The Environment Agency (EA) is continuing to take action against organisations that have failed to meet their Phase 3 Energy Savings Opportunity Scheme (ESOS) obligations, with 161 organisations fined in the past nine months.
The government’s published list of climate change civil penalties reveals that the fines total almost £4 million, with an average fine of nearly £25,000 per organisation.
The EA’s August 2026 ESOS newsletter explained that more than 86% of ESOS participants are now compliant, but that enforcement work continues to bring the remaining 14% into compliance.
ESOS Phase 3 deadlines and enforcement
Phase 3 participants were required to submit a Notification of Compliance by August 2024 and an Action Plan by March 2025.
They also have to submit two annual Progress Updates against their Action Plan, with the first due in December 2025 and the second due on 5 December 2026.
That means there are still outstanding Phase 3 obligations for businesses to consider – while the EA continues to investigate organisations that have failed to comply with earlier requirements.
Organisations that have not met their obligations are being investigated by the relevant compliance bodies: the EA in England, alongside the equivalent regulators in Scotland, Wales and Northern Ireland.
And the latest enforcement figures show that there can be a significant financial consequence to leaving compliance issues unresolved.
Who needs to comply with ESOS?
ESOS applies to large UK undertakings and their corporate groups.
Broadly, an organisation is in scope if it:
- employs 250 or more people; or
- has an annual turnover exceeding £44 million and an annual balance sheet total exceeding £38 million.
Eligibility is determined using the relevant ESOS qualification date, so businesses should check the detailed criteria rather than relying on their current size alone.
Phase 4 is already underway
The timing of the latest enforcement activity is particularly relevant because ESOS has also recently been strengthened.
The Energy Savings Opportunity Scheme (Amendment) Regulations 2026 came into force on 22 July, with updated Phase 4 guidance published later that month.
The changes introduce fuller reporting requirements and remove two routes to compliance that were permitted in Phase 3. Participants must now comply through either an energy audit signed off by an ESOS Lead Assessor or ISO 50001 certification.
Phase 4 also requires organisations to provide more detail about the energy-saving measures they have implemented, including estimated savings for individual measures.
We recently covered the changes in more detail in our guide to ESOS Phase 4.
For organisations that still have outstanding Phase 3 requirements, this creates an important overlap: there may be historic compliance issues to resolve while preparations for the current phase are already underway.
What should businesses do now?
The latest enforcement figures are a useful prompt for any organisation that is uncertain about its ESOS position.
Businesses should check that they have:
- submitted their Phase 3 Notification of Compliance;
- submitted their Phase 3 Action Plan;
- completed any Progress Updates that are due;
- retained the required evidence and supporting documentation; and
- responded appropriately to any correspondence from the relevant regulator.
It is also worth checking that the information submitted can be supported by a clear evidence trail.
If an organisation has been contacted by the EA about potential non-compliance, addressing the issue promptly is likely to be preferable to waiting for enforcement action to escalate.
Don’t wait for the next ESOS deadline
The latest figures show that ESOS remains an active area of regulatory enforcement. With almost £4 million in penalties issued to 161 organisations, businesses that have unresolved compliance issues have a clear incentive to address them.
At the same time, Phase 4 has introduced additional requirements that organisations will need to understand and prepare for.
If you’re unsure whether your ESOS obligations are fully up to date, Sustainable Energy First can help identify any gaps and give you confidence in your compliance position.
Get in touch with the team for ESOS advice and support via the form below.
For more advice on ESOS compliance, get in touch with Sustainable Energy First’s ESOS Lead Assessors.