Most organisations that qualify for ESOS Phase 4 compliance don’t know it yet. Those that do often assume it works the same as Phase 3. It doesn’t — and the differences matter.
The compliance deadline is 5 December 2027. The qualification period started on 6 December 2023 — it’s already running.
What is ESOS?
ESOS (the Energy Savings Opportunity Scheme) is a mandatory energy audit programme for large UK organisations. If you qualify, you must carry out energy audits across your buildings, industrial processes and transport operations, then report your findings to the Environment Agency. Non-compliance carries civil penalties of up to £90,000, plus £500 per day for continued failure.
Do you qualify for ESOS Phase 4?
You qualify if, at any point during the Phase 4 qualification period (6 December 2023 to 5 December 2027), your organisation has:
- 250 or more employees, OR
- an annual turnover exceeding £44 million AND a balance sheet total exceeding £38 million
Group structures and overseas subsidiaries of UK-qualifying companies also fall within scope. If you qualified for Phase 3, you almost certainly qualify for Phase 4.
What has changed in Phase 4?
Phase 4 is a significant step up from previous compliance cycles. Here is what has changed.
Annual reporting is now required
Under Phase 3, you reported once at the end of the compliance period. Phase 4 introduces annual reporting obligations. You will need to submit an annual energy report to the Environment Agency — not just a final compliance notification.
Net zero alignment is now part of ESOS
For the first time, your energy audit must include consideration of your net zero or decarbonisation plans. You will need to show how your energy improvement recommendations connect to those plans — or explain why they don’t. This is a meaningful change for organisations that have made net zero commitments but haven’t yet connected them to their energy management work.
Transport is now in scope for everyone
Under Phase 3, transport was only required if it represented a significant proportion of your energy use. Under Phase 4, transport must be included in all ESOS audits. For organisations with large vehicle fleets or significant business travel, this is a material change that will require data gathering and audit work you may not have done before.
Updated audit standards
The approved standards for Phase 4 are ISO 50002 and EN 16247. If your previous audit methodology was built around older guidance, it will need reviewing before your Phase 4 audit begins.
Larger audit sample sizes
The required audit sample size has increased under Phase 4. This means more sites, assets or operations may need to be assessed compared to previous phases — particularly relevant for organisations with large or diverse property portfolios.
What should you be doing now?
The 2027 deadline may sound distant, but ESOS Phase 4 compliance takes time to do properly — especially with the expanded transport scope, larger audit samples, and the new net zero alignment requirement. Audit capacity tightens significantly as deadlines approach, and Lead Assessors become harder to book.
Organisations in scope should now be:
- Confirming whether they qualify under the Phase 4 rules
- Appointing or confirming a registered Lead Assessor
- Gathering energy data across buildings, processes and transport
- Beginning audits — for complex or multi-site organisations, starting in 2025 or 2026 is sensible
Waiting until 2027 is a genuine risk. Rushed audits produce weaker recommendations, and the new Phase 4 requirements give you less room to cut corners.
How Green Team can help
Green Team Consulting carries out ESOS audits across buildings, industrial processes and transport. Our in-house Lead Assessor, Kerry Hamilton, is a Chartered Energy Manager registered via the Energy Institute. We work with organisations across manufacturing, financial services, commercial property and testing laboratories.
We also help organisations connect their ESOS findings to broader decarbonisation planning — which is exactly what Phase 4 now requires.
If you are not sure whether your organisation qualifies, or you want to understand what ESOS Phase 4 means in practice, get in touch. Email nick@gtconsulting.co.uk or call 0794 1044866.