The Difference Between ESOS and SECR 

What is ESOS? 

The Energy Savings Opportunity Scheme (ESOS) is a mandatory assessment that ‘large undertakings’ must carry out in the UK. Started in 2014 in line with Article 8 of the EU Energy Efficiency Directive, businesses who qualify must audit the energy usage of their assets, including buildings, transport or industrial processes on a four-year cycle.  

An ESOS assessment requires businesses to:  

  • Calculate their asset’s total energy consumption.  
  • Identify areas of significant energy consumption.  
  • Appoint an employee or contractor as their lead assessor who is a member of the UK Government’s approved professional body register.  
  • Notify the Environmental Agency by submitting a notification of compliance.  
  • Keep detailed records of ESOS compliance.  

Its purpose is to highlight where a company or business could make changes; it is not mandatory that you make any energy efficiency improvements. 

Why is It Important? 

The ESOS is beneficial to both businesses and the UK as a whole. Organisations that qualify measure their energy usage to identify inefficiencies and make cost-saving changes to reduce them. In turn, the UK government benefits from the reduced carbon footprint in pursuit of their 2050 target of Net Zero.  

Who Qualifies? 

Companies that qualify for ESOS include corporate bodies, partnerships and non-profits that meet the following requirements:  

  • 250 or more employees 
  • A turnover that exceeds £44,845,000 and an annual balance sheet above £38,566,700 

Overseas companies with UK-based operations or offices must also comply with ESOS.  

Which Organisations Are Exempt? 

Under current ESOS regulations, exempt organisations include:  

  • SMEs (Small or medium-sized enterprises)  
  • Public sector bodies  
  • Those that haven’t met the requirements by the 31st of December, a year before the deadline. For example, in Phase 2 (5th December 2019), to qualify, you need to have met the requirements by 31st December 2018.  

Are There Any Penalties? 

Yes, in each phase, the Environmental Agency strengthens its regulations and enforces harsher penalties for non-compliance. Until the EA requirements for ESOS are met, penalties can include initial and daily fines. Breaches include:  

  • Failure to notify: An initial penalty of up to £5,000 followed by a daily penalty of up to £500 for each day the organisation remains in breach.  
  • Failure to maintain adequate records: An initial penalty of up to £5,000 in addition to 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: An initial penalty of up to £5,000, plus a daily fine of up to £500 for each working day the organisation remains in breach.  
  • Failure to comply with a served notice: An initial penalty of up to £5,000 and a daily penalty of up to £500 for each working day the organisation remains in breach. 
  • Providing a false or misleading statement: A penalty of up to £50,000. 

What is SECR? 

SECR (Streamlined Energy and Carbon Reporting) differs from ESOS because it measures a company’s emissions rather than its energy use. It is a mandatory UK government framework implemented in April 2019 to replace the previous Carbon Reduction Commitment (CRC) Energy Efficiency Scheme.

It requires companies to disclose their energy consumption and carbon emissions yearly, increasing transparency. Companies must disclose their:  

  • Annual UK energy use (in kWh)  
  • Greenhouse gas emissions (CO2e)  
  • Emissions intensity ratio  
  • Their methodologies  
  • A narrative of the measures they’ve taken to improve efficiency  
  • Their prior relevant figures for comparison  

Why is It Important? 

By holding businesses to account, SECR encourages companies to utilise energy efficiency measures from schemes such as ESOS to cut costs and improve productivity whilst reducing emissions. It is a part of a collection of schemes and initiatives the UK Government is employing to encourage business compliance with their 2050 Net Zero target.  

Who Qualifies? 

A Quoted company, a large non-quoted company or an LLP that meets two of the following requirements qualify for SECR reporting:  

  • Employ over 250 people  
  • Have a turnover of £36 million 
  • An annual balance sheet of over £18 million.  

Which Organisations Are Exempt? 

Organisations that are exempt from SECR include:  

  • Public sector bodies  
  • Charities  
  • Private sector organisations that don’t file reports to Companies House (Dormant) 
  • Companies that use less than 40,000 kWh of energy  

Are There Any Penalties? 

Yes, the Conduct Committee of the Financial Reporting Council oversees SECR, and they can impose penalties on companies that qualify but don’t comply. Penalties for not reporting in line with SECR include:  

  • Fines of up to £40,000 
  • Companies House can reject annual accounts, incurring late deadline penalties.  

Unlike ESOS, these non-compliance penalties are not official or published but are still enforced.  

Are SECR Reports Available to the Public? 

Currently, ESOS does not require public reporting; however, SECR does. All of the reports compiled are publicly available and included in a company’s annual accounts to Companies House.

Additionally, it is expected that companies will disclose figures in a company report, such as a Directors’ report, in line with the reporting guidelines.  

Has SECR Replaced ESOS? 

Although the goal of SECR and ESOS is the same, they focus on different measurements. SECR measures a company’s emissions, whilst ESOS highlights energy efficiencies for improvement. Arguably, ESOS informs a business’s SECR report.

Together they encourage companies to utilise energy efficiency improvements, contributing to the UK government’s goal of Net Zero by 2050.  

What Are the Current Deadlines? 

The Phase 3 deadline for ESOS is the 5th of December, 2023.  

SECR’s deadline is the 31st of March, 2023.  

Explore Our EPC Solutions 

Our experienced and professional team is here to guide you at Nexus Energy Solutions. From domestic EPCs to commercial energy audits to ESOS assessments, we have the expertise you need to improve energy efficiency, reduce costs and achieve compliance.

With offices in major cities throughout the UK, our accredited energy assessors can help you comply with ESOS obligations so that you can forget impending penalties and deadlines. Contact us today for a quote.