What is it?
The Energy Savings Opportunity Scheme (ESOS) is a mandatory energy audit and assessment programme for large UK companies. Companies in scope are required to assess total energy use and identify cost-effective savings.
ESOS is rolled out in phases, and ESOS Phase 4 is approaching. With the qualification date (31 Dec 2026) drawing closer, now is the time to check if you’re in scope, review progress on existing actions and make sure you’ve got the right data and evidence in place to support your energy-saving claims.
Phase 4 Focus
In July 2026 the UK Government confirmed its plans ESOS Phase 4, with a continued focus on energy efficiency. This phase is all about delivering the actions you’ve committed to. There is a notable shift towards delivering action on commitments. Companies will now need to prove they are delivering the energy-saving commitments they previously identified as well as explaining where commitments have not been met.
Who is in scope?
Any entity in the UK which triggers either of the following thresholds as of 31st December 2026 is in scope for ESOS Phase 4 reporting:
250 or more employees, or
Turnover >£44m and Balance Sheet >£38m.
If any entity in a UK corporate group triggers either of these thresholds then all entities in that group fall into scope.
This is particularly notable for our Private Equity clients where certain portfolio companies will trigger the compliance threshold, and could bring other smaller portfolio companies along for the ride due to the “one in all in”[1] approach.
[1] Under the UK's Energy Savings Opportunity Scheme (ESOS), the "one in, all in" rule means that if a corporate group has at least one UK member company that qualifies as a large undertaking, the entire corporate group must be included in the ESOS energy assessment and compliance.Key dates for ESOS Phase 4:
Qualification Date: 31 December 2026 – this is the reference date for determining whether you are in scope for reporting.
Notification Date: 5 December 2027 – this is the date by which you must have completed your environmental audits, obtained relevant board-level sign off, received Lead Assessor approval and submitted your compliance notification to the Environment Agency by submitting your ESOS report via their MESOS platform, the Environment Agency's reporting system.
Action Plan Date: 5 December 2028 – this is a board-approved document which sets out committed measures (a clear list of energy-saving actions you plan to take, sourced from your ESOS energy audit, or identified independently); timelines and targets. It’s also submitted via MESOS.
Progress Updates Due: 5 December 2029, 5 December 2030, 5 December 2031
Phase 3 Progress Update: 5 December 2026 - 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 2026.
Consequence of non-Compliance
ESOS is enforced by the Environment Agency (EA), which audits a random selection of reports each year (around 10%). Public disclosure and fines are applied for companies found to be non-compliant.
What’s new in phase 4?
Companies will still need to measure and report their energy consumption as before. 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.
What about net zero?
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 4 (compliance date 5th December 2027). 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, which look increasingly like a precursor to the net zero requirements planned for Phase 5 (2027–2031).
What should you do now?
Ahead of the Phase 4 qualification date (31 December 2026), organisations should:
Confirm likely Phase 4 qualification status e.g. review group structure, employee numbers and financial thresholds ahead of 31st December 2026.
Review Action Plan delivery - for those that submitted Phase 3 Action Plans, the next step is to assess which measures have been completed, which remain outstanding, and the reasons behind any that haven't been delivered. You have until by 5th December 2026 to submit.
Consider energy data and evidence gathering – i.e. make sure you’ve got good systems in place to collect energy consumption data, track savings from efficiency projects, and document implementation decisions. Seek advice if you’re not sure what data you need or can help hold of.
Consider 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 to assess emissions from energy use, identify decarbonisation opportunities and develop implementation plans towards net zero.
How can Danesmead help?
We can handhold you through the entire ESOS process and support with ongoing action plans an annual updates. Please get in touch to find out more!
Further Reading
