Executive summary
ESOS Phase 4 keeps the four-yearly assessment cycle and the action plan and progress-update regime introduced for Phase 3, with some important changes. Your organisation qualifies if, on 31 December 2026, it is a large undertaking: a UK company that employs 250 or more people, or has an annual turnover over £44 million and an annual balance sheet total over £38 million. A corporate group qualifies if at least one UK member is a large undertaking. The notification of compliance is due through MESOS by 5 December 2027.
Background and regulatory context
ESOS was introduced in 2014 to implement Article 8 of the EU Energy Efficiency Directive and continues under the ESOS Regulations 2014, most recently amended in 2026. The Environment Agency is the scheme administrator and the regulator for England; Natural Resources Wales, SEPA and the Northern Ireland Environment Agency regulate in the devolved nations. Phase 3 added a requirement to publish an action plan and annual progress updates. Phase 4 builds on that.
What's new in Phase 4
- Display Energy Certificates and Green Deal Assessments can no longer be used as alternative compliance routes.
- The ESOS report and notification must set out energy savings achieved during the compliance period, including the measures, the saving from each and its category.
- Participants must review their previous action plan and explain any measures that were not implemented.
- A third annual progress update is now required, so action plans are tracked across the whole following compliance period.
- Energy intensity ratios must use verifiable data where reasonably practicable, or a reasonable estimate.
- Participants can voluntarily add a decarbonisation assessment using PAS 51215-1:2025 and PAS 51215-2:2025.
Why this matters
Phase 4 makes the action plan cycle harder to treat as a one-off. Savings achieved and commitments missed now have to be reported and explained, and the Environment Agency publishes most of what you notify. Organisations that treated earlier phases as a desk exercise should expect gaps in energy data quality and in the evidence behind their action plan.
Who is affected
- UK companies that meet the large-undertaking test on 31 December 2026.
- Corporate groups in which at least one UK member is a large undertaking.
- UK registered establishments of overseas companies, where other parts of the group's UK activities meet the criteria.
- Property businesses and funds with UK entities that meet the test. Check each group structure carefully.
Key dates
- 5 December 2026 — Phase 3 participants: annual progress update on the Phase 3 action plan due through MESOS.
- 31 December 2026 — Phase 4 qualification date.
- Audit data — must cover a 12-month period beginning no earlier than 6 December 2022, and no earlier than 24 months before the audit starts.
- 5 December 2027 — Phase 4 notification of compliance due through MESOS.
- 5 December 2028 — Phase 4 action plan due.
- 5 December 2029, 2030 and 2031 — annual progress updates due.
Recommended actions
- Confirm qualification at group level against the 31 December 2026 position.
- If you took part in Phase 3, submit your progress update by 5 December 2026.
- Refresh the ESOS energy data and check it against your SECR figures where you report under SECR.
- Appoint a lead assessor from an approved register early in 2027, unless your significant energy consumption is covered by ISO 50001.
- Plan the action plan (due 5 December 2028) as a real energy plan, because progress against it will be reported and published.
Risks of inaction
- Penalties of up to £5,000 plus £500 per working day (up to 80 days) for failing to notify, and up to £50,000 plus £500 per working day (up to 80 days) for failing to carry out an energy audit.
- Up to £50,000 for a false or misleading statement.
- Publication of penalties by the regulator, and publication by the Environment Agency of any failure to submit an action plan or progress update.
- Reputational exposure with investors, customers and procurement counterparties.
Key takeaways
- Action plans and progress updates are not new, but Phase 4 adds reporting of savings achieved, a review of missed commitments and a third progress update.
- Qualification date: 31 December 2026. Notification deadline: 5 December 2027.
- Phase 3 participants have a progress update due by 5 December 2026.
NZC Consultants has ESOS lead assessors on the Elmhurst and Quidos approved registers. To plan your Phase 4 compliance, talk to NZC Consultants.
Sources
- GOV.UK: ESOS — find out if you qualify and how to comply
- Environment Agency: How to comply with ESOS phase 4
Compliance dates and requirements are based on GOV.UK and Environment Agency Phase 4 guidance as at October 2026. They are not legal advice. Check the Environment Agency guidance for any update.