ESOS vs SECR
ESOS vs SECR: what is the difference?
ESOS vs SECR in one line: ESOS is a four-yearly energy assessment scheme with its own regulator and penalties, and SECR is an annual energy and carbon disclosure in the accounts.
Their thresholds differ, their deadlines differ, and complying with one does not satisfy the other.
Two regimes
An audit scheme and a disclosure duty
ESOS requires a qualifying organisation to measure its total energy consumption, have it assessed through an ESOS energy audit or covered by ISO 50001, and notify the Environment Agency that it has complied.
Since Phase 3 it has also required an action plan and progress updates on the measures the organisation intends to take.
SECR requires a company to disclose its energy use and emissions every year in its directors’ report, which is filed with its accounts; an LLP prepares a separate energy and carbon report.
Neither regime replaces the other, and many large organisations are in both.
The scheme administrator for ESOS is the Environment Agency, which publishes the guidance on behalf of all the UK regulators, while DESNZ is responsible for ESOS policy.
SECR has no scheme administrator: it sits in company law, and its enforcement runs through the Companies Act 2006, as SECR enforcement explains.
The Environment Agency’s Phase 4 guidance lists SECR alongside CCAs and UK ETS and says participation in them “does not automatically count as ESOS compliance”.
SECR data can help calculate ESOS energy consumption; it does not discharge any ESOS duty.
Side by side
ESOS and SECR, compared
| ESOS | SECR | |
|---|---|---|
| Legal basis | SI 2014/1643, as amended by SI 2023/1182 and SI 2026/701 (in force 22 July 2026) | SI 2008/410 Sch 7 Part 7 (quoted) and Part 7A (unquoted), inserted by SI 2018/1155; SI 2008/1911 reg 12B (LLPs) |
| Frequency | Four-yearly compliance periods, with an action plan and annual progress updates | Every financial year |
| What it requires | An ESOS assessment of total energy, with an audit or ISO 50001 covering total or significant (at least 95%) consumption | Disclosure of energy use, emissions, an intensity ratio, methodology and efficiency measures |
| Where it goes | Notification to the Environment Agency through MESOS | The directors' report, filed with the accounts |
| Who runs it | Environment Agency (scheme administrator); a regulator in each nation | No scheme regulator; the FRC can apply to court |
| Who is in it | Large undertakings under Sch 1 — group aggregation applies | Quoted companies, large unquoted companies and large LLPs — 19,900 in scope |
| Threshold | At least 250 employees, OR turnover in excess of £44m AND balance sheet in excess of £38m | Quoted: no size test. Unquoted and LLP: exceeding at least two of £36m turnover, £18m balance sheet, 250 employees |
| Intensity ratio | An energy intensity ratio for each organisational purpose (up to four) | At least one emissions ratio for the company |
| Qualified person | A lead assessor from an approved register (unless exempt) | None named; the directors approve the report |
| Penalties | Part 8: £50,000 (the regulator may set less) plus £500 per working day for failing to assess; none for a missed action plan | No SECR penalty; the Companies Act s.419 offence on directors |
Qualification
Two tests that work differently
ESOS applies to a “large undertaking” under Schedule 1 to the ESOS Regulations: one that employs at least 250 persons, or has an annual turnover in excess of £44 million and an annual balance sheet total in excess of £38 million.
The employee limb is “at least”, so 250 qualifies; the money limbs are “in excess of”, so exactly £44 million does not.
Status is fixed on the qualification date, 31 December 2026 for Phase 4, and group aggregation applies under regulations 15 and 17.
A large undertaking keeps that status until it falls below the thresholds for two consecutive accounting periods.
SECR applies to every quoted company, and to an unquoted company or LLP that is not exempt under the paragraph 20B test — in practice one exceeding at least two of £36 million turnover, £18 million balance sheet and 250 employees.
The SECR figures were not moved by the Companies Act uplift of April 2025, so they remain lower than the ESOS money limbs.
The previous government’s proposal to change the ESOS thresholds to align with SECR did not go ahead for Phase 4, SI 2026/701 left Schedule 1 untouched, and no Phase 5 commitment to that change has been published.
For how the ESOS money test is applied to groups, see this fuller breakdown of ESOS thresholds; the SECR test in full is on SECR thresholds.
The drafting that decides boundary cases
| Limb | ESOS | SECR (unquoted) |
|---|---|---|
| Employees | At least 250 — 250 qualifies | Not more than 250 is exempt — 250 does not count as exceeding |
| Turnover | In excess of £44m | More than £36m counts |
| Balance sheet | In excess of £38m | More than £18m counts |
| How combined | Employees OR (turnover AND balance sheet) | Any two of three |
Sources: SI 2014/1643 Sch 1 ¶¶1, 1A; SI 2008/410 Sch 7 ¶20B(2)
Who is in which
Both, one, or neither
Illustrative cases for a UK company that is not part of a group. Real groups must apply each scheme’s aggregation rules.
| Company | ESOS | SECR | Why |
|---|---|---|---|
| 300 staff, £20m turnover, £10m balance sheet | Yes | No | At least 250 staff for ESOS; exceeds only one SECR limb |
| Exactly 250 staff, £30m turnover, £15m balance sheet | Yes | No | 250 is "at least 250" for ESOS but "not more than 250" for SECR |
| 200 staff, £40m turnover, £20m balance sheet | No | Yes | Exceeds two SECR limbs; turnover not over £44m for ESOS |
| 200 staff, £50m turnover, £40m balance sheet | Yes | Yes | Both ESOS money limbs exceeded; two SECR limbs exceeded |
| Quoted company, 50 staff, £10m turnover | No | Yes | SECR applies to quoted companies at any size |
The cases show why each scheme has to be checked on its own terms: a company can be in ESOS and not SECR, or in SECR and not ESOS, on the same accounts.
Because ESOS fixes status on its qualification date and SECR looks at each financial year, a company can also move in and out of the two at different times.
Who reports under SECR, including AIM companies and subsidiaries, is covered on SECR eligibility.
Deadlines
A four-year cycle beside an annual one
ESOS runs in four-year compliance periods set by regulation 4: Phase 4 runs from 6 December 2023 to 5 December 2027, with a qualification date of 31 December 2026 and a compliance date of 5 December 2027.
The Phase 4 action plan is due by 5 December 2028, followed by three progress updates, due by 5 December 2029, 2030 and 2031.
The third update is new in Phase 4, added by SI 2026/701 regulation 28.
The Environment Agency’s Phase 4 guidance, published on 30 July 2026, sets out the same dates, though it contradicts itself in places on the number of updates; the regulations say three.
SECR has no phases: it is reported every year, in the accounts filed within the section 442 period — nine months after the year end for a private company and six for a public one.
The SECR dates by year end are on SECR deadlines.
ESOS Phase 4
- 6 Dec 2023Compliance period begins
- 5 Dec 2026Phase 3 progress update due
For organisations with a Phase 3 action plan.
- 31 Dec 2026Qualification date
Size on this date decides Phase 4.
- 5 Dec 2027Compliance date
Notification of compliance.
- 5 Dec 2028Action plan
Covering 6 Dec 2027 – 5 Dec 2031.
- 2029 · 2030 · 2031Three progress updates
Each due by 5 December.
Sources: SI 2014/1643 regs 4, 34A, 34B; SI 2026/701 reg 28
One number, two rules
The 40,000 kWh boundary runs both ways
| ESOS | SECR | |
|---|---|---|
| Rule | No lead assessor needed where total energy consumption is less than 40,000 kWh | Figures may be omitted where the company consumed 40,000 kWh or less, if the report says so |
| At exactly 40,000 kWh | The exemption does not apply — "less than" | The relief applies — "or less" |
| Territory | No territorial qualifier | Unquoted and LLP: in the United Kingdom only |
| Provision | SI 2014/1643 reg 21(3) | SI 2008/410 Sch 7 ¶20D(7)(a); ¶15(5)(a) for quoted |
The two figures look the same and are not: a participant at exactly 40,000 kWh must appoint a lead assessor under ESOS and may rely on the SECR low-energy relief.
Neither is an exemption from the scheme itself — an ESOS participant below 40,000 kWh still notifies compliance, with two responsible officers signing, and a SECR company still states why it has omitted the figures.
Shared data
What can be reused, and what cannot
Both schemes start from energy consumption data, so the same bills, meter readings and fuel records serve both.
The Environment Agency’s guidance says energy data collected for another scheme can be used to calculate total energy consumption for ESOS, but that the organisation is likely to have to do additional work.
The scopes differ: ESOS covers all energy across four organisational purposes — transport, industrial processes, buildings and any other purpose — while SECR’s required figures for unquoted companies are gas, transport fuel and electricity.
The ratios differ too: regulation 25C requires an energy intensity ratio for each organisational purpose, while SECR requires at least one emissions ratio, as the SECR intensity ratio explains.
ESOS audit findings can inform the SECR description of the principal energy efficiency measures a company has taken, which is covered on ESOS and SECR reporting.
The SECR guidance, the government’s environmental reporting guidelines, was last updated on 29 March 2019 and predates ESOS Phase 4 entirely.
The full ESOS route is set out in the ESOS Phase 4 compliance guide, and specialist ESOS consultants can carry out the assessment end to end, although the participant must still appoint a lead assessor from an approved register unless an exemption applies.
Penalties
A penalty scale against a company-law offence
| ESOS failure (SI 2014/1643 Part 8) | Maximum |
|---|---|
| Failing to carry out an ESOS assessment (reg 45) | £50,000, plus £500 per working day for up to 80 working days |
| Failing to notify compliance (reg 43) | £5,000, plus £500 per working day for up to 80 working days |
| Failing to comply with a compliance, enforcement or penalty notice (reg 46) | £5,000, plus £500 per working day for up to 80 working days |
| Failing to keep records (reg 44) | £5,000, plus the cost of confirming compliance |
| False or misleading statement (reg 47) | £50,000 |
| Missing an action plan or progress update | No penalty in Part 8 — the failure is published |
How the Environment Agency sets an ESOS penalty in practice is in Annex 2 of its enforcement and sanctions policy.
For a new entrant in its first compliance period, the Agency says it will normally impose a lower initial penalty of up to £5,000 for failing to undertake an energy audit.
A missed action plan or progress update carries no penalty because Part 8 does not name those duties; the scheme administrator publishes the failure instead.
SECR has no penalty of its own: a director who approves a directors’ report knowing it does not comply, or reckless as to whether it does, commits an offence under section 419(3)–(4) of the Companies Act 2006.
The FRC can apply to court for a defective report to be revised, and has never needed to — the detail is on SECR enforcement and penalties.
What next
One consultation for both
The Modernising corporate reporting consultation of 7 September 2026 records that DESNZ intends to hold a consultation on SECR and ESOS later in 2026.
It says that consultation will build on the evaluation of SECR published on 29 January 2026 and on an evaluation of ESOS that is under way.
As at 30 September 2026 it has not been published, so both regimes stand as they are.
For ESOS, that means the Phase 4 rules in SI 2026/701 and the GOV.UK ESOS page, rewritten for Phase 4 on 2 September 2026.
To talk through which regime applies to a particular organisation, you can book a free 15-minute call.
Frequently asked
ESOS vs SECR — frequently asked
What is the difference between ESOS and SECR?
ESOS is a four-yearly energy assessment scheme run by the Environment Agency under SI 2014/1643: a qualifying organisation measures its energy use, has it audited or covered by ISO 50001, notifies compliance, and then files an action plan and progress updates. SECR is an annual disclosure of energy use and emissions in the directors' report under the Companies Act regime. One is an audit-and-action scheme; the other is a reporting duty.
Do I need to comply with both ESOS and SECR?
Many large organisations do, but the tests are different and each must be checked separately. ESOS catches an undertaking with at least 250 employees, or with turnover over £44 million and balance sheet over £38 million. SECR catches every quoted company, and unquoted companies and LLPs exceeding two of £36 million turnover, £18 million balance sheet and 250 employees.
Does SECR reporting count as ESOS compliance?
No. The Environment Agency's Phase 4 guidance lists SECR among schemes whose participation does not automatically count as ESOS compliance. SECR energy data can help calculate total energy consumption for ESOS, but the ESOS assessment, notification, action plan and progress updates are separate duties with their own route to the Environment Agency.
Are the ESOS and SECR thresholds the same?
No. ESOS uses an employee test OR both money tests: at least 250 employees, or turnover in excess of £44 million and balance sheet in excess of £38 million. SECR uses a two-of-three test at £36 million, £18 million and 250 employees, and applies to quoted companies at any size. A proposal to align the ESOS thresholds with SECR did not go ahead for Phase 4.
When are the ESOS Phase 4 deadlines?
The Phase 4 qualification date is 31 December 2026 and the compliance date is 5 December 2027. The action plan is due by 5 December 2028, and three progress updates follow, due by 5 December 2029, 5 December 2030 and 5 December 2031. SECR has no phases: it is reported every year with the accounts.
What are the penalties under ESOS and SECR?
ESOS has its own civil penalties in Part 8 of SI 2014/1643, including £50,000 plus £500 per working day (capped at 80 working days) for failing to carry out an assessment, and £5,000 plus the same daily amount for failing to notify. There is no ESOS penalty for a missed action plan or progress update. SECR has no penalty of its own; the Companies Act 2006 section 419 offence applies to directors who approve a non-compliant report.
Is there a 40,000 kWh exemption in both schemes?
There is a 40,000 kWh figure in both, but it works differently. Under ESOS, no lead assessor is needed where total energy consumption is less than 40,000 kWh. Under SECR, a company that consumed 40,000 kWh or less (in the UK, for unquoted companies and LLPs) may omit the figures if the report says so. At exactly 40,000 kWh the ESOS rule does not apply and the SECR relief does.
Who regulates ESOS and SECR?
The Environment Agency is the ESOS scheme administrator for the whole UK, with the Environment Agency, Natural Resources Wales, the Scottish Environment Protection Agency and the Northern Ireland Environment Agency as regulators by location, and DESNZ responsible for policy. SECR has no scheme regulator; the FRC is authorised to apply to court about a defective directors' report.
Sources
Primary sources
Every figure, date and status on this page traces to the instrument’s owner. Secondary commentary is never the source for a number.
- legislation.gov.ukThe Energy Savings Opportunity Scheme Regulations 2014 (SI 2014/1643)
The ESOS instrument; cite with SI 2026/701 for Phase 4.
- legislation.gov.ukSI 2014/1643, Schedule 1 — the large undertaking test
At least 250 persons, or turnover over £44m and balance sheet over £38m.
- legislation.gov.ukSI 2014/1643, regulation 4 — compliance periods
Generates the Phase 4 dates: 6 Dec 2023 – 5 Dec 2027; qualification 31 Dec 2026.
- legislation.gov.ukSI 2014/1643, regulation 5 — the scheme administrator
The Environment Agency.
- legislation.gov.ukSI 2014/1643, regulation 25C — energy intensity ratios
One for each organisational purpose.
- legislation.gov.ukSI 2014/1643, Part 8 — civil penalties
Regs 43–47: the five penalties; none for action plans or progress updates.
- legislation.gov.ukSI 2026/701 — ESOS (Amendment) Regulations 2026
In force 22 July 2026: DECs and GDAs removed; ISO 50001 on total or significant consumption.
- legislation.gov.ukSI 2026/701, regulation 28 — the third progress update
Inserts reg 34B(1)(c).
- Environment AgencyHow to comply with ESOS phase 4 (30 July 2026)
§4.5: SECR, CCAs and UK ETS do not automatically count as ESOS compliance.
- Environment AgencyESOS: find out if you qualify and how to comply (rewritten 2 September 2026)
The GOV.UK hub; seven approved lead assessor registers.
- Environment AgencyEnforcement and sanctions policy, Annex 2: climate change schemes
How ESOS penalties are calculated; §D2.3 on new entrants.
- legislation.gov.ukSI 2018/1155 — the SECR regulations
In force 1 April 2019.
- legislation.gov.ukSI 2008/410, Schedule 7 paragraph 20B — the SECR size test
£36m / £18m / 250, two or more.
- legislation.gov.ukSI 2008/410, Schedule 7 paragraph 20D — SECR disclosures and reliefs
¶20D(7)(a): 40,000 kWh or less in the UK, stated.
- legislation.gov.ukCompanies Act 2006, section 419
The directors' offence behind a defective SECR disclosure.
- legislation.gov.ukCompanies Act 2006, section 442
The accounts filing period that carries the SECR deadline.
- GOV.UKEnvironmental reporting guidelines, including SECR requirements
The SECR guidance, last updated 29 March 2019.
- Department for Energy Security and Net ZeroIndependent evaluation of SECR (29 January 2026)
19,900 organisations in SECR scope.
- Department for Business, Innovation, Science and TradeModernising corporate reporting — consultation (7 September 2026)
¶150: DESNZ intends to consult on SECR and ESOS later in 2026.