Do Small Retailers Need to Report Supply Chain Emissions?

For most retailers and wholesalers, the majority of greenhouse gas (GHG) emissions don’t come from their own operations — they come from the supply chain: the production, transport, and disposal of goods. But under the Corporate Sustainability Reporting Directive (CSRD) and the Voluntary Sustainability Reporting Standard for SMEs (VSME), the level of reporting required depends on your size and scope.

This guide helps small and medium-sized retailers and wholesalers understand whether they need to report supply chain emissions (Scope 3), and how to do so proportionately.

1. Understanding Scope 1, 2 and 3 Emissions

The GHG Protocol defines three “scopes” of emissions:

• Scope 1: Direct emissions from your own sources (e.g. gas heating, delivery vans).
• Scope 2: Indirect emissions from purchased energy (e.g. electricity for lighting and refrigeration).
• Scope 3: All other indirect emissions in your value chain — from suppliers, transport, and sold products. Learn more about what counts as Scope 1 vs Scope 2.

For most retailers, Scope 3 emissions make up more than 80% of their total footprint — from manufacturing goods to customer use and disposal.

2. What the CSRD Requires

Under Directive (EU) 2022/2464, large companies must disclose all material GHG emissions (Scopes 1, 2, and 3) using ESRS E1 – Climate Change. That includes emissions linked to their suppliers, logistics, and downstream use of sold products.

Large retailers (e.g. supermarket groups, listed wholesalers) will therefore need data from their suppliers, even if those suppliers are smaller businesses.

This is where small and medium-sized retailers come into play: even if you are not legally required to report under the CSRD, you may be asked by your larger customers or investors to provide basic emissions information.

3. What the VSME Standard Says for Small Retailers

The VSME Standard (EFRAG, 2024) is a voluntary reporting framework for unlisted SMEs. It divides disclosures into two modules:

• Basic Module (B3): Requires reporting of Scope 1 and 2 emissions only — your direct and purchased energy emissions. See our step-by-step guide to reporting Scope 1 and 2 emissions.
• Comprehensive Module (C3): Adds optional disclosure of Scope 3 (supply chain) emissions, where relevant to your business.

In short:

You should report Scope 3 only if:

• It’s significant to your environmental impact (e.g. imported goods, outsourced logistics).
• It’s requested by major clients, investors, or lenders.
• You already collect relevant data (e.g. supplier sustainability info, transport fuel use).

4. How to Decide if You Should Report Supply Chain Emissions

a. Are You Legally Required?

You are only legally required if your business meets CSRD thresholds:

• More than 250 employees, or
• €40 million turnover, or
• €20 million in total assets.

Most independent retailers and wholesalers will not meet these thresholds.

b. Are You in a Supply Chain with CSRD Companies?

If you supply or distribute products to large listed retailers or manufacturers, they will likely ask for your emissions data as part of their own CSRD reporting.

In this case, using the VSME Standard — even voluntarily — helps you respond efficiently and maintain business relationships.

c. Do Your Customers or Lenders Ask for It?

Banks and corporate buyers increasingly request sustainability data. Having even simple Scope 1–2 data (and estimated Scope 3 where relevant) helps demonstrate preparedness and responsibility.

5. How to Estimate Supply Chain Emissions (Scope 3)

Small retailers can take a practical, simplified approach without full life-cycle analysis.

Step 1. Identify Your Major Supply Chain Emissions

Typical Scope 3 categories for retail include:

• Purchased goods and packaging (plastics, paper, textiles)
• Product transport and distribution
• Waste generated from sold products (e.g. packaging disposal)
• Business travel and outsourced services

Step 2. Use Public or Supplier Data

If you don’t have emission factors:

• Use supplier-provided data (e.g. “our packaging emits 1.2 tCO₂e/tonne”)
• Or use industry databases, such as the UK DEFRA or EU GHG Protocol factors.

Step 3. Use Spend-Based Estimates

If you can’t measure quantities, estimate emissions using spend-based factors (e.g. €1,000 of clothing purchases ≈ 150 kg CO₂e). This method is widely accepted for SMEs.

Step 4. Focus on the Biggest Impacts

Report approximate emissions for the top 2–3 categories that represent most of your purchasing or logistics impact.

Example: “Our main emissions sources are product deliveries (45%) and packaging materials (35%). Total estimated Scope 3 emissions: 240 tCO₂e in 2024.”

6. Example: Voluntary Scope 3 Reporting for a Small Retailer

Company: TrendWear Boutique Employees: 15 Turnover: €1.5 million Scope 1 (Heating & vehicles): 12 tCO₂e Scope 2 (Electricity): 8 tCO₂e Scope 3 (Suppliers, logistics, packaging): 95 tCO₂e (estimated)

Actions Taken:

• Moved to 100% renewable electricity.
• Asked main clothing suppliers for emissions data.
• Switched to recycled cardboard packaging.

Disclosure (in report):

“Although not required by law, TrendWear estimates that over 80% of its emissions occur in the supply chain. The company has begun collecting supplier data to improve accuracy and reduce logistics emissions.”

7. Benefits of Voluntary Supply Chain Reporting

• Keeps you competitive with sustainability-focused buyers.
• Simplifies responses to questionnaires from larger partners.
• Improves cost control, as emissions often mirror energy or waste inefficiency.
• Demonstrates readiness for future regulation or funding programmes.

8. Practical Tips for Retail SMEs

9. Summary: What Small Retailers Should Do

If your supply chain emissions are large or your customers request them, adopting the VSME Comprehensive Module can provide a structured, proportionate way to report them.

Key Terms

• CSRD – Corporate Sustainability Reporting Directive (EU 2022/2464)
• VSME – Voluntary Sustainability Reporting Standard for SMEs (EFRAG, 2024)
• Scope 1, 2, 3 – Categories of greenhouse gas emissions under the GHG Protocol
• ESRS – European Sustainability Reporting Standards (mandatory under CSRD)
• SME – Small and Medium-Sized Enterprise
• Supply Chain Emissions – Indirect GHG emissions from purchased goods, services, and logistics
• Turnover – Total annual revenue from business activities

Not sure which Scope 3 categories apply to your retail business? Use our interactive selector to identify which categories are most relevant to your operations:

This tool will help you determine which supply chain emissions categories you should focus on reporting, based on your business type and operations.