Nadine Bowles-Newark, associate director (consultancy), Energise.
A narrated version of this blog is available at the bottom of the page
“Sustainability”, “Net Zero”, and “climate change” are just a few terms that have become increasingly common in everyday life – from personal choices to global news, and from employee/volunteer influencing to strategic board room conversations. It’s important that these terms continue to become part of everyday conversations for our global society to stay on target to keep warming to no more than 1.5°C, while also considering wider sustainability, including the workforce, communities, and governance.
To keep collective progress pushing towards Net Zero goals by 2050, the government has introduced and will continue to build on policies, rules, and legislation.
Here is a summary of those that could apply to the third sector:
Minimum energy efficiency standards
Energy Performance Certificates (EPC) are applied to new buildings and buildings during sale or new lease arrangements. Buildings are rated from A (the most efficient and considered Net Zero) to G (the least efficient). From 1st April 2023, buildings cannot continue to be let or rented out if they have an EPC rating below E.
The requirement for better EPC ratings will continue to tighten over time, with the minimum being C from 1st April 2027, and B from 2030.
Streamlined energy & carbon reporting
Introduced in 2019, Streamlined Energy & Carbon Reporting (SECR) requires UK organisations to report their energy use and emissions within annual reporting alongside intensity metrics, commentary on energy efficiency actions taken in the reporting period, and detailed methodology statements.
SECR reporting covers electricity, gas and transport fuel emissions, and is mandatory for organisations who meet two or more of the following:
- > £36 million turnover
- > £18 million gross balance sheet
- > 250 employees (average number of persons employed under contracts of service)
SECR is a great starting point to develop a full carbon footprint, which can be used as a baseline to determine a Net Zero Strategy.
Energy savings opportunity scheme
Started in 2014 and run on four-year compliance cycles, the Energy Savings Opportunity Scheme (ESOS) is a legal requirement for large UK organisations. ESOS aims to:
- assess energy data;
- identify energy saving opportunities from buildings, transport and processes through site audits;
- receive sign-off from an ESOS Lead Assessor and company director(s);
- notify the Environment Agency of compliance.
ESOS goes further in terms of energy coverage compared to SECR by including electricity, fuels, all forms of energy products, purchased heat, and renewable energy. ESOS is currently in Phase 3 with the deadline recently extended from 5th December 2023 to 5th June 2024, and is required by organisations who meet the one, or both, of the below criteria:
- > 250 employees
- > £44.1m turnover AND > £37.9m gross balance sheet
If organisations are part of a group structure, where one entity meets the compliance criteria above, then the whole group structure must comply.
ESOS builds on annual reporting with SECR to provide tangible opportunities for emission reductions, which can be actioned immediately and considered as part of a longer-term Net Zero Strategy. Through these reductions, there is also a good chance of identifying financial savings. For example, during Phase 2 of ESOS, Energise consultants identified more than £13m worth of savings opportunities, so early compliance is recommended.
Task force on climate-related financial disclosure
The Task Force on Climate-related Financial Disclosures (TCFD) was created by the Financial Stability Board to improve reporting of climate-related financial information. From the 6th April 2022, listed and large non-listed companies are required to produce TCFD-aligned disclosures alongside their annual reporting.
TCFD covers four recommendations for metrics & targets, strategy, risk management, and governance, all linked to the organisation’s climate-related plans, progress and reporting.
The current legislation covers:
- Listed companies, banks and insurers with > 500 employees;
- AIM companies with > 500 employees;
- Non-listed companies & LLPs with > 500 employees AND > £500 million turnover.
As part of the legislation consultation, the Government made clear their plans to further roll out TCFD disclosure requirements across the economy by 2025.
Next steps
Whilst these policies are a legal requirement in many cases, they can provide a wealth of opportunities for your organisation, including ever-important financial savings through reducing emissions. Not only are you doing your part to move towards Net Zero, but you can demonstrate this to colleagues, volunteers, and other stakeholders, as you are paving the way for sustainable conversations and future progress.
How can sustainability experts help?
To address the unique needs of third sector and small to medium organisations, Energise is developing accessible solutions that empower you to comply with legislation and measure, plan and verify your progress against targets. Our consultants are on-hand to support you with various resources, from resource efficiencies to carbon literacy and behaviour change interventions.
Energise offers ACEVO members 40-minute free consultations that help your organisation understand its current impact. Explore your options and email gonetzero@energise.com to book a free consultation.
