Does My Organisation Need to Comply with ESOS Phase 4?

Who must comply with ESOS Phase 4?

Businesses who meet the qualification criteria for ESOS Phase 4 employ 250 or more people, and/or have an annual turnover over £44 million and a balance sheet total over £38 million.

Public sector organisations are generally exempt, but some with mixed funding or non-profit elements may still fall within scope. Therefore, if one organisation within a UK corporate group meets the ESOS Phase 4 criteria, the entire group may be required to comply.

Key dates and deadlines for ESOS Phase 4

Organisations will need to confirm whether they meet the below criteria on this date. Furthermore, If an organisation is very close to the threshold for qualification or has recently grown or shrunk, then they may need to look back over several accounting periods to establish if they qualify.

Compliance must be submitted to the Environment Agency via the MESOS portal by the deadline. This should include information on the total energy consumption, and recommendations highlighting estimated energy savings.

What are the new requirements for ESOS Phase 4?

ESOS Phase 4 largely retains the same reporting framework as Phase 3. Hence, the qualification criteria remains unchanged from Phase 3, and so far only minor updates have been confirmed, mainly relating to increased reporting transparency and the removal of certain compliance routes:

• Display Energy Certificates (DECs) and Green Deal Assessments (GDAs) can no longer be used as compliance routes.
• Organisations that were required to submit an ESOS Phase 3 Action Plan that must include progress updates on their Action Plan commitments in their ESOS Phase 4 submission. If planned actions are not completed, an explanation must be provided.

What ESOS Phase 4 changes are not going ahead?

The government has postponed several previously‑announced changes. As a result, the changes not proceeding in Phase 4 include mandatory Net Zero reporting requirements (Net Zero ambitions are voluntary in Phase 4; expected to be mandatory from Phase 5 onwards) and qualification thresholds (intended to align with Streamlined Energy and Carbon Reporting (SECR) have also been postponed until Phase 5).

ESOS FAQs

What is the Action Plan requirement?

Introduced in Phase 3 and continuing in Phase 4, organisations must:

• Prepare an Action Plan outlining energy-reduction measures and expected savings
• Submit mandatory progress updates in subsequent years
• Include action plan progress in the Phase 4 ESOS assessment

What counts as an ESOS Audit in Phase 4?

Audits must now follow stricter requirements, including:

• Detailed energy use reporting
• Updated estimation methods
• Minimum audit standards
• Expanded definitions of energy types

Is guidance for Phase 4 final?

Not yet, however UK Government plans to further publish full guidance and update the ‘Manage your ESOS reporting’ system by early 2027 ahead of the compliance deadline.

What is MESOS?

MESOS (Manage Your Energy Savings Opportunity Scheme) is the updated ESOS reporting platform, replacing Smart Survey and requiring more detailed data submissions in Phase 4.

What happens if my business qualified for Phase 3 but no longer meets the criteria?

If you are told you need to comply with ESOS, but have determined you do not meet the criteria, you must still submit a Do Not Qualify (DNQ) notification to the Environment Agency via the MESOS portal by the compliance deadline.

How McGrady Clarke can support with ESOS

We provide full ESOS compliance support, including on-site audits, data analysis and guidance through ESOS Phase 3 Action Plan implementation. Also, our team supports you with the MESOS portal submission process, to guide you in meeting your obligations while identifying opportunities to cut costs and carbon emissions.

Even if your organisation is exempt, energy efficiency measures can still reduce costs, improve environmental performance, and support corporate sustainability goals.

Contact a specialist at McGrady Clarke today to start preparing for compliance ahead of the deadline.