Do I Need to Report Subcontractor Emissions?

Introduction

If your construction business relies on subcontractors — for transport, specialist trades, or site operations — you might be wondering whether their emissions fall under your CSRD reporting.

The short answer is yes — but proportionately. Under the Corporate Sustainability Reporting Directive (CSRD) and ESRS E1 (Climate Change), companies must account for Scope 3 emissions, which include activities performed by subcontractors and suppliers.

However, SMEs and smaller contractors aren’t expected to measure every kilogram of CO₂e. The VSME Standard (EFRAG 2024) allows you to use estimates, spend-based data, or industry averages — as long as your approach is transparent and consistent.

This guide explains what subcontractor emissions include, how to report them without overburdening your business, and how to document your methods correctly.

1. Understanding Subcontractor Emissions (Scope 3)

Under the GHG Protocol, which the CSRD aligns with, subcontractor emissions typically fall into Scope 3, Category 1 or 4:

• Category 1 – Purchased goods and services: Materials and services supplied by subcontractors (e.g. scaffolding, machinery hire, finishing works).
• Category 4 – Upstream transportation and distribution: Deliveries, freight, or logistics arranged by subcontractors.

If a subcontractor performs work on your behalf, their energy and fuel use form part of your value chain emissions — even if you don’t directly control it.

Think of it as your project’s extended carbon footprint.

2. When SMEs Are Expected to Include Subcontractor Data

Not every subcontractor’s emissions need to be tracked in full detail. CSRD uses a “materiality” principle — meaning you report what significantly affects your total impact or is relevant to stakeholders.

As an SME, you should:

• Include subcontractors that account for a large share of project activity or spend.
• Focus on high-emission activities like transport, concrete works, steel fabrication, or heavy machinery use.
• Use estimates for minor or short-term subcontractors.

Under VSME B7 (Energy and Emissions), proportionality is allowed — you can aggregate small contributors rather than reporting them individually.

3. How to Estimate Subcontractor Emissions

If you can’t obtain direct energy data from subcontractors, use one of the following practical estimation methods:

Document which method you used, why it was appropriate, and any assumptions or data sources.

For a detailed explanation of how to handle incomplete data, see our guide on how to estimate missing data for CSRD reporting.

4. Collecting Subcontractor Data Step-by-Step

If you want to improve accuracy over time, follow a simple data collection process:

1. Request basic energy data (fuel use, electricity, materials) in subcontractor agreements.
2. Add a short ESG questionnaire for large partners (e.g. annual fuel or material usage).
3. Store supplier data centrally in your sustainability file or reporting software.
4. Cross-check large subcontractor invoices with project energy records to avoid double counting.

Even partial data helps improve transparency and can strengthen your bids for public or green contracts.

5. Reporting Subcontractor Emissions Under CSRD and VSME

In your sustainability statement, report subcontractor emissions as part of your Scope 3 inventory. A clear narrative is key:

Example disclosure:

“Scope 3 emissions from subcontracted services were estimated at 95 tCO₂e in 2025, based on major subcontractor fuel use and industry averages. Data quality improvements are planned through supplier engagement and contract updates in 2026.”

This demonstrates both accountability and progress, which is exactly what auditors look for under limited assurance.

For construction SMEs using the VSME Basic Module, a simplified disclosure could read:

“The company estimates that subcontractor activities account for approximately 20% of total project emissions. Data collection from key partners is ongoing.”

6. Improving Over Time

You’re not expected to get it perfect in year one. The CSRD is built around continuous improvement. Over time:

• Ask subcontractors to share fuel, transport, or material data annually.
• Standardise ESG clauses in contracts.
• Move from spend-based to activity-based estimates for high-impact trades.
• Use software to manage supplier and project-level data.

Each year, aim to replace estimates with measured data where feasible — this shows progress toward accuracy and completeness.

Frequently Asked Questions

Do small subcontractors need to report their own emissions?

No, unless they’re directly under CSRD scope. You, as the main contractor, can estimate their contribution or request simple data as part of your Scope 3 reporting.

What if a subcontractor refuses to share data?

You can use spend-based or benchmark estimates. As long as your method is reasonable and transparent, it remains compliant.

Should I include equipment hire?

Yes — machinery and transport services hired through third parties are part of your indirect emissions if used on your project.

How do I avoid double counting emissions?

Only include emissions related to subcontractors’ activities performed for your projects. Exclude unrelated operations, and use clear allocation methods (e.g. hours or project share).

Key Terms

• Scope 3 emissions – Indirect GHG emissions in your value chain, including suppliers and subcontractors.
• Materiality – Determining which impacts are significant enough to disclose.
• VSME Standard – Simplified reporting standard for SMEs aligned with CSRD.
• Spend-based method – Estimating emissions using cost × emission factor.
• Limited assurance – Moderate-level audit confirming reasonableness of reported data.

Conclusion

Yes — subcontractor emissions count under CSRD, but your reporting approach should be proportionate and transparent. Focus on significant partners and activities, use credible estimates, and document your methodology.

By gradually improving data collection from key subcontractors, your SME will not only meet CSRD expectations but also strengthen sustainability credentials for tenders and client reporting.

To schedule your data gathering and reporting cycle, see our annual CSRD reporting calendar.

To understand which subcontractor-related emissions categories apply to your business, use our interactive selector:

This tool will help you determine which Scope 3 categories are most relevant to your subcontractor relationships and value chain.