Compliance Guidance for ESOS, SECR, CDP and TCFD
Oct 26, 2022
Updated 10/1/23
There are a number of different reporting frameworks in the UK that companies can voluntarily or are required to comply with based on their size and/or turnover. Knowing what to disclose for these different frameworks can be challenging. This article summarises what the requirements are for compliance with ESOS, SECR, CDP and TCFD.
ESOS
Energy Savings Opportunity Scheme
What is it?
ESOS is the mandatory implementation of the Energy Efficiency Directive. It has been in force since 2014 and occurs in 4 year phases. We are currently in ESOS Phase 3. The aim of ESOS is to highlight where energy efficiency improvements can be made through an audit of a company's energy usage, transport data and energy saving measures. Completing ESOS to a high standard can have numerous benefits, not least the significant reductions in energy consumption and costs at a time of extreme energy market volatility.
What are the penalties for non-compliance?
Failure to comply with ESOS will result in an initial penalty of up to £5000, followed by a daily fine of £500 for each working day of non-compliance.
Who qualifies?
To qualify for ESOS, a company must fulfil at least one or both of the following criteria on 31 December 2022:
- Employs more than 250 people in the UK.
- Has a turnover in excess of £44 million and a balance sheet exceeding £38 million.
Companies which have a certified ISO 50001 energy management system covering 95% of all energy use do not need to undergo ESOS audits.
When is the deadline?
The deadline for ESOS Phase 3 is 5 December 2023.
What should I do now?
Contact PASCHALi for expert advice and assistance with your ESOS reporting.
SECR
Streamlined Energy and Carbon Reporting
What is it?
SECR is the annual reporting of qualifying companies' carbon emissions and energy usage. The main aim of SECR is to build on existing reporting and make it consistent with the financial year, making it easier to monitor and achieve reductions in carbon emissions each year. It also extends the scope of mandatory reporting to include more companies.
What are the penalties for non-compliance?
The Conduct Committee of the Financial Reporting Council can impose fines for non-compliance. There can also be fines imposed for late submissions, ranging from £150 up to £7500, dependant on the lateness of submission and the type of company. In addition to this, Companies House can also reject annual accounts based on inadequate information provided.
Who qualifies?
SECR applies to all quoted companies (those which shares are traded on the stock exchange) and applies to companies that meet two out of the three following criteria:
1. Employs 250 employees or more in the UK.
2. Has an annual turnover in excess of £36 million.
3. Has an annual balance sheet in excess of £18 million.
When is the deadline?
The deadline to submit SECR is dependant on your company's financial year end.
What should I do now?
Contact PASCHALi for expert advice and assistance with your SECR reporting.
CDP
Formerly the Carbon Disclosure Project
What is it?
CDP is a voluntary reporting framework that companies can use to disclose information and data on emissions and environmental impacts to their stakeholders. Results are graded from A to D-, with different focus areas, e.g. climate change, water and forests, scored separately. These scores are collated and the company given an overall grade. A high CDP score can bring many benefits as it shows a company's willingness to consider environmental impacts in their operation.
What are the penalties for non-compliance?
As CDP is voluntary, no penalties can be induced. However, a low score or no response reflects negatively on a company.
Who qualifies?
All companies can disclose through CDP, however it is usually by invitation from CDP.
When is the deadline?
The end of July every year. The exact date is announced at the start of each year.
What should I do now?
Contact PASCHALi for expert advice and assistance with your CDP reporting.
TCFD
Task Force on Climate-Related Financial Disclosures
What is it?
TCFD is a framework aimed at helping companies report on risks and opportunities they face in relation to climate change. It also aims to increase and improve reporting on financial information and how it is affected by climate-related risks. Companies are recommended to disclose in four key areas; governance, strategy, risk management, and metrics and targets.
What are the penalties for non-compliance?
Fines for non-compliance range from a minimum of £2,500 up to a maximum of £50,000.
Who qualifies?
All UK companies that produce an annual non-financial statement are required to comply with TCFD. Also required to comply are UK registered companies with:
- More than 500 employees
- A turnover of more than £500 million
When is the deadline?
The deadline for disclosure is dependant on your company's financial year end.
What should I do now?
Contact PASCHALi for expert advice and assistance with your TCFD reporting.
Knowing what to disclose for these different frameworks can be challenging. At PASCHALi, expert advice and assistance can be given to ensure reporting is done to the highest standard for your company. To make use of our expertise, do not hesitate to get in touch.
If you would like to discuss the blog post above or find out how we can support your business, please contact us.
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