ESOS and SECR legislation should not be regarded as a burden but an opportunity to make the case for serious energy-saving action, argues Richard Dormer, MD of BCR-ECS
The international report by the Intergovernmental Panel on Climate Change (IPCC) identified that energy efficiency could contribute 45 per cent of the energy reductions needed to keep the global temperature rise to below 1.5°C. This, coupled with commercial cost savings, has meant that energy efficiency is rapidly climbing the business agenda. Political and commercial pressures will remain on businesses to ensure increased momentum, with further legislation likely to be introduced.
The launch in 2014 of the Energy Savings Opportunity Scheme (ESOS), a mandatory energy assessment scheme for qualifying companies, was born from the UK’s legal obligation to reduce our carbon footprint. Apart from the obligation to comply with legislation, there is, where audits are carried out effectively, the opportunity for costed energy efficiency measures to be considered seriously at board level. Any reductions in cost as a result can lead to gains in competitive advantage.
ESOS applies to larger UK businesses with an annual turnover in excess of £44,845,000 and a balance sheet of £38,566,706, or employing over 250 staff. Qualifying organisations are obliged to carry out ESOS assessments every four years, with the first having taken place in 2015 and the deadline for completing the second assessment set for 5 December 2019.
An Environment Agency audit of ESOS phase 1 revealed that only 16 per cent of participants were compliant, leaving 75 per cent compliant but with remedial actions and five per cent still non-compliant. As we progress through phase 2, businesses should be far more aware of the requirements and should be starting to see the opportunities the scheme affords. (Non-compliance has led to fines for high-profile companies such as eBay and Gumtree, with Amdoc (UK) being fined £45,000.)
Many FMs tasked with meeting ESOS requirements regard ESOS as a compliance issue rather than an opportunity. The surveys can become a tick-box exercise, but when executed effectively they become an agenda
for positive change, efficiency and cost reduction. Often FMs’ access to board directors is limited and it’s a challenge to bring ideas for energy efficiency improvements to the attention of the highest levels within the business.
ESOS offers the opportunity for FMs to have their ideas evaluated by a qualified assessor and reviewed at board level as statutory compliance. Where FMs have had long-held ambitions around driving better energy efficiency, but without the budgets to do so, ESOS and now SECR (streamlined energy and carbon reporting) can be the impetus to demonstrate a return on investment and obtain commitment.
Boards now appreciate that business and consumer chains are more environmentally focused than ever before, and CSR is more than a buzzword. Even if your organisation does not currently meet the criteria for compliance, it is a good idea to examine the ethos of ESOS and be prepared for future legislative change, so that you’re ready if and when your business may need to comply.
NAVIGATING THE PROCESS
While some FMs will have already been through ESOS phase 1 and know what is involved, many will have joined part way through and may be unfamiliar with the requirements. So, what are the stages involved in ESOS phase 2 compliance?
1. Appoint a lead assessor. The first step is to identify a certified lead assessor and energy manager with experience in helping companies achieve ESOS compliance, and who is a member of an approved professional body register (such as CIBSE or the Energy Institute). Ask your connections in the FM world to refer proven assessors with whom they’ve worked. Just as importantly, pick an assessor who will listen and work with your business to provide compliance and added value by being open to your ideas.
2. Arrange a scoping meeting. Any lead assessor will either provide a free scoping meeting via teleconference, or charge for a site meeting. At this point decide if you want to tick boxes or carry out an effective energy survey, and set this out in your meeting. A qualified energy manager will be more than happy to provide real value.
3.Measure and assess. To save costs get your data ready in advance; your lead assessor will then collate data and follow the audit process to BS EN 16247. Assessment depends on the number of sites to be covered and the scope of your emissions.
4. Report. With an effective energy survey, the ESOS report is a by-product of your agenda for efficiency changes. The lead assessor will provide the full report for review by you and the board of directors.
At this point, your ideas as to how to improve your business’ energy efficiency can truly be realised at board level. In practice, this may mean your agenda for effective sub-metering or lighting controls can be progressed, saving your business more money than ‘generic ESOS’ recommendations.
It’s important for everyone to understand that energy costs will rise unless further legislation around energy efficiency is wholeheartedly embraced at board level. This is where ESOS can prove valuable. First, it can be used to bridge the gap between FMs and the board, ensuring great ideas for improved energy efficiency do not remain an operational matter but become part of a company’s strategic plan.
Second, a business can actively seek ways to reduce spend on energy via the ESOS compliance process and work towards improving cost efficiency, demonstrably improving the organisation’s CSR agenda and delivering a competitive edge. Increased pressure on the board with the new SECR legislation has escalated the relevance of ESOS, and when used together will give FMs greater scope for improvements.
ESOS and SECR need not be seen as a compliance issue. Embracing the opportunities that arise from reviewing your organisation’s existing energy usage, formulating ideas for improved efficiencies, and having the communications channel available to formally present these at board level can help FMs increase their influence in shaping the future of their business.