Supply Chain Compliance
CSRD requires companies to report on sustainability impacts across their value chain — not just their own operations. For your suppliers, this means engaging them on ESG data, supplier codes of conduct, and human rights due diligence.
CSRD requires companies to report on sustainability impacts across their value chain — not just their own operations. For Scope 3 Category 1 (purchased goods and services) — the typically largest Scope 3 category: GHG emissions intensity of products and services purchased; energy consumption in production; waste generated.
What you need from your suppliers
For Scope 3 Category 1 (purchased goods and services) — the typically largest Scope 3 category: GHG emissions intensity of products and services purchased; energy consumption in production; waste generated.
For ESRS S2 (workers in value chain): Working conditions compliance — wages, hours, health and safety; human rights policies and grievance mechanisms; collective bargaining coverage; country-level risk assessment.
For ESRS G1 (business conduct): Anti-corruption and anti-bribery policy compliance; supplier code of conduct adherence; payment terms compliance.
The VSME standard for supplier data
The VSME (Voluntary SME Standard) is being developed by EFRAG specifically to help SME suppliers provide the ESG data their large customers need for CSRD reporting.
The VSME contains a simplified set of data points — a subset of the full ESRS — that SMEs can report without the full burden of CSRD compliance. Expected in final form during 2026.
For companies with large SME supply chains, encouraging supplier adoption of VSME reporting will significantly improve the quality of Scope 3 Category 1 data over time.
High-risk supplier prioritisation
Not all suppliers present equal risk. High-risk suppliers are those in: high-emitting industries (manufacturing, logistics, agriculture); high human-rights-risk geographies (Southeast Asia, parts of Africa and South America); sectors with known labour issues (garments, electronics assembly, mining).
Concentrate your supplier engagement budget on high-risk, high-spend suppliers first. A matrix of spend × sector risk × geographic risk identifies your priority engagement list.
For highest-risk suppliers, independent audits (SA8000, SMETA, or equivalent) provide assurance-ready evidence of supply chain compliance.
Frequently asked questions
Can we require our suppliers to comply with CSRD?
Not directly — CSRD applies to companies meeting the size thresholds. But you can require suppliers to provide ESG data via contractual clauses and supplier codes of conduct. Large companies are increasingly making ESG data provision a contract condition.
What is CSDDD and how does it relate to supply chain?
The Corporate Sustainability Due Diligence Directive (CSDDD) requires large EU companies to identify, prevent, and mitigate adverse human rights and environmental impacts in their supply chains. It goes beyond data disclosure — it requires active due diligence. CSDDD applies from 2027–2029 depending on company size.
How do we calculate Scope 3 Category 1 without supplier data?
Use spend-based emission factors (EEIO) as a starting point. This gives ±50-100% accuracy but is sufficient for initial screening. ESGMaster's Scope 3 calculator provides Category 1 spend-based estimates immediately, with a pathway to primary data as supplier engagement matures.