Essent's 'independent' consultancy firm had a commercial interest in selling sustainable measures

NieuwsuurClimate route

Renee van Hest

Research editing

Yoeri Vugts

research editing

Renee van Hest

Research editing

Yoeri Vugts

research editing

Nieuwsuur investigated the world of consultancy firms in the energy transition and local government. Below you can read a reconstruction about the Climate Route consultancy firm, acquired by energy group Essent in 2018. Climate Route withheld essential information from local governments.

The struggle of local governments with the implementation of the climate agreement is encountering problems. For example, commercial influences are gradually creeping into policy. For example, Nieuwsuur received tips about the commercial consultancy firm Climate Route, which has been owned by Essent since 2018.

Climate Route carries out energy scans at households and companies at the expense of municipalities, environmental services and provinces and provides advice on, for example, solar panels or insulation. The company says it operates “independently” and “without commercial interest in the implementation of measures”.

This is also evident from the dozens of contracts that Nieuwsuur requested. Consistently, the company presents itself as “independent” and promises “no commercial interest whatsoever”. “In this way we prevent a double interest in the guidance process and the entrepreneur is assured of an independent partner,” it says. But according to several sources, things are different. Because Climate Route does not appear to do exactly what is stated in the contract.

The company promises in contracts that it can help residents request quotes for solar panels, for example. Climate Route says it does this in various contracts with “agreed local parties”. But only one of the more than fifty authorities questioned by Nieuwsuur knows which local companies have been collaborated with. All others do not know which local installers Climate Route works with.

News hour

Climate Route also appears to request quotes from affiliated companies in its own network. It has a partnership with about twenty installation companies, which are active nationally. This network also includes a number of installation companies owned by parent company Essent.

Climate Route receives an average compensation of 7 percent for each quotation submitted to an installer from its national network. The percentages differ per product and per supplier. After inquiries by Nieuwsuur, the company states that the compensation it receives “covers the costs” of “setting up and maintaining” that national partner network. But it does not specify exactly what costs are involved.

Essent, the owner of Climate Route, denies that it has ‘a commercial interest’. “Such a referral has no commercial interest. By commercial interest we mean actions aimed at making a profit.”

But lawyers refute that. “If, as a result of this construction, business is attracted to affiliated parties and turnover is therefore generated, then you already have a commercial interest,” says contract law expert Martien Schaub. “The fact that compensation is also collected from the suppliers at the back, at least gives the impression that there is a double capture.”

Schaub emphasizes that costs will certainly have been incurred, but that this does not rule out that the paying companies see this as a referral premium: “By calling it cost-effective, I think the aim is to comply with the ‘no commercial interest’ or ‘no revenue model’ “But I think that’s a bit too easy to say. There is soon a commercial interest, even if you don’t make a profit. The same applies to a revenue model, even if no profit is made, there can be a revenue model.”

The company does not want to say in how many municipalities residents have received quotes from affiliated companies in its national partner network. Essent does say – on behalf of its subsidiary Climate Route – that “more than 95 percent of the energy savings achieved are achieved by local parties. In exceptional cases we refer to national partners.”

shafts

But in Assen alone, half of the 1,400 homeowners who wanted to get started with sustainability received a quote from an affiliated company of Climate Route. In the Drenthe municipality, Climate Route has carried out 634,000 euros worth of energy scans in recent years at the expense of the municipality. The subsidy application that the company submits to the government on behalf of the municipality states that “if desired, immediately submit a request for quotation [wordt, red.] done with locally selected partners”.

But Nieuwsuur discovered that Climate Route did not work with local installers in Assen. The Climate Route advisors residents of Assen point out the existence of the Drents Energieloket, a website where several installers from Assen are listed, but there is no question of a collaboration with Climate Route. The Drenthe Energy Desk also confirms this.

The municipality says it is now considering whether the contract with the company can be terminated. “It was an important principle for the municipality that Climate Route provided independent advice. Revenue models such as committees can influence the independence of advice. The existence of this structure in this case was relevant information that Climate Route should have made open for discussion,” says the councilor. Martin Rasker.

Amersfoort

We see a similar pattern in Amersfoort. And although this municipality initially labels Climate Route as independent, it changes its mind after Nieuwsuur presents its findings. “The municipality has established that there is a relationship of dependence. Based on the recent statement and the explanation from Climate Route itself, we can draw this conclusion.”

Essent says it “strongly disputes” that it is not independent. According to the company, if referrals are made to national partners, this is done purely to better help residents and entrepreneurs and to achieve more energy savings. We demonstrably make no profit from this and this does not lead to additional costs for residents and entrepreneurs.”

But, experts say, that is not the point at all: “In addition to advice and referral to local parties or energy counters, there is a national network of providers connected to Climate Route and this is not discussed in the contracts,” says associate professor of contract law Martien Schaub .

Schaub points out that referrals are also made to a national network, including parties affiliated with Essent, including a support process. “Even if only a small part of the orders ends up in the national network, this is contrary to the promised cooperation with local parties and the lack of an interest in the advice.”

Public interest

Professor of contract and procurement law Chris Jansen also says that Climate Route’s method of presentation does not match practice. “The starting point is that the municipalities have purchased consultancy services from Climate Route with public money. The agreements are laid down in a contract. And one of the agreements laid down in the contract means that Climate Route must refer residents to local implementing parties. Climate Route partially complies with this agreement. not: after all, she acknowledges that she referred residents to her national network, while that was not the agreement.”

According to Jansen, this involves a public interest: “By deviating from the contractual agreement, on the one hand, there is a chance that Climate Route will be able to avoid certain economic risks that it runs in the event of performance in accordance with the contract. On the other hand, it is an extension of the foregoing. chance that by not complying with the agreements it will be able to realize certain benefits for itself that it would not have achieved if, in accordance with the agreement, it had referred residents to local parties instead of to its own national network. I think here in the special to the generation of additional turnover. Relevant for the assessment is whether at the time of that action there is a real chance that the aforementioned consequences will materialize, not whether that has actually happened.”

Former employees

Nieuwsuur also spoke with (former) employees of Climate Route. They say that they were encouraged to refer homeowners to the friendly installation network of Climate Route. “That was extremely encouraged. Often at the start and end of the day in the office staff,” says one of them. The employees themselves were also rewarded for this, with a cash bonus when a requested quotation was carried out by an affiliated company.

Climate Route response to bonus:

“In the past, Climate Route has had various motivational schemes for employees in order to achieve as much savings as possible, but independence has always been taken into account. Employees were rewarded when energy savings were achieved through a national partner, but employees were also rewarded when energy savings were achieved through the network of the resident or local partners was achieved. Energy savings via the resident’s network or via a local partner are less easy to measure, because we do not receive direct feedback about this. For this reason, we deployed employees during that period to actively assist residents. approach with the aim of mapping energy savings. The aim of the rewards (various, maximum 10 euros) was mainly to further motivate our colleagues (mostly students) to achieve as much energy savings as possible. We also think it is important to once again to emphasize that no one has been disadvantaged because residents were always encouraged to request quotes from multiple parties and therefore there was no focus on obtaining a quote (only from) a national partner.”

Suppliers

Some suppliers who work with Climate Route tell Nieuwsuur that they pass on the compensation they have to pay to the company in the amount that consumers pay. Essent disputes this and says that it would conflict with the agreements that have been made. These agreements have not been recorded.

You can read the full responses from Essent and Climate Route here.

Governments

Nieuwsuur already informed dozens of governments in July of the research findings. A number of them, such as the municipalities of Oss, Gouda, Soest, Bergen, Heiloo, Castricum and Bloemendaal, state that they currently see no reason to directly inquire with Climate Route about the state of affairs. For example, the municipality of Oss believes that although the contract has not been complied with on points, the service has been provided. Other municipalities, such as Assen and Amersfoort, will investigate the matter further.

Supervisor

Supervisory Authority for Consumers and Markets (ACM) says that it is common in many sectors to pay a commission for submitting assignments or agreements. But if Climate Route mentions independence in the contract, “the suggestion is made that there is no (financial) link between the consultant and the implementing parties,” says ACM. “There could therefore be a case of deception.” The ACM states that the “signal was passed on internally”.

Ministry

The Ministry of the Interior, as the subsidy manager, states: “It is obviously bad when market parties indicate that they provide independent advice, but it appears that this independence is at risk due to financial interests. Households must be able to trust that they are being given independent and good advice. especially if this is carried out under the responsibility of a municipality.”