozone depletion.

While a lesser known facet of carbon emissions management, refrigerants have an outsized impact. In the U.S., the average refrigerant annual leak rate for equipment older than 6 years is 25%. This is problematic because many of the most common refrigerants in use today are super pollutants with high ozone-depleting potential (ODP) or global warming potential (GWP). There are many classes of refrigerants to consider, including but not limited to the following:

  • Chlorofluorocarbons, or “CFCs”, are the most destructive class and also the original refrigerants. Just a single pound of CFC gas has the GWP of 10,900 pounds of CO2 — the same amount emitted by a typical passenger car in a year. Findings from a recent MIT study suggest that the continued emissions from stored CFCs have a GWP of 9 billion metric tons of CO2. That alone is more than the total GHGs the EU pledged to eliminate by 2030 under the Paris Climate Accord.
  • Hydrochlorofluorocarbons, or “HCFCs,” were a class of refrigerants used to replace CFCs after 1995. These too are highly destructive to the environment, however, and are no longer produced.
  • Hydrofluorocarbons, or “HFCs” came next. Some newer equipment uses these formulations, which do not contain chlorine and are less atmospherically impactful. However, they still have a high GWP and are being phased out. 

While CFCs haven’t been manufactured in equipment since 1995, and HCFCs have not been used since 2010, obsolete equipment is still in service or in storage in many locations, leaking these chemicals into the atmosphere. Remaining stockpiles of cylinders and canisters containing CFCs also remain a major threat. Short-lived pollutants (including hydrofluorocarbons) account for up to 45% of current global warming.

 

Refrigerant Management, Drawdown & Destruction

For years, refrigerants like CFCs and HCFCs have given us many modern conveniences. The time has come, however, to retire them from use and ensure they can do no more harm to the ozone. Leaked refrigerants are proven to release more harmful materials into the atmosphere than all commercial airliners combined. 

The most negative impacts can be avoided with proper refrigerant management. Project Drawdown identifies refrigerant management as one of the top solutions for curbing climate change. Success requires a multi-pronged approach, including:

  • Effective ESG reporting
  • An internal culture of urgency around regulatory compliance
  • An earnest effort to reduce leaks
  • Reduced reliance on older refrigerants, which are undergoing mandated drawdowns
  • Successful recycling and destruction of older refrigerants

Destruction Over Recycling

Trakref has always championed the destruction of used refrigerant gases over recycling. Why? The evidence shows that, by and large, recycling has led to further venting (and further global warming). Over the past 27 years in the U.S., in spite of increased ESG reporting and guidance from the EPA, over 10 billion pounds of refrigerants have been vented into the atmosphere — the equivalent of more than 20 billion tons of CO2. 

The simple fact is that reclamation and recycling cannot keep pace with growth in global refrigerant usage. Destruction is clearly the best option, with benefits including reduced need for storage, less uncertainty around where refrigerants end up, and no more surprise mixed-gas fees from batches of recovery cylinders.

By staying engaged and committed to successful refrigerant management, ESG reporting, phase downs, and destruction of old refrigerants, you can contribute to a sustainable climate solution.

The High Impact of Accurate ESG Reporting

Your corporation’s social credit score depends upon positive performance on sustainability audits and climate-related financial disclosures. This matters to your investors, who increasingly seek insights into how your company performs on ESG strategy and sustainability metrics. 

Refrigerants including CFCs, HCFCs, HFCs, PFCs, and others play a substantial role in ESG strategy and reports due to their high impact on climate change. Remember, a single pound of refrigerant is the equivalent of a ton or more of carbon. 

 

Frameworks For ESG Reports

There are several environmental, social, and governance reporting frameworks to choose from as you embark on your ESG reporting journey and decide on the proper climate-related financial disclosures for your business strategy. An ESG framework like the Sustainability Accounting Standards Board (SASB) will require broad reporting, while others, like the Global Reporting Initiative (GRI), will have a specific section for refrigerants (in this case, GRI-305). The SBTi (Science Based Target Initiative) uses another possible ESG reporting framework, although with a weaker overall requirement for “General” emissions tracking. There is also the International Sustainability Standards Board, which calls for high quality, transparent, reliable and comparable reporting.

In any case, refrigerant usage will need to be reported as a part of Scope 1 emissions financial statements, and all companies are expected to record and report all refrigerant usage for sustainable development. Common gaps include refrigerated containers, vehicles, smaller equipment, recently replaced equipment, new installations, and fire suppression systems. Remember, your company is solely responsible for corporate ESG data reporting and omissions — so be careful and complete when reporting refrigerant use, and use proper ESG factors.  

  

Benefits of Accurate ESG Data

The goal should always be to amass “Investor Grade Data” to tell your ESG story, demonstrate your own ESG journey, and show your energy efficiency. Proof of sustainability improves your image and opportunities in the market. The importance of ESG reports to the success of your company in today’s market is hard to understate.

According to Harvard Business Review, external stakeholders like investors and banks are more willing to open the coffers and offer capital investments or loans to companies with strong corporate governance performance in detailed ESG reports with data analytics. Stockholders will use this information to invest…or not invest, since they are interested in responsible investment. Robust, accurate sustainability reports and financial statements can differentiate your company and create meaningful opportunities. ESG information in annual reports is, in a sense, a competitive advantage and just as important as financial performance.

The actual sustainability performance of your company can also improve by incorporating ESG disclosures into your reporting toolbox. If you are able to uncover leaks, implement fixes, focus your attention on identified risks, or improve your sustainability initiatives, you’ll not only please other stakeholders but become more sustainable in the process.

 

Double-Materiality in ESG Reports

The methods that companies use to handle ESG reporting — and the regulations that govern those reports — have changed drastically in the past decade. There has been a gradual convergence between ESG objectives and the broader push for net zero emissions, decreasing environmental impacts, and mitigating climate risks.

The now-critical concept of Double Materiality, for example, was introduced by the EU Commission as a part of the 2019 Non-Binding Guidelines on Non-Financial Reporting Update (NFRD). This concept acknowledges that ESG topics can be “material” in terms of either financial or climate impacts — or both. It also acknowledges that ESG issues represent a combination of risks and opportunities for the company and for the environment. Detailed reporting of Scope 1 emissions will eventually be a requirement under this concept. Read more about Double Materiality and its implications for reporting here.

 

Improving ESG Reporting

A standardized approach to emissions reporting and ESG efforts — across all of your equipment and types of emissions — will go a long way towards a more consistent, accurate, and persuasive ESG report with qualitative disclosures and quantitative disclosures. One of the best ways to keep your ESG report in line is by migrating manual recording processes into more reliable technology solutions. Modern refrigerant management platforms can make ESG data sources and reporting functions easily accessible to all stakeholders, on-site and on-the-go.

Refrigerant tracking and reporting software like Trakref helps to improve your ESG reports in at least 4 ways:

  • Eliminate the delays, guesswork, and potential to lose paper forms
  • Real-time monitoring of key metrics and KPIs for strategic purposes
  • More engagement with streamlined, simplified ways to record and present data
  • Keeps investors well-informed and satisfies growing demand for ESG info

 

Investor Interest in Energy Management & ESG

It wasn’t until the 2010’s that investors really began to pay attention to ESG reporting and sustainability data. Today’s investors are deeply interested in you presenting ESG information and environmental footprint, and may even have a task force on climate. Due to new EPA refrigerant regulations, 2022 is also set to be a turning point year. Energy management and corporate sustainability talks are already heating up in the C-suites of many organizations. Sustainable investing has finally gone mainstream and companies disclose more often.

In other words, it can actually do damage to your company if you aren’t reporting on energy management, usage, and other corporate responsibility initiatives. Tracking energy use — including refrigerants — provides key insights into your company’s carbon footprint. Energy management metrics have grown into a key focus of ESG reporting. 

However, even companies with strong performance too often focus on non-financial information when writing reports. This is not enough to satisfy financial stakeholders, who use ESG & energy management data to decide whether or not to invest in your company. 

So where does this valuable data come from? The voluntary nature of ESG reports and the lack of universal ESG standards for disclosures on issues like energy management can make it hard to figure out where to begin. Recent regulatory changes will push sustainability leaders to elevate and formalize their processes and tracking with emerging energy management software solutions that structure the tracking and reporting process from end-to-end.

 

Recent Regulatory Changes Tied to ESG Emissions

Regulations that are meant to curb gas emissions that harm the ozone, including super-polluting HFC and CFC refrigerants, have been evolving for decades. The Clean Air Act in 1970 and the Montreal Protocol in 1987 laid a lot of groundwork, but the most recent evolutions in the regulatory landscape are sweeping in scope. Here are a few of the developments in the last few years that you should be aware of, as they’ll have heavy implications for strategic planning and reporting on ESG initiatives:

  • The Kigali Agreement (2019) — This update to the Montreal Protocol has made it an even more powerful instrument against climate change. The goal is to reach a reduction in HFC consumption of over 80% by 2047, which could help the planet avoid up to a 0.5 °C increase in global temperature by 2100.
  • The AIM Act (2020) — A part of the pandemic relief package in December 2020 was a bipartisan set of energy provisions that included the AIM Act. It provides the EPA with new regulatory authority to address HFC refrigerants for environmental stability. The AIM Act introduced an official phase down in production and consumption of HFCs as well as programs and policies around managing HFCs and transitioning to next-gen technologies.
  • Phase 2 of AIM Act (2021) — The second phase of the AIM Act began in late 2021 and involved a number of updates and changes to the regulatory process. SNAP 20 & 21 restrictions as well as Section 608 requirements for all HFC’s have been reinstated. This will mean your company is expected to track leak inspections, fix leaks, document repairs, calculate annual leak rates, and include them on every transaction or invoice. CARB’s New R4 Program could also play a large role in this phase.

Overall, the push is for a greater focus on draw downs and phase outs of harmful GHGs coupled with more detailed and formalized tracking and reporting of all emissions. 

 

Sustainable Management of Refrigerants With ESG Software

At Trakref, we believe that technology is the solution to many of the environmental and regulatory challenges faced by sustainability leaders. We’ve worked hard to create ESG reporting solutions that support the needs of corporate sustainability goals and sustainability audit questions. 

These tools are easy-to-use for executives, HVACR technicians, and sustainability personnel alike. By making them accessible and intuitive, Trakref’s ESG software helps you to limit emissions and meet your sustainability goals while also satisfying investors who want to see detailed ESG reports.

Among other solutions, Trakref can help you to:

  • Meet ISO 14001 and other requirements (ISO 14064, GRI, LEED, and more)
  • Achieve impactful corporate social responsibility goals
  • Streamline environmental reporting and tracking
  • Reduce your regulatory tasks
  • Provide immediate access to audits and validations
  • Set and manage goals across all your operations

Your team will have access to standardized reports and push-button audit convenience that change the game for reporting on ESG and sustainability metrics.

Our comprehensive refrigerant management system includes three individual solutions that work together to help you protect our environment from harmful refrigerants.

  • Trakref V3: Technicians can use Trakref V3 to quickly and easily enter and track all service tickets, supporting compliance and ESG success. Clear, step-by-step guidance, improves engagement, accuracy, and ESG outcomes.
  • Trakref Pro: This digital refrigerant journal helps the whole team maintain clear and complete records. Detailed tracking of all gas & cylinder related data, streamlined with bar code readers, maximizes your proof of ESG performance for your investors.
  • SF6 Compliance With Trakref: Our compliance management software helps your organization to acutely track usage, calculate leak rates, and meet numerous regulatory requirements (such as EPA 608 and CARM RMP). Use it to track ESG performance and unlock valuable insights into how to improve your company’s sustainability initiatives. 

The environmental management of refrigerants has never been so simple. Trakref has leveraged more than 25 years of refrigerant management experience to bring the best possible solutions to the table for ESG reporting and refrigerant management. 

 

Join the Refrigerant Geek Community

Our team of refrigerant geeks has helped firms to track hundreds of millions of pounds of gas. We invite you to join us in The Billion Ton Challenge with free HVAC/R training and resources. 

You’re also welcome to join our community of like-minded sustainability and ESG reporting professionals. We regularly share information about how to become more sustainable in your refrigerant management practices on our blog  and offer live events and helpful resources through the Refrigerant Geek Academy.

Interested in a best-in-class solution for ESG reporting and refrigerant management? Schedule a free 15-minute consultation with a Refrigerant Geek to learn more about the Trakref platform and how it can help you contribute to a more sustainable environment.

If you’re interested in attending an upcoming event or webinar, reserve your spot now at the bottom of this page.

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