New ESOS Phase 3 Requirements That Your Business Must Know

Factory floor inspection

With energy prices soaring and increased public scrutiny on how the government addresses energy regulations and carbon emissions, there are signs that change is afoot across the entire sector.

In a response to the BEIS’ consultation on strengthening the ESOS scheme, the government has outlined its decisions around key changes. Last month (July 2022), the government also announced that a bill would soon be introduced to allow changes to the scheme, provided those changes were subject to necessary parliamentary scrutiny.

While it may not be obvious from their lengthy, jargon-heavy response online, the intention is clear: the government aims to strengthen ESOS measures before the ESOS Phase 3 compliance deadline – and even aims to introduce a Net Zero element before Phase 4.

As a company, we act as your ESOS Lead Assessor to ensure you comply with these regulations, and we’ll stay on top of any changes so that you don’t have to worry. These government consultation results are simply another step for an ESOS Lead Assessor, but they can be confusing and challenging for any business that lacks specific ESOS knowledge. Let’s examine what they are and how they can impact you.

What does this mean for your business?

ESOS guidelines have been updated, and all eligible businesses must now understand what these upcoming changes mean and whether they will impact you. The good news is that they are largely designed to bring more clarity to the reporting requirements.

The main points for you to be aware of are due to come into effect as part of ESOS Phase 3. These are:

  • There will be a new standardised template for including compliance information on an ESOS report. This will include information you should already have as part of ESOS requirements but will now be formatted in a standardised system across all UK businesses.
  • The 10% de minimis exemption has been reduced to 5%
  • A new energy intensity metric must be included in all ESOS reports
  • A new requirement to share ESOS reports with subsidiaries
  • Changes to how ESOS reports and how much information they need to include regarding the implementation of recommendations and an action plan for Phase 4 compliance. All of these various changes are around presenting ‘next step’ style information following ESOS findings – which we’ll break down below

Further scrutiny on “next steps”

The changes make it clear that the government expects to see more information from businesses about how they plan to act on ESOS findings. Not only should you now detail how you’re going to act on the immediate recommendations made from Phase 3 reporting, but also outline a plan that looks towards Phase 4.

The government goes so far as to stipulate that businesses should set out an action plan they can use to report against in Phase 4 – so anything you do set down in your Phase 3 report should be achievable as it will be called upon during Phase 4.

Choose an ESOS Lead Assessor to stay compliant

If your business meets the eligibility criteria, you must declare your ESOS compliance on or before the Phase 3 deadline on 5th December 2023. To be eligible for ESOS Phase 3, the government expects: “all businesses that are large (250+ employees OR turnover £44m+ and balance sheet £38m+ on 31 December 2022) or part of a corporate group containing at least one large business will be required to meet the new requirements. Core proposals that are not introduced in Phase 3 will be introduced in Phase 4.”

To ensure you meet the ESOS assessment criteria, work with an ESOS Lead Assessor that can not only oversee your programme as required – but also create tangible value in terms of outlining the next steps and action plans.

We’ll simplify compliance and help your business get on the right path to energy efficiency. Time is running out for ESOS Phase 3, so get in touch now to start.

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