Law firms urge companies to comply with ESOS legislation

Law firms urge companies to comply with ESOS legislation

With less than 100 days to go, the ESOS deadline is fast approaching. Large law firms are urging organisations to comply with ESOS legislation before the 5th December deadline to avoid the hefty fines.

The first compliance deadline of 5 December 2015 is now looming. By this date, organisations are expected to have determined whether they are eligible for ESOS, appointed a lead assessor to carry out an energy audit and identify potential energy savings, and notified the Environment Agency of compliance.

Who is eligible for ESOS?

ESOS assessments are mandatory for organisations in the UK that have:

  • 250 or more employees or;
  • Fewer than 250 employees, but an annual turnover and balance sheet exceeding €50m and €43m respectively.

The Environment Agency, as the regulator of ESOS, can impose significant penalties for non-compliance. Financial penalties can be as high as £50,000 with an additional £500 a day after the deadline. Law firms specialising in business legislation such as CMS are therefore urging obligated businesses to ensure they comply before the 5th December 2015.

Various recent polls indicate that a large number of businesses have yet to begin to consider the steps needed to undertake an audit. The legal director at global law firm DLA Piper states that businesses should not delay any longer given that an ESOS audit can take between two to three months to complete.

According to multinational law firm Reed Smith the main reason that organisations have not yet notified the Environment Agency of compliance is that:

“Many businesses are simply not aware of ESOS, or believe they are exempt because they already participate in other mandatory schemes requiring measurement of energy consumption/carbon emissions.”

Further to this business law firm CMS state a further reason for the low number of compliance notifications:

“Many organisations are struggling to gather appropriate information to complete the ESOS assessment due to structural complexities”.

It is not too late to start or accelerate plans to ensure compliance and potentially secure cost benefits. However businesses should act now given the limited number of lead assessors compared to the estimated 10,000 businesses within the scope of ESOS that will all have to comply by the 5th December 2015.