ESOS and UK SRS: how ESOS, SECR and UK SRS work together

ESOS Phase 4 is the fourth four-year compliance cycle of the Energy Savings Opportunity Scheme, established by SI 2014/1643, originally made to implement the EU Energy Efficiency Directive and retained in UK law after Brexit.

The current amending instrument, SI 2026/701, is made under Energy Act 2023 sections 254–260 and 263 — now the operative vires, not the EU Directive.

Qualification date: 31 December 2026. An organisation’s status on this single date determines whether it is in scope of Phase 4.

Previous-phase non-qualification does not carry over — the test must be assessed afresh.

Both financial tests must be met; meeting only one is not sufficient.

This is a different and higher test than SECR’s; alignment of the two was proposed but did not happen, because SI 2026/701 left the ESOS test untouched, and no Phase 5 commitment to it has been published.

The two tests are compared line by line in the difference between ESOS and SECR.

If any UK undertaking within a corporate group meets the threshold, all other UK undertakings in that group are in scope; the group definition follows the Companies Act 2006, capturing parent, subsidiary and sister subsidiary undertakings.

Compliance period: 6 December 2023 to 5 December 2027. The responsible undertaking must notify the Environment Agency (or devolved equivalent) by 5 December 2027.

ISO 50001 covering total or significant consumption — significant meaning at least 95% of the total — deems the lead assessor, audit and ESOS report duties met, but a notification of compliance is still required.

DECs and GDAs are removed as routes: regulation 26 of SI 2026/701 omits regulation 34 of the 2014 Regulations, in force 22 July 2026.

Penalties are asymmetric

Penalties attach to the compliance-date obligations — up to £50,000 plus up to £40,000 in daily penalties for failure to undertake an assessment, a £90,000 statutory maximum.

There is no direct penalty for non-submission of an action plan or a progress update: regulations 34A and 34B are named nowhere in Part 8’s penalty chapter, a genuine statutory gap rather than regulatory forbearance.

The primary consequence is publication of the failure on the public register.

The residual route: an enforcement notice under regulation 38 requiring an action plan carries its own penalty under regulation 46(1) if not complied with — £5,000 plus £500 per working day, capped at 80 working days.

The Environment Agency publishes a summary of the ESOS penalties it has imposed in England, and its Enforcement and Sanctions Policy, Annex 2 sets out how it calculates them.

The seven Phase 4 steps, in order, are in our ESOS compliance checklist.

SECR was introduced by The Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 (SI 2018/1155), which amended Part 7 and inserted Part 7A of Schedule 7 to SI 2008/410, and inserted regulation 12B into the LLP regulations, to require energy and carbon reporting in the Directors’ Report or LLP Energy and Carbon Report.

Who is in scope

• Quoted companies — equity share capital on the Official List under FSMA Part 6, officially listed in an EEA state, or admitted to dealing on the NYSE or Nasdaq (Companies Act 2006 s.385(2)) — with no size test, and emissions and energy reported with no territorial limit.
• AIM-listed companies are not “quoted” for SECR: AIM securities are not admitted to the Official List, so an AIM company reaches SECR scope only via the size test, and may then limit its figures to the UK.
• Large unquoted UK companies and LLPs — the size test is drafted as an exemption in paragraph 20B(2) of Schedule 7 to SI 2008/410, exempting a company that satisfies two or more of “not more than” £36 million turnover, “not more than” £18 million balance sheet total and “not more than” 250 employees; a company satisfying one or none is not exempt.
• Large parent companies — must include consolidated group information where consolidated accounts are prepared.

The shape of the exemption matters: exceeding just one figure does not bring a company into SECR.

Take the shape from paragraph 20B itself — the 2026 post-implementation review restates the test as “£36 million or more … and/or 250 or more employees”, which inverts it.

What must be reported

• UK energy use (gas, electricity, transport fuel) for the reporting period, in kWh.
• Scope 1 and Scope 2 emissions — quoted companies without a territorial limit (Part 7 of Schedule 7 gives no UK carve-out); unquoted companies and LLPs report UK energy and emissions, with an express option to exclude non-UK consumption.
• At least one intensity ratio, such as emissions per £m turnover or per unit of production.
• The methodology used to calculate the figures.
• Narrative on energy efficiency measures taken in the period.
• Prior-year comparatives, from the second year of reporting.
• Scope 3 beyond the transport-fuel limb is permitted but not required.

The full disclosure list, with the quoted-company version of each line, is in our SECR reporting guide.

The de minimis relief is not automatic, is measured on UK consumption, and the figure is 40,000 kWh or less, not “under 40 MWh”.

Where UK SRS disclosures are included in the Strategic Report, the protective provisions of section 463 of the Companies Act 2006 apply.

Section 463 is a liability limitation for directors, not a source of additional liability — a point sometimes misreported.

Section 463(1) applies by its own terms to the strategic report and the directors’ report, so UK SRS disclosures placed in either fall within it.

The DBT consultation response (¶1.82) records that most respondents thought section 463 sufficient for UK SRS reporting, provided the government clarifies that it applies.

The same protection does not automatically extend to disclosures published outside those reports, so consider where UK SRS disclosures are located.