SECR and ESOS energy reporting

SECR and ESOS are two different UK energy and carbon reporting regimes, and they’re often confused with each other because both apply to larger businesses and both are about energy. This guide sets out what each one actually requires, the thresholds that decide whether your business is in scope, the current ESOS Phase 4 dates, and the penalties for getting it wrong.

What are SECR and ESOS, and how do they differ?

SECR is an annual reporting requirement built into your company’s own accounts. ESOS is a separate four-yearly energy audit requirement enforced by the Environment Agency, with different qualification thresholds. The practical differences:

	SECR	ESOS
What it requires	Reporting UK energy use, emissions and efficiency actions	Carrying out an energy audit covering at least 95% of energy use
How often	Every year, in your directors’ report	Every four years
Who enforces it	Companies House, as part of normal accounts filing	The Environment Agency (in England; equivalent bodies elsewhere in the UK)
Who qualifies	UK quoted companies, and large unquoted companies/LLPs meeting size tests	Large undertakings meeting employee or financial thresholds

Because the tests are different, a business can be caught by one, both, or neither. Don’t assume that qualifying for one automatically means you qualify for the other.

Does SECR apply to your business?

SECR applies to UK quoted companies, and to large unquoted companies and LLPs that meet at least two of three size tests. For an unquoted company or LLP, you’re in scope if you meet at least two of:

• more than 250 employees
• turnover of more than £36 million
• a balance sheet total of more than £18 million

These thresholds are set specifically in the SECR regulations and are different from the general company size thresholds used elsewhere in the Companies Act, which rose to £54 million turnover and £27 million balance sheet for medium-sized companies from 6 April 2025. Don’t use the general Companies Act medium-sized company thresholds to check SECR; use the SECR-specific figures above.

A large unquoted company that used 40,000 kWh of energy or less in the UK during the year doesn’t have to disclose the energy and carbon information, provided its report explains why.

Worked example: checking whether SECR applies

This is a worked illustration of how to apply the test, not advice on any specific company.

Suppose an unquoted company has 180 employees, turnover of £40 million, and a balance sheet total of £15 million.

• Employees: 180, below the 250 threshold. Test not met.
• Turnover: £40 million, above the £36 million threshold. Test met.
• Balance sheet: £15 million, below the £18 million threshold. Test not met.

Only one of the three tests is met, and SECR requires at least two, so this company would not be in scope on these figures. Change any one of the inputs, for example turnover growing further or employee numbers rising above 250, and the answer could flip, so it’s worth rechecking each year rather than assuming last year’s answer still holds.

What does SECR require you to report?

If you’re in scope, your directors’ report must include:

• Your UK energy use in kWh, covering at least electricity, gas and transport fuel.
• The related greenhouse gas emissions from that energy use.
• At least one intensity ratio (emissions per unit of some relevant measure, such as revenue or floor area), so the figures can be compared year on year and against other organisations.
• The methods used to calculate the figures.
• The main energy efficiency measures taken during the year.

Quoted companies have slightly different, broader requirements that also cover global emissions, not just UK energy use. This guide focuses on the more common large unquoted company and LLP position; if your company is quoted, check the specific quoted company requirements in the government’s environmental reporting guidelines.

Does ESOS apply to your business?

ESOS applies to large undertakings that meet either the employee threshold or both financial thresholds on the scheme’s qualification date. For the current phase, ESOS Phase 4, the qualification date is 31 December 2026. You qualify if, at that date, your UK organisation (including group subsidiaries and associates):

• employs 250 or more people, or
• has annual turnover above £44 million and an annual balance sheet total above £38 million (both tests must be met together for the financial route).

If any single UK entity within a corporate group meets either threshold, the whole UK group is generally in scope. Once you qualify, you generally continue to qualify until you fail the tests for two consecutive accounting periods, so a single quieter year doesn’t automatically take you out of scope.

ESOS has run in phases since it was introduced, each with its own qualification date and compliance deadline, rather than being a one-off requirement. Phase 4 is the current phase as of September 2026. Because the qualification date resets each phase, a business that didn’t qualify in an earlier phase can still qualify in Phase 4 if it has since grown, merged, or reorganised, and equally a business that qualified before could fall out of scope if it has shrunk.

What does an ESOS assessment involve?

An ESOS assessment is an energy audit covering the great majority of your energy use, carried out or reviewed by an approved lead assessor, then formally notified to the Environment Agency. In outline:

1. Calculate your total energy consumption across buildings, transport and industrial processes.
2. Ensure your chosen compliance route (energy audits, or deemed-compliant routes such as a certified ISO 50001 energy management system) covers at least 95% of that total energy consumption. The remaining 5% can be treated as de minimis and excluded.
3. Calculate energy intensity ratios for your buildings, transport and industrial processes, for example kWh per square metre for buildings.
4. Appoint a lead assessor to carry out or review the audits.
5. Prepare an ESOS report setting out your findings.
6. Notify compliance to the Environment Agency through its online system.
7. From Phase 4 onwards, prepare and later report against an action plan setting out how you intend to improve energy efficiency.

Phase 4 removed Display Energy Certificates and Green Deal Assessments as alternative compliance routes that earlier phases allowed, so if your business used either of those before, check the current guidance for what now applies instead.

What are the key ESOS Phase 4 dates?

Milestone	Date
Qualification date	31 December 2026
Energy audits completed and compliance notified	5 December 2027
Action plan submitted	5 December 2028
Progress updates	2029 and 2030

If your business qualifies on the 31 December 2026 qualification date, the clock for completing your audits and notifying the Environment Agency runs to 5 December 2027. Don’t leave sourcing a lead assessor until close to that date, since demand for qualified assessors tends to increase as deadlines approach.

Can you use the same data for SECR and ESOS?

Not directly, but the groundwork overlaps. SECR asks for your annual UK energy use, emissions and an intensity ratio, reported every year. ESOS asks for a detailed audit of at least 95% of your energy use, carried out every four years, with more granular intensity ratios by building, transport and industrial process. A business caught by both will find that the metering, sub-metering and data collection it needs for a thorough ESOS audit also makes its annual SECR figures easier and more accurate to produce, and vice versa: good SECR data collection habits make an ESOS audit less of a scramble when your phase comes round. Treat them as complementary rather than duplicate exercises if you’re in scope for both.

What happens if a business doesn’t comply?

The Environment Agency can issue civil penalties, and the figures are set out directly in the ESOS regulations. Under the Energy Savings Opportunity Scheme Regulations 2014:

• Failing to carry out a required energy audit carries an initial penalty of up to £50,000, plus a daily penalty of up to £500 for each working day the breach continues after a compliance notice, capped at 80 working days (a further £40,000 maximum).
• Failing to comply with other requirements, such as notifying compliance or keeping adequate records, carries an initial penalty of up to £5,000, plus the same daily penalty structure, capped at 80 working days.
• Penalty notices can also be published, so non-compliance can become public.

SECR sits within your normal company accounts and directors’ report, so getting it wrong is generally treated as a failure of your statutory filing obligations under the Companies Act, enforced through the normal Companies House framework, rather than through the separate ESOS civil penalty regime.

What should a business do now?

1. Check the SECR thresholds against your own company or LLP’s employees, turnover and balance sheet, using the SECR-specific figures, not the general Companies Act size bands.
2. Check the ESOS thresholds against your UK group’s position on 31 December 2026, including subsidiaries and associates, not just the entity that might sign the notification.
3. If you’re close to either threshold, don’t wait until the deadline. Group structures, recent growth or an acquisition can bring a business into scope that wasn’t previously.
4. If ESOS applies, start sourcing a lead assessor well ahead of the 5 December 2027 compliance deadline.
5. If SECR applies, build energy and emissions data collection into your normal reporting cycle, rather than scrambling for figures at year end.
6. If neither applies, you can still use the same measurement approach voluntarily. Our net zero for small businesses guide covers a lighter-touch way to track and reduce your energy use and emissions without a statutory reporting duty behind it.
7. Get this checked by your accountant or a qualified adviser if you’re unsure. The consequences of getting SECR wrong sit within your statutory accounts, and the ESOS civil penalties are significant enough that it’s worth professional confirmation rather than relying on a general guide like this one for the final word on your specific circumstances.

Whether or not SECR or ESOS applies to you, the practical first step for cutting your energy costs is the same: understand where your energy actually goes. A business energy audit can do this whether or not you’re legally required to, and once you know your usage, compare business energy quotes to make sure you’re paying a fair price for it.

Frequently asked questions