As companies navigate compliance with the Energy Savings Opportunity Scheme (ESOS), a variety of challenges can surface. These challenges often stem from data management issues, level of senior sponsorship, and the complexity of regulatory obligations. However, these hurdles also present an opportunity for businesses to improve operational efficiency, reduce costs, and enhance sustainability. In this blog, we’ll explore common challenges we’ve observed with ESOS compliance and the actionable learnings companies can take forward to enhance not only ESOS reporting but also overall sustainability and compliance with frameworks like SECR (Streamlined Energy and Carbon Reporting), and building decarbonisation.
1. Tackling Transport Data and Mileage Tracking
Transport data, particularly around mileage, has been one of the most persistent challenges for businesses complying with ESOS. Many organisations struggle to collect accurate, granular transport data, which is necessary for assessing energy consumption. The difficulty arises when businesses operate large vehicle fleets or have extensive travel-related emissions but lack the tools to collect data in real time.
One solution could be to integrate GPS tracking systems or fuel card data into your reporting systems. While this may require an upfront investment, it provides long-term benefits by streamlining the reporting process, allowing you to capture real-time mileage data, and improving accuracy across both ESOS and SECR. Another common solution is to use expense and finance data, which may be a viable solution for some organisations. However data reports should be validated to ensure data completeness, and processes documented for accurate and repeatable use year on year.
2. Improving the Quality of Energy Data
The quality of data, especially electricity and gas data used for calculating energy intensity ratios, is another area where businesses often falter. Many companies rely on manual data collection processes, which can lead to inaccuracies or gaps in reporting. This is particularly problematic when calculating key metrics such as energy intensity ratios, which are essential for identifying energy-saving opportunities.
A key lesson here is the importance of automating energy data collection wherever possible. Smart meters and other IoT-based energy monitoring systems can provide continuous, accurate data, allowing businesses to not only comply with ESOS but also track energy use for broader sustainability reporting. Aligning this data collection for SECR reporting can further improve operational efficiency, saving time and resources across the board. This is harder in leased buildings, where apportionment is a common solution, so beginning conversations with landlords early on sub metering solutions is important.
3. Understanding Legal Entity Structures
One of the more surprising challenges companies face is a lack of knowledge around their legal entity structures, or that knowledge sitting with the owner or department leading on sustainability compliance. This becomes problematic when multiple legal entities within a group fall under ESOS requirements but aren’t properly accounted for. ESOS compliance necessitates a clear understanding of which entities within a corporate group qualify under the scheme, and failure to correctly identify these can lead to incomplete reporting and non-compliance penalties.
Ensuring that your organisation has a firm grasp of its legal structure and the disclosure requirements tied to each entity is essential. This knowledge can not only streamline the ESOS process but also feed into broader corporate governance, ensuring compliance across multiple frameworks such as SECR and financial disclosure regulations.
4. Accessibility of Data Systems
A significant obstacle we’ve seen is that even when required data is collected, it often isn’t housed in systems that are easily accessible for ESOS reporting. This is particularly true for businesses that have decentralised operations or multiple data repositories.
Improving internal data management systems is key to overcoming this. By centralising data in a cloud-based system that is accessible across departments and locations, businesses can ensure that all relevant data is available when needed. Moreover, aligning these systems with SECR requirements can reduce duplication of effort, enhancing efficiency across both frameworks. Data reporting procedures with data sources, schema’s, assumptions and estimations clearly documented is key.
5. Clarifying Sign-Off Routes
Sign-off routes are often unclear, leading to delays as projects approach deadlines. In many cases, the lack of defined roles and responsibilities for ESOS reporting can create bottlenecks at the final stages of submission. This is particularly problematic when the deadline is looming, and key decision-makers are unavailable to approve the final report.
To address this, businesses should create clear governance structures with designated points of responsibility for each phase of the ESOS process. Assigning clear roles and establishing a timeline for internal reviews and approvals well in advance of submission can prevent last-minute delays. Additionally, this can enhance governance for other reporting obligations, such as SECR, ensuring smoother compliance across the board.
6. MESOS Access Challenges
Another technical challenge has been undocumented or restrictive MESOS (Measurement, Evaluation, and Statistics Operational System) access, which can hinder companies’ ability to submit ESOS when the time comes.
A critical learning from this issue is the need for better documentation of MESOS access and scheduling of the submission.
7. ESOS Action Plans: Turning Audits into Action
One of the most significant developments in ESOS Phase 3 is the introduction of the ESOS action plan and progress updates. This transforms energy audits from a compliance checklist into a strategic roadmap that identifies areas for energy savings, sets clear targets, allocates resources, and ensures ongoing monitoring. The shift from theory to practice allows businesses to fully capitalise on the benefits of the audits, ensuring that energy-saving opportunities identified are actually implemented.
This approach not only helps meet ESOS compliance but also supports long-term sustainability goals, such as reducing operational costs and achieving net-zero targets. Moreover, it aligns with the broader trend of integrating energy efficiency into business strategy and decision-making, providing significant economic and environmental benefits.
Conclusion: Learning for the Future
By addressing the common challenges companies face with ESOS, businesses can significantly improve their operational efficiency, not only in ESOS compliance but across other regulatory frameworks like SECR. From improving transport data collection to centralising data systems and creating clear governance structures, the lessons learned from ESOS compliance can offer long-term benefits that extend beyond mere compliance, driving both cost savings and sustainability performance.
By taking these learnings on board, companies can build stronger foundations for energy efficiency, better compliance, and ultimately, a more sustainable future.
We hope these insights can help businesses see that ESOS is not just a mandatory task but an opportunity to streamline processes, reduce energy consumption, and integrate sustainability into core operations.
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