The single most common question I get asked is “Do I have to comply with ESOS?”.
Large companies tend to expect to be covered by the legislation and small companies are similarly sure that they are not included, but the confusion often comes with medium-sized companies.
The rules for inclusion in ESOS are enshrined in three tests: answer “yes” to any of these and you must comply with ESOS. If you:
- Employ more than 250 staff.
- Turnover in excess of £38m and have balance sheet asses in excess of £33m.
- Are a member of a corporate group where any other company in the group is in ESOS or you have a “sister company” that is in ESOS.
My tips for checking inclusion in ESOS
Things to watch for here are:
- Staff numbers – full time or part time, it’s the number of people that counts not the hours they work. Contractors, for example your company cleaners or security staff that work through an agency, are excluded. If in doubt, refer to your company annual return where the number of staff you have should be listed.
- Balance sheet assets – this is the total of all of your balance sheet assets *not* the net assets, which has caught out a number of people.
- It’s turnover and balance sheet – if your turnover is over £38m but your balance sheet is under £33m (which is often the case) then you not included under this rule.
- Corporate Groups – this also applies to subsidiaries of companies with overseas owners. If, for example, your parent company is American and they own a large manufacturing plant in the Midlands and, via a subsidiary of a subsidiary, a small cushion manufacturer in Scotland, then this small cushion manufacturer is also included in ESOS even though day-to-day activities are separate.
There are a couple of other nuances that it is worth noting.
- If you are close to the limit, my advice would be to check with a Lead Assessor. Enistic can help you understand the regulations as they apply to your specific situation. There are a couple of subtleties that are not included above and you may need professional advice to ensure you are complying with the legislation.
- If between us we decide you are indeed close to the limit then you have a choice to make about risk and how much of it you are willing to take on. You could either choose to rule yourself out (“I am sure I don’t comply”) which is the risky route or even better I can get a written decision for you from the Environment Agency that you can keep in your files in case you get questioned in future. Drop me a line if you would like my help here.
A note on Smaller Charities in ESOS
I was with BEIS (the government group responsible for setting ESOS policy) recently talking about the future of ESOS and I expressed my view that certain companies, for example, smaller charities with little money, a low amount of energy use and over 250 volunteers or low paid carers should be excluded. It seemed inappropriate to me to divert money given to the charity in good faith for a worthy cause to give to people like my good self as a fee to audit a tiny amount of energy use. They have to comply by law, but in the past 3 or 4 audits I have completed for such charities, the savings identified are insignificant and, frankly, their money would be better spent on more worthy causes. Whether BEIS listened to me or not, time will tell but I hope they increase the exemptions allowable for ESOS to help these worthy causes make the most of their sometimes limited resources. If you feel strongly about this, as I do, then please feel free to drop me a line and perhaps if enough people express their opinion in a concerted form we can affect a change.
Want more information, download our “Guide to ESOS”
Enistic help companies manage their energy and have been doing so since 2009. We are market leaders in ESOS auditing, energy monitoring via meters of all forms and we carried out over 2,000 ESOS site audits during ESOS phase 1. We develop and maintain Plato, a cloud-based Energy Management Platform that helps a large number of medium-sized and Enterprise level organisations manage their energy in real-time throughout the world, including several listed companies. We are based in Oxford but have distributors worldwide and have national reach when it comes to ESOS Audits.
If you would like more information about ESOS and see our Top 5 Tips On How to Make The Most Out Of ESOS, click here to download our guide.
About Darryl Mattocks
Darryl is the founder of Enistic and has personally been the responsible ESOS Lead Assessor on over 150 ESOS Audits. He advises on how to reduce energy use in over 2,000 sites throughout the UK and is doubly certified for ESOS by two independent ESOS approval bodies. He is an approved ISO50001 Lead Auditor and holds the industry-specific CEM and CMVP qualifications awarded by the Association of Energy Engineers.
He is happy to answer any ESOS or energy management related questions you may have and can be contacted by email at firstname.lastname@example.org or by phone on 01865 598 776.