What is ESOS?
The Energy Savings Opportunity Scheme (ESOS) is a UK regulation aimed at encouraging energy efficiency in large businesses. It requires companies meeting specific size thresholds to report their energy use to the Environment Agency or confirm if they qualify for an exemption.
The notification deadline was June 5, 2024, and businesses required to comply must submit an energy-saving action plan by December 5, 2024.
What are the criteria?
ESOS applies to large undertakings and their wider corporate group.
A large undertaking is a corporate body or partnership which meets one or both of the following criteria as of 31 December 2022:
- 250 or more employees worldwide; or
- Annual turnover in excess of £44 million and an annual balance sheet total in excess of £38 million.
If one corporate body or partnership which is part of a wider group meets the above criteria, the entire group operating in the UK are obliged to comply with ESOS.
There are large undertakings that can be excluded from complying ESOS. These are:
- If it is defined as a public body; or
- If it is subject to an insolvency procedure.
The test for public body can be met three ways. Either the large undertaking will be financed, subject to management supervision or have a board appointed by national, regional or local government. If you believe your large undertaking meets one of these criteria, we recommend you take advice to confirm. You would still need to notify the Environment Agency your large undertaking is subject to an exemption.
What does a notification consist of?
If a large undertaking qualifies, it should undertake an ESOS assessment with an environmental consultant and provide information to the Environment Agency including the following:
- Details about the organisation including structure, contact details and director authority;
- Individuals involved in the compliance;
- Information around energy usage including energy consumption data and energy saving measures; and
- If it was subject to phase 2 ESOS compliance, a summary of energy saving since this date.
What happens if I fail to file a notification?
Organisations who the Environment Agency suspect are large undertakings and have not filed a notification by 5 June 2024 may now be subject to compliance and enforcement activities.
The first stage of this is a compliance notice, which is an information request to ask the organisation whether it has complied in notifying the Environment Agency.
If a compliance notice is not responded to, the large undertaking can be subject further enforcement procedures, culminating in a penalty notice. A penalty notice can consist of a fixed penalty of up to £5,000, with an additional £500 for each working day following the penalty notice that the compliance notification is not filed.
What should I do if I have received a Compliance Notice?
If you’ve received an ESOS Compliance Notice, we recommend speaking to a member of our team. We can advise you on how to respond to the Environment Agency, as failing to reply within the specified timeframe may result in penalties.
We’re here to help, get in touch with Emma Reilly.