Targeting efficiency: the role of reporting and target-setting in energy
The recent energy crisis has brought energy management back into sharp focus for businesses. Improving energy efficiency not only leads to cost savings but also benefits the climate by reducing energy consumption.
The recent energy crisis has brought energy management back into sharp focus for businesses. Improving energy efficiency not only leads to cost savings but also benefits the climate by reducing energy consumption. Energy emissions are categorised into two scopes based on their source.
Scope 1 emissions, known as direct emissions, occur at a company’s facilities and come from its own assets, such as gas boilers, diesel vehicles, or leaking air conditioning systems.
Scope 2 emissions are classified as indirect emissions, as they are generated by a third party. This includes emissions from electricity produced by natural gas power plants connected to the grid or heat purchased from a district heating network.
Measuring and tracking energy usage is essential for calculating both Scope 1 and Scope 2 emissions. Furthermore, many businesses must comply with regulations that mandate energy reporting.
In the UK, the Streamlined Energy and Carbon Reporting (SECR) regulation requires businesses to report their energy consumption for the past two years and disclose any energy efficiency projects they have undertaken or plan to undertake.
A significant portion of a company’s CDP (Carbon Disclosure Project) score is based on the disclosure of energy consumption. Additionally, the new EU regulation, the Corporate Sustainability Reporting Directive (CSRD), requires companies to report and set targets related to their energy usage.
There are four main types of energy targets: renewable, self-generation, absolute, and intensity.
| Target Type | Example target language | Additional information |
| Renewable | Company A commits to source 80% renewable electricity by 2030 from a baseline of 20% in 2022. | The RE100 initiative requires companies to commit to 60% renewable procurement by 2030, 90% by 2040 and 100% by 2050. |
| Self-generation | Company B commits to produce 50% of electricity consumption onsite by 2040 from a baseline of 0% in 2024. | Self-generation has multiple benefits such as reduced energy costs, guaranteed low-carbon power and improved resilience. |
| Absolute | Company C commits to reducing absolute energy consumption by 20% by 2030 from 150 GWh in 2024. | While there are currently no guidelines for absolute energy targets, the Science-based Targets initiative requires a minimum 42% reduction in Scope 1 and 2 emissions by 2030. Therefore, absolute energy reduction targets should be used as a way of ensuring progress against emission targets. |
| Intensity | Company D commits to reduce energy consumption per £m revenue by 40% by 2030 from 120 MWh/£m revenue in 2023. | Intensity targets are useful when a company is undergoing rapid growth and can be used to prove an increase in operational efficiency. However, intensity targets should be set carefully using growth projections to ensure that the target does not lead to an increase in absolute energy consumption. |
Once a business is reporting on its energy consumption and has set energy-related targets, the final step is to begin making progress on these targets.
There are a range of technologies available that can help you understand where energy is being used, allowing you to appropriately target capital expenditure to ensure you get the most benefit and action occurs in time to limit the worst impacts of climate change.
