ESOS Phase 4: The Complete UK Compliance Guide for 2026–2027

‍

What Is ESOS and Which UK Organisations Must Comply?

‍

The Energy Savings Opportunity Scheme UK (ESOS) is a mandatory energy assessment scheme for qualifying UK companies. UK companies meeting the criteria are required to assess their energy consumption every 4 years, primarily from Scope 1 and 2 activities. Participation in the scheme allows UK companies to identify cost-effective energy consumption reduction methods, lower their carbon emissions, and to improve their overall energy efficiency. The scheme is estimated to be responsible for annual efficiency energy savings of 1.65 TWh from buildings, 1.51 TWh for industrial processes, and 0.52 TWh of fuel efficiency savings across ESOS participants. The 2023-2027 ESOS cycle is referred to as ESOS Phase 4.

‍

Although ESOS is separate to the Streamlined Energy and Carbon Reporting (SECR) framework (2019), data gathered for ESOS reporting can make meeting SECR requirements easier and less time consuming for eligible companies.

‍

The Energy Savings Opportunity Scheme Regulations 2014 have been updated for Phase 4. Here's everything you need to know.

‍

Which Companies Meet the ESOS Phase 4 Qualification Criteria?

ESOS disclosure applies to large UK undertakings, including commercial businesses, corporate groups, and not-for-profit bodies operating outside the public sector. The qualifying criteria for corporate groups operate on a strict "one-in, all-in" rule. If at least one UK-registered member of a corporate group meets the threshold criteria of a large undertaking, every single UK entity within that entire corporate structure must comply with ESOS.

‍

What Is the ESOS Definition of a Large Undertaking?

To be classed as a large undertaking, UK companies or overseas group entities registered in the UK must either meet or exceed a threshold of 250 employees (full or part time) or a £44 million plus turnover with an annual balance sheet of £38 million plus on 31 December 2026.

‍

Your company's qualifying criteria are based on its last two consecutive accounting periods that both met or fell below the employee or financial threshold.

‍

For example:

‍

• If your company has fallen below the employee or financial threshold for at least two consecutive accounting periods before the December deadline, you are exempt from Phase 4 assessment.

‍

• If you do not meet either threshold for Phase 4 by 31 December 2026, but did for your last two consecutive accounting periods, you qualify for Phase 4 assessment and must disclose.

‍

• If you previously qualified for Phase 1, 2 or 3 but no longer qualify for Phase 4, it is your responsibility to contact your ESOS regulator to declare this.

‍

What Are the Key Dates for ESOS Phase 4?

‍

The qualification deadline for Phase 4 is 31 December 2026.

‍

Qualifying companies must submit a notification of compliance by 5 December 2027 for ESOS Phase 4.

‍

Mandatory Net Zero Assessments have been postponed until ESOS Phase 5 (beginning 2027 with a compliance notification deadline in 2031).

‍

There is overlap between ESOS Phase 4 and 5 allowing a continuous cycle of carbon management. While the Phase 4 Compliance Notification Deadline is 5 December 2027, Phase 5 begins immediately the next day on 6 December 2027.

‍

During the Phase 5 cycle (2027-2031), companies remain legally bound to Phase 4 obligations. Specifically, businesses must submit a formal Phase 4 Action Plan by 5 December 2028, followed by Annual Progress Reports on 5 December 2029, 2030, and 2031.

‍

In parallel, companies must prepare for Phase 5 milestones, including the Phase 5 Qualification Date on 31 December 2030 and the final Phase 5 Compliance Notification Deadline on 5 December 2031. The energy-saving actions implemented under the Phase 4 plans will directly serve as the data baseline for Phase 5 compliance.

‍

Companies must complete an energy audit over twelve consecutive months of operations for their total energy consumption. This reference period must include the qualification date and finish before the notification date (31 December 2026 and 5 December 2027 respectively for Phase 4).

‍

What's New Since the September 2026 Regulation Update

‍

What has been updated in the Energy Savings Opportunity Scheme Regulations 2014 for Phase 4?

‍

Assessment must still be reported via Manage your Energy Savings Opportunity Scheme Reporting (MESOS), but what's required has changed.

‍

Display Energy Certificates (DECs) and Green Deal Assessments (GDAs) have been removed as alternative compliance routes. Compliance must now be standardised through full ESOS audits of all areas of operations.

‍

Continuing from Phase 3, companies must report publicly each year on the progress of their ESOS action plans via MESOS. The final ESOS annual update report for Phase 3 is due on 5 December 2026. Companies must submit their Phase 4 action plan by 5 December 2028, and provide updates every 12 months until 2031 included.

‍

Starting in Phase 4, companies must submit more granular data regarding their actual energy savings within their action plan reviews. Companies are also required to audit their existing action plans to pinpoint any unexecuted measures and formally document the reasons for not implementing them.

‍

The Updated ESOS Compliance Process: Data Collection

‍

Step 1: Establishing Total Energy Consumption

‍

Compliance starts with mapping every source of energy use tied to the company or its group. Consumption must be measured in a common energy, or financial (GBP), unit. All fuel types must be included, there are no fuel type exemptions in ESOS compliance.

‍

Step 2: Isolating Significant Energy Consumption

‍

Companies may choose to identify the portion of their energy use (at least 95% of the total) that counts as "significant," which then becomes the scope they need to cover through an energy audit or ISO 50001 certification. If they don't make this election, the full 100% of total energy consumption must be covered by those same two routes instead.

‍

Step 3: Setting Energy Intensity Ratios

‍

A ratio must then be produced for each of four energy categories: buildings, transport, industrial processes, and any remaining energy against relevant business activities. Each ratio must be measurable, clearly tied to the relevant assets or activity, and, from Phase 4 onward, built on verifiable figures or, where that isn't practical, a reasonable estimate. Energy ratios must be calculated in kWh. If a company's energy measurements are not already in kWh, the government conversion factors for company reporting are available as an acceptable conversion rate.

‍

Step 4: Choosing a Route and Appointing an Assessor

‍

This is the step most reshaped by the amended regulations in Phase 4: organisations must now cover their significant or total consumption through either an energy audit or an ISO 50001 certification as DECs and GDAs have been withdrawn as valid alternative compliance routes. Any ISO 50001 certificate used for this purpose must have been granted after 5 December 2023 and remain valid on the 5 December 2027 compliance date. Sign-off from a registered lead assessor can be skipped only where total consumption sits below 40,000 kWh or is fully covered by ISO 50001, or, new for this phase, where an ISO 50001 certificate covers the significant energy consumption specifically.

‍

Step 5: Carrying Out the Energy Audit

‍

An audit must be compiled of measured data spanning a continuous 12-month window that, for Phase 4, must include 31 December 2026 and finish before 5 December 2027.

‍

The Updated ESOS Compliance Process: Reporting and Progress Tracking

‍

Step 6: Compiling the ESOS Report

‍

A company's Phase 4 ESOS report must record the scope of the energy audit or ISO 50001 certification, the savings opportunities identified and the energy savings achieved from its last ESOS action plan and a plan review. Any previously identified opportunities that were not carried out must be stated and justified. Both of these additional steps apply where a previous compliance period and action plan exist. A company reporting under ESOS for the first time won't have a prior action plan to review or a previous compliance date to measure savings against, so this part of the requirement doesn't apply to them. They instead produce the standard report and go on to build the action plan that will be judged against in future phases.

‍

Your ESOS Report Checklist

‍

In your Phase 4 ESOS report you will need to provide:

• Record of the undertaking and individuals responsible for compiling the report
• Record of other relevant undertakings (quantity and relationships)
• Record of the lead assessor where applicable
• Energy consumption calculations and energy intensity ratios
• Identified energy saving opportunities
  • Additionally, for each of these opportunities, the organisational use and relevant energy category must be identified, as well as any considerations relevant to their implementation, and estimated associated savings.
• An implementation timeline for all opportunities and estimated reduction in annual energy consumption and energy spend, as well as a granular estimate of savings within the compliance period (6 December 2023 – 5 December 2027).

While not submitted to MESOS, an ESOS evidence pack is also required to be kept for each compliance period and for at least the next two periods. The evidence pack demonstrates that, if asked, a company can prove it has fully complied with ESOS disclosure.

‍

Step 7: Submitting the Notification of Compliance

‍

The completed notification is lodged through the ESOS MESOS system for the 5 December 2027 deadline, and needs sign-off from a director or an equivalent person before it goes in.

‍

Step 8: Tracking Progress

‍

Companies are required to retain their own records demonstrating how each of the above steps was met. This is to be recorded internally in the ESOS evidence pack.

‍

Exemptions, Regulation, Enforcement and Where to Get Help

‍

Exemptions

‍

There are two ESOS Phase 4 exemptions. A company is exempt from completing and submitting an ESOS report for Phase 4 if it operates with a zero energy supply, or if it holds an ISO 50001 certification that covers the totality or the aforementioned significant portion of its energy consumption. It is, however, required to carry out additional steps:

‍

1. Two directors or equivalent seniority must confirm the company's zero energy supply

‍

2. Submit notice of exemption for these reasons to the UK Environment Agency

‍

3. Keep verifiable records in their internal ESOS evidence pack of their zero energy supply status and all notification of compliance materials.

‍

Regulation

‍

Your ESOS regulatory body depends on where you are registered. While the Environment Agency acts as the overall scheme administrator for ESOS across the UK, enforcement is split geographically to align with regional environmental authorities. Companies registered in England report to the Environment Agency, while those in Wales, Scotland, and Northern Ireland answer to Natural Resources Wales, SEPA, and the NIEA respectively. Additionally, the Department for Energy Security and Net Zero (DESNZ) directly regulates companies whose operations are primarily based offshore.

‍

Penalties for Non-Compliance

‍

The relevant regulator is in charge of any penalties resulting from non-compliance. If qualifying companies fail to comply, fines of tens of thousands of pounds can be attributed, including extra penalties for late submissions.

‍

Lead Assessors

‍

Lead assessors must be members of one of the approved professional body registers. The full list of approved registers can be found here.

‍

Turning ESOS Compliance into a Genuine Decarbonisation Strategy with Net Zero Assessments

‍

Although not required for Phase 4, participating companies can choose to fold voluntary net zero considerations into their assessment using the British Standards Institution's Publicly Available Specification (PAS) 51215-1 and PAS 51215-2 standards. These best practices frameworks bridge the gap between regulatory compliance and active climate action by giving guidance to transform energy audits into actionable Net Zero transition plans.

‍

It is important to note that MESOS itself currently has no facility to record these voluntary assessments, so any Net Zero Assessments made within the ESOS assessment process must be published independently for visibility.

‍

Although ESOS disclosure is mandatory for qualifying companies, the cost of reporting is estimated to be offset and then some by the savings identified through the scheme.

‍

Completing a thorough ESOS assessment is a valuable tool for compliance and identification of energy inefficiencies within your company.

‍

Want your ESOS Phase 4 audit to double as the foundation of a decarbonisation roadmap? Sami offers an ESOS assessment and carbon footprint combined bundle in collaboration with SGS.

{{newsletter-blog-3}}

‍

FAQ

‍

Do I need to submit a Phase 3 progress update if I've already qualified for Phase 4?

‍

Yes. Companies must report publicly each year on the progress of their ESOS action plans, and the final ESOS annual update report for Phase 3 is due on 5 December 2026. Furthermore, if you previously qualified for Phase 3 but no longer qualify for Phase 4, it remains your responsibility to contact your ESOS regulator to declare this change.

‍

What happens if a UK company misses the ESOS Phase 4 deadline?

‍

Missing the deadline or failing to comply can result in enforcement by regional regulators, including substantial fines and additional penalties for late submissions.

‍

Can ISO 50001 certification fully replace the ESOS energy audit?

‍

Yes. An ISO 50001 certification serves as an ESOS Phase 4 exemption provided it covers at least 95% or the totality of energy consumption, was granted after 5 December 2023, and remains valid on the compliance date of 5 December 2027.

‍