ESOS Compliance and SECR Support

The  ESOS (Energy Savings Opportunity Scheme) and SECR (Streamlined Energy and Carbon Reporting) are both Government regulatory frameworks aimed at promoting energy efficiency and reducing carbon emissions, but they have different focuses and requirements.

• SECR, on the other hand, focuses on carbon emissions as well as energy consumption. It requires eligible organizations to report on their energy use, greenhouse gas emissions, and energy efficiency measures annually in their Directors’ Report.
• Unlike ESOS, SECR applies not only to large companies but also to unquoted companies and LLPs (Limited Liability Partnerships) meeting specific criteria, making it applicable to a broader range of entities.
• SECR integrates pre-existing carbon reporting requirements with additional elements related to energy efficiency, creating a more comprehensive reporting framework.

• Focus: ESOS focuses primarily on energy use and efficiency, while SECR covers both energy and carbon emissions.
• Frequency: ESOS requires energy audits every four years, whereas SECR mandates annual reporting of energy use and carbon emissions.
• Applicability: ESOS applies specifically to large UK-based enterprises exceeding energy consumption thresholds, while SECR applies to a broader range of entities, including large companies, unquoted companies, and LLPs meeting certain criteria.

While both schemes aim to encourage energy efficiency and carbon reduction, they serve slightly different purposes and have distinct requirements. However, there’s an opportunity for companies to streamline their efforts by integrating compliance activities where possible, thereby reducing duplication of work and costs.

ESOS, or the Energy Savings Opportunity Scheme, is a mandatory energy assessment scheme in the UK aimed at reducing energy consumption and improving energy efficiency in large businesses and organizations.

• Qualifying organizations are required to conduct energy audits over a 12-month period once every four years during each compliance phase.
• These audits aim to identify opportunities for energy savings and efficiency improvements within the organization’s operations, buildings, and transportation.

• Companies registered or based in the UK or with a UK establishment.
• Employing 250 people or more, or having an annual turnover in excess of £44 million and an annual balance sheet total in excess of £38 million.
• Small and medium-sized enterprises (SMEs) and public-sector bodies are generally exempt from ESOS.

• The UK Government has confirmed the introduction of Phase 4, expected to align ESOS thresholds with the Streamlined Energy and Carbon Reporting (SECR) framework.
• Phase 4 will focus on energy efficiency and net zero goals, with requirements for net zero plans and increased clarity on audit standards and reporting.

• Organizations can seek assistance from ESOS consultants to navigate the scheme’s requirements, including data collation, energy audits, report preparation, and compliance verification.

• Failure to comply with ESOS deadlines can result in fines, including a basic fine of £50,000 plus additional daily fines up to a maximum of 80 days.

Overall, ESOS aims to drive energy efficiency improvements and help organizations achieve carbon and cost savings, contributing to the UK’s target of reaching net zero emissions by 2050. Compliance with ESOS requirements is essential for eligible organizations to avoid penalties and contribute to national sustainability goals.

SECR, or the Streamlined Energy and Carbon Reporting framework, is a regulatory framework in the UK aimed at enhancing environmental reporting and increasing transparency regarding energy consumption and carbon emissions.

• SECR was introduced on 1 April 2019 to broaden the scope of energy and carbon reporting, making it mandatory for more UK businesses to report on their energy usage and carbon emissions.
• The objective of SECR is to put green credentials into the public domain, promote environmental transparency, and help organizations achieve the benefits of environmental reporting.

• Approximately 14,000 organizations across the UK are required to comply with SECR.
• Quoted companies of any size already obliged to report under mandatory greenhouse gas reporting regulations.
• Unquoted UK registered companies and large Limited Liability Partnerships (LLPs) meeting certain criteria.

• Establishing a solid environmental reporting framework involves principles such as ensuring relevance, accuracy, completeness, consistency, comparability, and transparency of reported data.
• There is no prescriptive methodology with SECR, but organizations must adopt a methodology suitable for their business needs to facilitate efficient and comparable reporting in future years.
• Businesses must report on what actions they have taken during the year to cut energy uses and emissions, but does not expect them to mention any planned or possible future actions.
• Businesses are required to include at least one energy “intensity ratio” comparing units with other metrics such as units of production.

• SECR reports are included in an organization’s annual accounts submitted to Companies House.
• The Conduct Committee of the Financial Reporting Council monitors compliance, and non-compliance may result in penalties, including rejection of the report and fines for late compliance.

Overall, SECR aims to drive environmental transparency, encourage energy efficiency, and support organizations in their efforts to reduce carbon emissions and contribute to the UK’s target of becoming carbon neutral by 2050. Compliance with SECR requirements is crucial for eligible organizations to fulfill their reporting obligations and avoid penalties.