19 May 2016 | Adam Leach
Few social science ideas have captured the attention of parliamentarians and policy wonks in the past decade as much as the theory of 'nudge'.
Espoused in the 2008 book Nudge: Improving Decisions About Health, Wealth and Happiness by professors Richard Thaler and Cass R Sunstein and brought to even greater prominence by Nobel laureate Daniel Kahneman in Thinking, Fast And Slow, the theory, in its most basic form, urges an approach of show rather than tell.
Embraced by David Cameron and driven by his Behavioural Insight Team, the concept lies at the heart of the Energy Savings Opportunity Scheme (ESOS) and its success or failure over the next 12 months will speak strongly to whether the billing lives up in practice.
Under ESOS, enacted in 2014 in response to Article 8(4) of the EU Energy Efficiency Directive, all large businesses and a selection of public institutions are now required to carry out an in-depth assessment and audit of energy use and efficiency within their facilities, with the first deadline passing in December 2015. No actions are required from the findings - the regulation simply calls for parties to become aware of their performance, but the intention and expectation is that once made aware, the parties will willingly seek to capitalise on the opportunity to cut costs and increase sustainability.
With inefficiencies laid bare, the policy simply nudges businesses towards self-improvement. At least that is the hope. This year, the fruits of its labour will start to be seen and measured. As with any new policy, teething problems have come to bear, with more than 40 per cent of parties failing to comply in time, but there are also early signs of some success.
Premier Inn and Costa Coffee owner Whitbread recently announced the installation of 1,326 MWh of rooftop solar to shave £280,000 off its annual energy costs. And Marks & Spencer has pledged to refit its entire retail estate with LED lighting by 2025, drastically improving energy efficiency in lighting. Neither pledge can be directly attributed to the policy, but the policymakers would no doubt argue that is the nature of the 'nudge'.
Unlike ESOS, the Eco Design European Directive, which came into force on 1 January, is explicit in the actions it is calling for. Setting minimum requirements for energy-consuming appliances, the regulation is expected to bite biggest for those in FM, when big-ticket items such as air conditioning units break down and require replacement.