Value Chain Reporting
CSRD extends sustainability reporting beyond your own operations to your entire value chain — upstream suppliers and downstream customers. This is one of the most demanding aspects of CSRD compliance and requires significant supplier engagement.
CSRD extends sustainability reporting beyond your own operations to your entire value chain — upstream suppliers and downstream customers. Value chain reporting requires you to understand and disclose the sustainability impacts, risks and opportunities that occur across your entire supply and distribution chain — not just in your own operations.
What value chain reporting covers
Value chain reporting requires you to understand and disclose the sustainability impacts, risks and opportunities that occur across your entire supply and distribution chain — not just in your own operations.
Upstream: your suppliers of goods, services and raw materials; their suppliers (tier 2 and beyond for material relationships); logistics and transportation providers.
Downstream: distributors, retailers, customers; product users and end consumers; end-of-life treatment of your products.
The proportionality principle
ESRS acknowledges that obtaining data from thousands of suppliers is impractical. The proportionality principle allows you to focus your engagement on material relationships — the suppliers and customers that account for the most significant sustainability impacts.
In practice: identify your top suppliers by spend, by sector risk, and by emission intensity. Prioritise primary data collection from these relationships. Use industry average data for remaining suppliers.
The 3-year SME relief
CSRD recognises that SME suppliers cannot be expected to immediately provide detailed ESG data. A 3-year transitional relief applies — for the first three years of your CSRD reporting, you may use estimated data for SME suppliers where primary data is unavailable.
After the transition period, you are expected to have engaged your material SME suppliers on data provision. The VSME standard (Voluntary SME standard) provides a framework for SMEs to report the data their customers need.
Frequently asked questions
How far up the supply chain do we need to report?
As far as necessary to identify your material impacts. For most companies, tier 1 suppliers are sufficient for initial compliance. Where tier 1 suppliers have significant sub-contractor risks (e.g. raw material extraction), tier 2 mapping may be required.
What if our suppliers refuse to share data?
You can use estimated data and disclose this in your report. Over time, supply chain engagement programmes and contractual ESG data requirements in supplier agreements will improve data quality. Lack of supplier data is a transition challenge recognised by EFRAG.
Does our subsidiary's ESG data count as value chain or own operations?
Subsidiaries within your consolidation boundary are own operations — their data is included in your direct reporting. Suppliers and customers outside your consolidation boundary are value chain.