The schemes driving business decarbonisation in the UK
Here’s our guide to the main energy and carbon reporting schemes for UK businesses.
Organisations are facing more stringent energy and carbon compliance rules as the UK moves to deliver its 2050 net zero pledge.
Faced with increasing investor and consumer pressure, many businesses are also choosing to go further with the help of voluntary schemes, which raise the bar on tackling climate change.
Here’s our quick guide to the main energy and carbon reporting schemes driving decarbonisation in UK business, and details of where you can go to find more information.
Streamlined Energy and Carbon Reporting (SECR)
SECR is a mandatory scheme requiring UK quoted companies, large unquoted companies and Large Limited Liability Partnerships (LLPs) to report publicly on their annual energy use and greenhouse gas emissions, and “provide a narrative” of energy efficiency actions taken.
The scheme came into force in April 2019 and affects 11,900 firms, many of whom have never been subject to mandatory carbon and energy reporting before. While it’s too early to understand the full impact of the scheme (many firms are only just filing their first report), it’s fair to say that it will drive greater visibility of energy use and emissions across firms.
Advice for brokers: Switching to a green energy supply can benefit a company’s SECR reporting. Explicit reporting on renewable energy is not mandatory under SECR, but it is recommended. In short – companies can report a reduced net emissions figure if they are using renewable energy in some way, whether this is through onsite generation, corporate power purchase agreements, or via a green tariff that is backed by Renewable Energy Guarantees of Origin (REGOs). Given that SECR reports are publicly available, reporting a truly green energy supply offers significant reputational benefits.
Energy Savings Opportunity Scheme (ESOS)
ESOS is a mandatory energy assessment scheme for large organisations in the UK. Firms in scope (around 7,700 in total) need to carry out audits of the energy used by their buildings, industrial processes and transport every four years, and identify cost-effective energy saving measures, such as LED lighting upgrades or building controls.
Organisations are asked to calculate their total energy consumption, as well as the most significant areas of energy consumption.
ESOS came into force in 2014, and there have been two compliance periods to date, so organisations should be well versed on the scheme. The deadline for the third phase of ESOS is 5th December 2023.
Organisations that don’t comply face penalties of up to £50,000, as well as an additional £500 per day if the breach is not remedied.
Advice for brokers: ESOS is there to highlight energy saving opportunities for large organisations, so it does not directly influence an organisation’s energy supply decisions. But the scheme does make carbon reduction a board-level priority by requiring ESOS assessments to be signed off a Director. It may prompt wider conversations around clean energy sourcing, as the 2023 deadline approaches.
The Science Based Targets initiative (SBTi)
More than a thousand businesses around the world are already working with the voluntary Science Based Targets initiative, and it sets the gold standard for emissions reduction. Under the framework, organisations must set a validated emissions target, as well as disclosing their emissions and target progress annually.
Targets are considered ‘science-based’ if they are in line with what the latest climate science deems necessary to meet the goals of the Paris Agreement – limiting global warming to well-below 2°C above pre-industrial levels and pursuing efforts to limit warming to 1.5°C.
Advice for brokers: Many of the world’s biggest companies are on board with SBTi, so despite being a voluntary initiative, its impact is huge. Companies wishing to set (and achieve) a validated science-based target will need to look carefully at their energy procurement. Procurement targets need to be in line with procuring 80% of electricity from renewable sources by 2025 and 100% by 2030.
Read more information on the SBTi
The final word
This year sees many businesses accounting for their carbon emissions for the first time, and this will shine a light on where they are sourcing their energy.
For businesses choosing green tariffs to meet reporting requirements, transparency and credibility is key. That’s where Good Energy comes in. Unlike many other suppliers, we don’t disguise electricity generated from fossil fuels by greenwashing it. We match all the power our customers use with electricity bought directly from renewable generators, investing in the industry to help it grow.
Learn more about our fuel mix and our values.
