Supply Chain Transparency for SMEs: CSRD Requirements

Under the Corporate Sustainability Reporting Directive (CSRD), supply chain transparency is no longer a “nice-to-have” — it’s a legal expectation for large companies, and an emerging responsibility for SMEs that supply them.

Even if your company isn’t directly in scope, your larger clients will need your help to map and measure their value chain impacts. This includes sharing information about your environmental footprint, workforce practices, and governance standards.

This guide explains what supply chain transparency really means in the CSRD context, how SMEs are indirectly affected, and how you can prepare a proportionate, practical response.

See how to respond to large clients’ CSRD data requests →

What CSRD Says About Supply Chain Transparency

Article 19a of the CSRD Directive requires companies to disclose information on their value chain, including impacts, risks, and opportunities linked to upstream (suppliers) and downstream (customers) activities.

Recital 9 of the Directive highlights that business partners — including suppliers — are expected to provide sustainability data so that undertakings can understand and report on their risks and impacts throughout the value chain.

In practice, this means your clients may request information such as:

• Energy use and emissions (Scope 1 and 2)
• Waste and recycling data
• Workforce size and safety
• Policies on ethics and diversity

Learn what to expect in supplier data requests →

Why This Matters for SMEs

Large companies cannot comply with CSRD without reliable supplier data. SMEs that provide structured, consistent information will:

• Build stronger client relationships
• Gain preferred supplier status
• Be better positioned for green financing and public tenders

Ignoring or delaying sustainability data collection can, over time, lead to commercial disadvantages, even if your business is not legally required to report.

How to Build Supply Chain Transparency

1. Map Your Value Chain

List your key suppliers and partners, including manufacturers, transporters, and service providers. Identify where the biggest environmental or social impacts occur — this helps you prioritise who to engage first.

2. Collect Data Using a Standardised Format

Use the VSME Standard as your structure for collecting and sharing sustainability data. The Basic Module (B1–B11) covers everything from energy and emissions to workforce and governance.

You can use it to both:

• Respond to data requests from larger clients, and
• Request data from your own suppliers.

Explore the VSME Standard →

3. Document Data Sources and Assumptions

Whether you gather data directly or use estimates, keep clear records of:

• Data sources (e.g. invoices, utility bills, HR files)
• Assumptions (e.g. energy intensity factors, averages)
• Confidence level (high/medium/low)

This approach aligns with CSRD’s focus on verifiability and transparency.

4. Communicate Openly with Suppliers and Clients

Supply chain transparency is a two-way process. Be clear about what data you can share now and what you plan to improve. Example message:

“We currently track total electricity use and workforce size. We plan to add emissions and waste metrics next year in line with the VSME Standard.”

Such proactive communication builds trust and demonstrates progress.

Learn what to do when suppliers can’t provide CSRD data →

5. Plan for Continuous Improvement

CSRD reporting is iterative. Set simple, annual goals such as:

• Expanding data coverage to 80% of key suppliers
• Introducing a basic sustainability questionnaire
• Automating data collection via shared spreadsheets or software

Small steps compound over time into a robust, transparent supply chain.

See data collection best practices for SMEs →

Frequently Asked Questions

Are SMEs legally required to ensure supply chain transparency?

Most SMEs are not directly in scope of CSRD. However, their clients will request data to meet their own obligations. Participating voluntarily strengthens your market position and prepares you for future regulation.

What kind of data should I prioritise?

Start with environmental and workforce data — energy use, GHG emissions, waste, water, and employee numbers. These are the most common indicators requested by large clients.

Check the supplier questionnaire template →

Can I use estimates if suppliers don’t have data?

Yes. The CSRD allows estimated or proxy data when suppliers can’t provide figures, as long as you document the methodology. Over time, help your suppliers improve their reporting capabilities.

What tools can SMEs use to manage this process?

You can use simple spreadsheets, shared drives, or sustainability software tools. The key is consistency and traceability, not sophistication.

Key Terms

• CSRD (Corporate Sustainability Reporting Directive): EU directive requiring large companies to disclose sustainability impacts and risks.
• VSME Standard: Voluntary framework by EFRAG that helps SMEs collect and share sustainability data proportionately.
• Scope 3 Emissions: Indirect emissions from your value chain, including suppliers and logistics.
• Value Chain Transparency: Open disclosure of sustainability data across all business relationships.
• Double Materiality: CSRD principle assessing both the impact on the environment and the financial effect on the company.

Conclusion

Supply chain transparency is at the heart of the CSRD — and it’s reshaping how companies of all sizes do business. SMEs that start early, use the VSME framework, and communicate clearly with clients and suppliers will find compliance far less daunting. It’s not just about data; it’s about trust, collaboration, and building a value chain fit for a sustainable economy.

To understand which supply chain transparency requirements apply to your business, identify your relevant Scope 3 categories:

This tool will help you determine which supply chain categories are most relevant to your business operations.