In an era of increasing energy costs and environmental concerns, businesses are under growing pressure to improve energy efficiency and reduce carbon emissions. The UK government’s Energy Savings Opportunity Scheme (ESOS) plays a critical role in this effort, requiring large organisations to assess and report their energy consumption.Â
Compliance with the Energy Savings Opportunity Scheme not only helps businesses meet regulatory obligations but also highlights opportunities to cut costs and enhance sustainability. With upcoming changes tightening sustainability reporting requirements and increasing accountability, it’s more important than ever for businesses to understand and prepare for ESOS compliance.
What does ESOS stand for?Â
ESOS stands for Energy Savings Opportunity Scheme. It is a mandatory energy assessment scheme in the UK that requires large organisations to audit their energy use and identify energy-saving opportunities.
What is ESOS reporting?Â
ESOS is a UK government initiative that requires large businesses to conduct energy audits and identify energy-saving opportunities. It is designed to improve energy efficiency and reduce carbon emissions across industries.
ESOS reporting is the process businesses must follow to comply with the Energy Savings Opportunity Scheme regulations, ensuring they meet legal obligations by assessing their energy consumption and efficiency at least once every four years. Organisations are required to participate in ESOS if they meet any of the following criteria:
- They employ 250 or more people
- They have an annual turnover exceeding £44 million and an annual balance sheet total over £38 million
- They are part of a larger corporate group that meets these criteria
Public sector organisations are exempt, but many charities, non-profits, and trusts fall under the Energy Savings Opportunity Scheme if they meet the financial thresholds.
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Overview of ESOS reporting requirementsÂ
Below is an overview of the key requirements under the Energy Savings Opportunity Scheme.
Energy audits
Businesses must conduct comprehensive energy audits covering at least 95 percent of total energy consumption across buildings, industrial processes, and transport. These audits must be carried out or reviewed by a qualified ESOS Lead Assessor.
Identification of energy savings opportunities
Companies must identify cost-effective energy-saving measures, but they are not legally required to implement them.
Measurement and data collection
Organisations must collect 12 months of verifiable energy consumption data, including electricity, gas, transport fuel, and industrial process energy use. The data must be recent (no older than 24 months before the compliance deadline).
ESOS compliance report submission
Organisations must submit compliance reports to the UK’s Environment Agency (EA) or the relevant regulator in Scotland, Wales, or Northern Ireland. The report must confirm that the energy audits have been conducted and that findings have been reviewed by a board-level director.
Record keeping and documentation
Businesses must retain ESOS records for at least two compliance periods to demonstrate how they have assessed energy use and identified efficiency opportunities.
ESOS deadlines
ESOS operates on a four-year compliance cycle, requiring large UK organisations to conduct mandatory energy audits and report their energy consumption. Meeting ESOS compliance deadlines is critical to avoiding financial penalties and ensuring businesses can capitalise on cost-saving and energy efficiency opportunities. Below are the key compliance dates:
- ESOS Phase 1 Deadline – 5 December 2015 (Completed): Organisations were required to conduct their first round of energy audits and submit compliance reports to the Environment Agency.
- ESOS Phase 2 Deadline – 5 December 2019 (Completed): The second compliance phase required businesses to reassess their energy use and identify further efficiency measures.
- ESOS Phase 3 Deadline – Extended to 5 June 2024 (Previously 5 December 2023): The UK Government extended the deadline due to planned regulatory changes, giving businesses additional time to meet new reporting and disclosure requirements.
- ESOS Phase 4 Deadline – Expected in 2027: The next compliance cycle will introduce stricter regulations to align with the UK’s net-zero and energy efficiency targets.Â
However, the ESOS is set to evolve further, with upcoming updates in Phase 3 introducing stricter reporting requirements to enhance transparency and drive energy efficiency improvements. One major change will be the introduction of mandatory energy efficiency action plans, requiring organisations to outline concrete steps for reducing energy consumption.Â
Additionally, ESOS will align more closely with Streamlined Energy and Carbon Reporting (SECR) to ensure consistency across corporate sustainability disclosures. The updated framework will also expand reporting requirements, holding businesses more accountable for their carbon reduction efforts. These developments signal a shift from ESOS being a compliance-driven audit scheme to a proactive tool for driving real energy savings, reinforcing the UK’s commitment to achieving net zero.
Final thoughts – What does ESOS compliance look like?
ESOS compliance is an opportunity for businesses to identify energy savings, improve operational efficiency, and contribute to the UK’s net-zero targets. While ESOS focuses on energy efficiency, broader sustainability regulations – such as the Corporate Sustainability Reporting Directive (CSRD) – are reshaping corporate accountability on a global scale. Stay ahead of evolving regulations and enhance your organisation’s sustainability strategy with our online CSRD training, designed to equip businesses with the knowledge and tools to navigate the changing regulatory landscape.Â
