Viewpoint - 04/07/2023

The ESOS deadline has been extended - but is there a better approach?

In our latest viewpoint, Stephen Clayton in our ESG & Sustainability team questions whether ESOS is the best solution for recording and reporting energy data.

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The phase 3 deadline has recently been extended to 5th June 2024 to allow more time for lead assessors. However, many organisations are still likely to leave it to the last minute. All businesses who qualify for the government’s Energy Savings Opportunity Scheme (ESOS) must submit their information or face penalties for non-compliance.  

About 10,000 UK organisations meet the qualification criteria for ESOS - a mandatory energy auditing and assessment scheme. This covers about 200,000 buildings across the UK. Landlords are expected to record and report energy data, as well as carry out surveys that include recommendations to reduce energy use.

Landlords might be doing this anyway, but appointing in-demand lead assessors needed to carry out an audit takes time and planning. Many organisations still underestimate the time and availability of lead assessors to carry out this type of project across a large portfolio. 

Now is the time to act. We are often asked to step in at the eleventh hour to help a company create its submission, which we are happy to do. But it is much more preferable to work with a business to create a considered submission without the panic of last minute measures and analysis. 

Is ESOS the right initiative? 

Deadline aside, this is Net Zero Week. It’s an opportune moment to discuss whether ESOS is giving organisations the right approach. 

Today, there are many disclosure frameworks and acronyms that more resemble an alphabet soup. Their ultimate aim is to help businesses reduce carbon emissions and demonstrate transparency that they have done so. Sometimes it’s hard to see the wood for the trees. There’s an argument for consolidating these disclosures and initiatives.

Most organisations now accept the need to reduce carbon emissions, or at least accept the fact legislation asks them to. They are less accepting of the need to report progress to multiple organisations using multiple frameworks.

A further argument to reduce options is that there is currently a lot of crossover between schemes. Businesses find themselves duplicating their reporting, demonstrating the same details about their carbon savings in different formats. 

Consider ESOS and ISO 50001, the global standard for energy management. There is so much crossover between the two that if an organisation qualifies for ESOS it may as well gain the standard. DECs and EPC level 5 reports also cover dynamic energy modelling and recommendations to improve certification level albeit these are valid for 10 years and for larger properties. The team will have already done the hard work, demonstrating a similar level of continuous improvement and governance around energy saving.

Consolidation in schemes is perhaps inevitable with so much overlap, as industry pressure for it will increase as initiatives continue to be launched. The Greenhouse Gas (GHG) Protocol Standard is now the widely accepted method of reporting carbon emissions which is used for a variety of global frameworks and mandatory schemes. 

Globally, we are already seeing consolidation of various institutions, frameworks and initiatives as they mature, which gives greater standardisation and transparency to stakeholders and investors. Take the merger of The Value Reporting Foundation’s with the Climate Disclosure Standards Board to become the International Sustainability Standards Board. Hopefully, the UK will see some consolidation of various mandatory frameworks to become more streamlined and not increasingly complicated for businesses.

The first steps to reducing emissions 

In short, meeting several frameworks is time consuming and not necessarily productive. Efforts put into conforming to different or competing initiatives and certifications could be better spent strategising about how a business can reduce its scope 1 and 2 emissions and deliver on those solutions. 

Many large organisations have a target to reach net zero by 2050, while others have committed to ambitious roadmaps towards that goal. This should be the encouragement a business needs, rather than the need to comply. There are many opportunities for a property owner to reduce emissions. 

One option is for landlords and property owners to carry out a deep retrofit. Energy performance certificates will soon require commercial buildings to be rated B or above by 2030; for many properties, that will take a significant amount of investment. 

There is an opportunity to invest in technology that helps drive down emissions. Monitoring tools that facilitate more efficient use of space, for example, or smart technology that limits the use of light and heating to what is really needed. 

ESOS will expand

Whether or not a large organisation is involved in another certification, scheme or initiative - or is looking to reduce emissions generally - the deadline for the third phase of ESOS will rapidly approach. If you haven’t derived a plan to collect the data you need, start thinking about it now.

The scope of ESOS is likely to expand in the next phase 4 with the use of net zero elements in the audits, which will add more value to these schemes. If medium-sized enterprises are included, it will be possible to understand carbon emissions in a supply chain, for example. It will facilitate the measurement of the GHG Protocol-defined scope 3 emissions more accurately if the scope 1 & 2 data is widely available in your supply chain. 

This will have knock-on benefits, as disclosing scope 3 emissions is currently voluntary in Streamlined Energy and Carbon Reporting. It represents the majority of an organisation's emissions and is a beast to tackle due to the poor data currently available. Hopefully with this expansion, this would become a mandatory requirement so scope 3 can become more granular and managed more effectively. 

If you need support getting your submission ready for next June, our team is on hand. We can work with you to collect data and present it in the right format. 

And while we’re doing so, let’s have a chat about the wider area of carbon emissions. There may well be an opportunity to lobby the industry, government and associations to slim down the range of certifications on offer, to find a streamlined way to see who is really making headway towards net zero emissions. 


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