ESOS Phase 4: net zero requirements postponed as focus shifts to delivery

ESOS Phase 4 is no longer set to become a major net zero compliance exercise. In February 2025, the UK Government announced that several planned reforms would be pushed back to Phase 5, giving organisations more time to absorb the recent Phase 3 changes and understand how they are working in practice. A further Government update in July 2026 confirmed that this approach still stands.

The headline change is that mandatory net zero assessment requirements will now wait until Phase 5 (expected to run from 2027 to 2031). For Phase 4 (compliance date 5th December 2027), the focus remains on energy efficiency but with a stronger emphasis on whether organisations are actually delivering the energy-saving actions they have already identified.

What's changed

Net zero requirements postponed

One of the more ambitious proposed reforms was to broaden ESOS beyond energy efficiency, requiring organisations to give greater consideration to net zero and decarbonisation measures. The Government has deferred this until Phase 5, so it will not apply for the current phase. Organisations that want to go further than the current energy efficiency requirements are being encouraged to make voluntary use of the PAS 51215 and 51216 standards (more on these below), which look increasingly like a precursor to the net zero requirements planned for Phase 5.

Qualification thresholds hold steady

The Government's February 2025 announcement proposed aligning ESOS thresholds more closely with the Streamlined Energy and Carbon Reporting (SECR) regime, but this wasn't reiterated in the July 2026 update, suggesting it has also been pushed back to Phase 5.

Phase 4 thresholds therefore remain unchanged: organisations qualify if they have 250 or more employees, or turnover above £44 million and a balance sheet total above £38 million.

From audit exercise to delivery

The main new requirement for Phase 4 is that organisations must report on progress against the energy-saving actions identified in previous ESOS cycles. This includes:

• progress against action plan commitments;

• energy savings achieved during the compliance period, including which measures were implemented, the savings delivered by each, and the relevant energy saving category; and

• an explanation where commitments have not been delivered.

This marks a shift from ESOS being treated largely as an audit exercise to one that increasingly asks organisations to demonstrate what they've actually implemented.

Fewer routes to compliance

The Government intends to remove Display Energy Certificates (DECs) and Green Deal Assessments (GDAs) as alternative compliance routes for Phase 4. Organisations relying solely on ISO 50001 certification will see their obligations reduced: where certification covers total or significant energy consumption, they will no longer need to produce an ESOS report or appoint a lead assessor.

Key dates

Phase 4's qualification date is 31st December 2026 - the date on which organisations assess whether they fall within scope.

The compliance notification deadline is 5th December 2027, by which qualifying organisations must complete their Phase 4 assessment, obtain board-level sign-off where required, and submit their compliance notification through MESOS (Managing your Energy Savings Opportunity Scheme), the Environment Agency's reporting system. This system itself isn't changing, but Phase 4 does expand the information organisations need to provide, including on implementation progress and savings achieved.

Organisations that qualified for Phase 3 should also note that their obligation to submit annual Progress Updates continues, with a new third Progress Update required by 5 December 2031.

What to do now

With 6–12 months to go before the qualification date, organisations should be:

• Confirming likely Phase 4 qualification status e.g. reviewing group structure, employee numbers and financial thresholds ahead of 31st December 2026. Organisations close to the thresholds should keep a close eye on their position.

• Reviewing Action Plan delivery - for those that submitted Phase 3 Action Plans, assessing which measures have been completed, which remain outstanding, and the reasons behind any that haven't been delivered.

• Strengthening energy data and evidence gathering - making sure robust systems are in place to collect energy consumption data, track savings from efficiency projects, and document implementation decisions.

• Considering voluntary use of the PAS standards - PAS 51215 and 51216 offer a voluntary route for organisations wanting to combine energy efficiency and decarbonisation assessments, helping them assess emissions from energy use, identify decarbonisation opportunities and develop implementation plans towards net zero.

Our view

The direction of travel here isn't a change of ambition so much as a change of sequencing. The Government still wants ESOS to evolve into something closer to a net zero planning tool,  it's just pushed that transition into Phase 5, giving organisations more time to embed the Phase 3 changes and demonstrate delivery before decarbonisation requirements are layered on top.

For organisations close to the qualification thresholds, or still working through Phase 3 action plans, that extra time will likely be welcome. But the shift towards accountability for delivery, rather than simply producing an audit, means the real test of Phase 4 will be less about compliance on paper and more about evidence of what's actually been done.

If you'd like to discuss what these changes mean for your organisation, please get in touch.