Key Changes to ESOS Phase 4 in 2026

Introduction  

The Energy Savings Opportunity Scheme (ESOS) regulations are changing once again, with updates confirmed for ESOS Phase 4 ahead of the 2026 qualification date and 2027 compliance deadline. For large UK organisations, these changes mark an important shift in how ESOS reporting is approached, with a stronger focus on accountability, measurable progress, and energy savings. 

In this article, we explore what ESOS reporting involves, who it applies to, the key changes organisations need to be aware of for Phase 4 and take a look ahead to Phase 5 predictions. 

What is ESOS Reporting and Why is it Important? 

Energy Saving Opportunity Scheme (ESOS) is a mandatory energy assessment implemented by the UK government, designed to help large organisations understand and reduce their energy consumption. 

ESOS applies to companies that meet certain size thresholds generally those with over 250 employees or significant annual turnover. 

Under ESOS regulations, organisations are required to carry out comprehensive energy audits across their buildings, industrial processes, and transport operations. These audits identify opportunities to improve energy efficiency, lower costs, and reduce carbon emissions. 

Although ESOS reporting is mandatory, completing it is about more than just staying compliant, and there are a number of additional benefits for businesses. 

• Cost Savings – By highlighting inefficient energy use, businesses can take measures that can result in significant financial savings. 

• Environmental Impact – Reducing energy consumption helps organisations contribute to the UK’s climate targets and combat climate change. 

• Compliance and Reputation – ESOS is a legal obligation, and failing to comply can lead to fines and other penalties. 

• Strategic Insight – ESOS audits provide businesses with actionable insights, helping them to make informed decisions about energy management and long-term efficiency investments. 

Who does ESOS Reporting Apply to? 

ESOS reporting applies to all large UK undertakings and their corporate groups that meet the following criteria: 

Large undertakings 

An organisation qualifies if it has: 

250 or more employees, or fewer than 250 employees but: 

• An annual turnover in excess of £44 million, and 

• An annual balance sheet total in excess of £38 million 

Corporate groups 

If any UK entity within a corporate group meets the above criteria, the entire UK group (including subsidiaries) may fall within scope. 

This applies to: 

• Private sector companies 

• Public sector bodies undertaking commercial activities 

• UK registered companies 

• UK establishments of overseas companies 

Organisations are exempt if they: 

• Do not meet the size thresholds 

• Are fully covered by ISO 50001 certification (though notification is still required) 

• Cease trading before the compliance deadline 

ESOS is currently overseen by the Environment Agency in England, with equivalent regulators in Scotland, Wales, and Northern Ireland. 

What Does ESOS Reporting Involve? 

Organisations completing ESOS reporting must undertake a detailed structured review of their energy consumption and identify practical opportunities to improve energy efficiency across their operations. 

The process involves a number of steps: 

1. Measure total energy consumption 

Organisations must calculate their total energy usage across a 12-month period. This includes energy consumed in buildings such as offices and warehouses, any industrial processes and transport. 

This establishes an accurate energy profile of the organisation that can be used as a baseline. 

2. Identify areas of high consumption 

After calculating total consumption, organisations can then look closer to determine which areas account for the most energy use. Areas accounting for over 95% must be covered by compliance routes such as energy audits or ISO 50001 certification. 

3. Conduct energy audits 

For any energy that is not covered by an ISO 50001-certified Energy Management System, organisations must carry out ESOS-compliant energy audits. These audits must: 

• Be led or reviewed by an approved ESOS Lead Assessor 

• Analyse energy use and efficiency 

• Identify cost-effective energy-saving opportunities 

• Be proportionate to the scale and complexity of energy consumption 

The audits are designed to highlight practical actions that can reduce energy usage, costs, and carbon emissions. 

4. Board-level review 

A board-level director (or equivalent) must formally review and sign off the ESOS assessment findings. This ensures accountability and demonstrates that energy efficiency is considered at a strategic level within the organisation. 

5. Notify the Environment Agency 

Organisations must notify the relevant regulator of compliance by the phase deadline via the MESOS portal. In England, this is administered by the Environment Agency, with equivalent bodies operating in Scotland, Wales, and Northern Ireland. 

ESOS Phase 3 

ESOS Phase 3 was introduced in 2018 as the third phase of the UK’s Energy Savings Opportunity Scheme and required large organisations in the UK to undertake mandatory energy assessments every four years. 

Phase 3 covered the compliance period up to 5 December 2022 and introduced several important updates to energy reporting: 

• Stronger governance requirements – Board-level directors were required to review and formally sign off ESOS submissions. 

• Greater reporting standards – Clearer expectations were set around the calculation of total energy consumption and audits. 

• Focus on action and energy savings opportunities – Whilst ESOS remained an audit-based scheme, Phase 3 placed increased emphasis on identifying practical, cost-effective energy efficiency measures through the introduction of the ESOS Action Plan and Progress Updates 1 & 2, all of which had deadlines from 2024-2026. 

• Improved compliance guidelines – The regulator provided more detailed guidance to help organisations avoid errors and reduce non-compliance risks. 

Key Changes to ESOS Phase 4 in 2026 

There are a number of changes that are being introduced with ESOS Phase 4, and it’s important to stay informed to ensure you remain compliant: 

• Green Deal Assessments (GDAs) and Display Energy Certificates (DECs) have been removed as compliance routes, meaning companies that previously relied on these will now need to demonstrate compliance either through certification to ISO 50001 or by undertaking formal energy audits. 

• Organisations will be required to report on progress against commitments made in their previous ESOS action plans. This will include providing explanations where previous commitments haven’t been fulfilled, although further guidance on the exact reporting format is still expected.  

• Voluntary net zero reporting will be introduced using the standards PAS 51215-1:2025 and PAS 51215-2:2025, which align traditional energy efficiency assessments with broader decarbonisation assessment criteria. 

Looking Ahead: ESOS Phase 5 

Businesses preparing for ESOS Phase 5 should take note of key dates to stay compliant. ESOS Phase 5 will run from 6th December 2027 – 5th Dec 2031. 

Organisations that qualify will need to audit their energy usage (including buildings, transport, and industrial processes) by the qualification date of 31 December 2030. The compliance deadline is 5th Dec 2031. 

Whilst the Net Zero reporting element is only voluntary in Phase 4, we expect this to become a requirement in Phase 5. 

Early planning is essential to ensure all audits are completed accurately and on time. By understanding these dates and starting audits promptly, organisations can ensure smooth compliance with the upcoming ESOS requirements. 

Supporting You on Your ESOS Journey 

The Consultus Sustainability team has been supporting businesses with ESOS compliance since 2014. We’re here to help you complete your ESOS reporting ahead of upcoming deadlines, so you can stay compliant.  

Contact us today to learn more about how we can assist you with your ESOS obligations and take advantage of our net zero services. Let’s work together towards a more sustainable future! 

You can find more guidance about the Energy Savings Opportunity Scheme (ESOS) here.