ESOS Phase 4: Start early and prepare clients properly
By Nicolette Walshe, ESOS Lead Assessor and Energy & Carbon Specialist at Concept Energy Solutions
Having been an ESOS Lead Assessor since the scheme was introduced, Nicolette has worked with organisations ranging from single-site businesses to international companies with more than 300 locations. Drawing on experience across manufacturing, defence, aviation, retail and commercial property, she shares her advice on preparing for ESOS Phase 4 and the lessons learned from previous compliance phases.
How are you and your clients preparing for ESOS Phase 4, and what are the main priorities at this stage?
The priority is understanding what is changing and preparing well before the qualification date. One of the most important things I’m doing is keeping up to date with the latest developments and proposed changes to the scheme, so that we are ready to advise clients as soon as new requirements are confirmed.
At the same time, we are reviewing all of our existing clients and their previous submissions. Fortunately, our internal processes were robust during Phase 3, so we are refining rather than rebuilding them. We are also bringing new members of our team up to speed so they understand both the technical requirements and the practical challenges of delivering ESOS.
For clients, preparation starts with understanding their organisation. That means confirming which legal entities qualify, identifying all operational sites and, crucially, beginning data collection now rather than waiting until the deadline approaches. The earlier organisations can provide energy and organisational data, the easier audits will be required and which sites should be selected. Waiting until the last minute inevitably creates unnecessary pressure for both the organisation and the Lead Assessor.
What advice would you give organisations that are beginning their ESOS Phase 4 journey?
The single biggest piece of advice is to start early.
Every organisation is different, so preparation needs to be tailored accordingly. Some organisations already have excellent governance and routinely review energy performance. Those tend to be straightforward because the information is readily available and the right people are already engaged.
Others present much bigger challenges. We have worked with organisations where simply establishing an accurate site list proved extremely difficult. Without that information, it is impossible to determine the audit schedule or understand whether additional audits are required. Finance teams should be involved from the outset because they often hold information that other departments don’t realise is needed. Floor area data, transport information, grey fleet mileage and expenditure records frequently sit outside sustainability teams, yet they are essential for ESOS compliance.
Another common challenge is obtaining data from landlords, managing agents or energy suppliers. Sometimes organisations need support drafting requests or obtaining letters of authority before suppliers will release the required information. It can take persistence, but resolving these issues early makes the rest of the process much smoother.
Clients also need to understand that every source of energy consumption must be considered, even if it ultimately proves to be negligible. Estimates are perfectly acceptable where appropriate, but organisations need evidence demonstrating why a particular energy source is considered insignificant rather than simply excluding it.
ESOS works best when organisations view their Lead Assessor as part of the wider team rather than someone who simply arrives to produce a report.
Collaboration throughout the process produces much better outcomes.
What would help ESOS Lead Assessors deliver Phase 4 more effectively?
Earlier publication of guidance would make a significant difference. Lead Assessors often have only around a year between the qualification date and the compliance deadline, yet detailed guidance sometimes arrives after organisations have already begun work. During Phase 3, many reports had to be revisited because additional requirements, such as energy intensity ratios, were introduced later in the process. That created unnecessary work for assessors and additional costs that many consultancies simply had to absorb.
Clear regulations are essential, but it’s important to distinguish between regulations and guidance. Guidance is valuable when it explains the regulations, but it shouldn’t extend their scope. When discussing compliance with clients, I always refer back to the legislation itself because ultimately that’s what organisations are legally required to comply with. Better guidance would also reduce uncertainty around interpretation and help create greater consistency across the profession.
Establishing organisational structures has been a challenge in previous ESOS phases. How are you approaching this with your clients ahead of Phase 4, and have the action plans improved engagement between compliance phases?
Organisational structure remains one of the biggest challenges in ESOS. We proactively research organisations ourselves, using company accounts and publicly available information to identify subsidiaries and corporate relationships before discussions even begin. Cross-checking websites and Companies House records often reveals sites or entities that clients themselves haven’t identified.
International ownership can add another layer of complexity. We have encountered situations where UK organisations were unaware they had sister companies that also formed part of the qualifying group because the connection existed through an overseas parent company. Explaining joint responsibility under the regulations often requires careful discussion.
Some sectors are particularly challenging. Construction companies may have a completely different portfolio between qualification and compliance dates. Pharmaceutical companies often have commercial sensitivities around organisational information. Agriculture presents unique data collection challenges because of leased equipment and limited information.
Data collection goes hand in hand with organisational structure. Transport data, grey fleet information and energy supplied through landlords can all prove difficult to obtain. Sometimes organisations need support communicating with landlords or suppliers to explain their legal obligations under ESOS.
The introduction of action plans has encouraged more ongoing engagement between compliance phases, but in my experience the biggest improvement still comes from maintaining regular communication with clients rather than relying on formal reporting requirements alone.
Looking back at ESOS Phase 3, what are the key lessons learned you would share with other Lead Assessors and participating organisations?
Preparation and communication are everything. Engage with clients early and involve the right people from the beginning, particularly finance teams. They are often central to resolving data issues and can unlock information that sustainability teams struggle to obtain on their own.
Maintain more than one contact on the MESOS system so organisations aren’t left without access if someone changes role or leaves the business.
For participating organisations, don’t panic if you’re selected for a Phase 3 compliance audit. If you have made a genuine effort to comply and worked with a competent Lead Assessor, the Environment Agency is generally interested in helping organisations achieve compliance rather than penalising honest mistakes.
Respond promptly to requests, communicate openly and involve your Lead Assessor throughout the audit process. They can often clarify technical points, keep discussions focused on the regulatory requirements and help organisations avoid unnecessary misunderstandings.
Finally, remember that ESOS isn’t simply about producing a compliant report. The best outcomes come when organisations and Lead Assessors work collaboratively throughout the entire process. When everyone is pulling in the same direction, compliance becomes far more straightforward and organisations gain much greater value from the exercise.
