The Energy Saving Opportunities Scheme (ESOS) and Streamlined Energy and Carbon Reporting (SECR) exist to improve awareness of what impact energy consumption and carbon emissions have on the environment. In this blog, Boxfish have detailed the differences between ESOS and SECR.
So what is the difference between ESOS and SECR? ESOS and SECR have different purposes related to reducing business’ impact on the environment. ESOS measures a business’ energy consumption, providing helpful steps to reduce it in their daily tasks. SECR examines a business’ carbon footprint, providing helpful steps to reduce greenhouse gas emissions.
Read on to find out about the differences between ESOS and SECR.
The main difference between ESOS and SECR is their purpose and what they measure. ESOS examines business’ energy consumption and provides recommendations on how to reduce the impact on the environment. SECR is more focused on business’ carbon emissions, again to reduce negative impact on the environment.
There are different requirements for businesses to qualify for each scheme, including annual turnover and balance sheet, however the number of employees is the same for both. The compliance deadlines work differently for both; ESOS has a strict deadline for submission and compliance, while SECR does not rely on strict deadlines. Instead, businesses must submit a compliant SECR report as part of their annual accounts.
Below we have included a detailed everything you need to know about ESOS and SECR, including the requirements and how often they happen.
The Energy Saving Opportunities Scheme (ESOS) is an important step in minimising energy consumption in the UK. Every business has a responsibility to reduce the amount of energy they consume, however companies only have to complete a mandatory ESOS assessment if they meet the requirements.
During the assessment, an auditor will review the last 12 months of your business’ energy data combined with site surveys. A requirement of the ESOS assessment is that 95% of your business’ total energy usage data is assessed; this can be split into different sites and sectors of the organisation. Larger businesses will of course consume more energy than smaller businesses, especially if they have heavy machinery usage or require a lot of transport of employees and equipment.
Individual businesses will qualify for an ESOS assessment every 4 years if the following criteria are met, or if they are part of a larger group of businesses that meets this criteria:
They have 250 or more employees
They have an annual turnover in excess of £44 million and an annual balance sheet total in excess of £38 million
Failure to comply with the rules and regulations, including missing the deadline for submission will result in hefty fines for the business that increase with time. These fines are as follows:
Failure to notify – The initial penalty is up to £5,000 with an additional daily penalty of up to £500 for every working day the company remains in breach.
Failure to maintain records – The initial penalty is up to £5,000 plus a “sum representing the cost to the compliance body of confirming that the responsible undertaking has complied with the scheme”.
Failure to undertake an energy audit – The initial penalty can be up to £50,000 with a daily penalty of up to £500 for every working day that the company remains in breach.
Failure to comply with an enforcement/penalty notice – The initial penalty can be up to £5,000 plus a daily fine of up to £500 for each day the business remains in breach.
False or misleading statement – A penalty charge of up to £50,000.
Although the ESOS assessment is mandatory where businesses meet the requirements, the recommendations provided post-assessment are not mandatory. Your business will however need to identify potential opportunities as part of the study that can be used to rescue consumption.
Every 4 years, a new phase of ESOS begins. Phase 3 is next with a qualification date of 31st December 2022 and submission due on or before 5th December 2023. Starting early is a good strategy as leaving it till last minute creates higher costs for businesses and potential delays in assessment completion. This also means that actions can be implemented sooner, cutting business costs and emissions sooner.
Streamlined Energy and Carbon Reporting (SECR) was introduced in 2019 to replace the Carbon Reduction Commitment (CRC) scheme. This legislation requires qualifying companies to report on their energy consumption and greenhouse gas emissions. Its purpose is to increase the awareness of climate change and its impact on the world. Organisations will then be aware of their current carbon emissions and how to reduce them from their daily operations.
Around 12,000 companies qualify for SECR in the UK. You will be required to comply with SECR if you meet 2 out of 3 of the following criteria:
A turnover of £36m or more
A balance sheet of £18m or more
250 employees or more
To be compliant, companies need to measure and quantify their Scope 1 and Scope 2 carbon emissions and use this data to calculate an intensity metric. Best practice is to include details of actions being implemented by companies to reduce the intensity metric over time, however this is not mandatory. This includes Scope 3 emissions which are not mandatory but considered best practice where the data exists.
SECR doesn’t have a fixed deadline, however qualifying companies need to submit a compliant SECR report as part of their annual accounts. This means the ‘deadline’ date will be linked to your financial year with companies having up to 9 months to submit following the year closing out.
With a combined experience of 27 years, transparent pricing and additional services, Boxfish can advise your business on how to get the best value of money from suppliers.