Supply Chain Transparency for SMEs: CSRD Requirements

Under the Corporate Sustainability Reporting Directive (CSRD), companies with more than 1,000 employees and net turnover above €450 million must disclose their value chain impacts — environmental, social, and governance effects that happen at their suppliers, subcontractors, and customers. Small and growing businesses (SMEs) are drawn in indirectly: if your business supplies a CSRD reporter, your clients will request your sustainability data to complete their own disclosures.

The pressure is already live. The first wave of large public-interest companies published CSRD reports in 2025, for financial year 2024, and published their second reports in 2026. The next group of large reporters starts with financial year 2027, but they are building supplier data processes now — which is why questionnaires keep arriving well ahead of the reporting date.

This guide explains what CSRD requires on supply chains, which data points your clients will typically ask for, and how your business can prepare a proportionate response without rebuilding your operations. For practical response guidance, see How to Respond to Clients’ CSRD Data Requests. For handling subcontractor-specific Scope 3 data, see How to Report Subcontractor Emissions Under CSRD.

What CSRD Says About Supply Chain Transparency

Article 19a of the Accounting Directive, as inserted by the CSRD, 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 CSRD notes the other side of this: business partners, including customers, “might rely on sustainability information to understand and, where necessary, report on their sustainability risks and impacts throughout their own value chains” (source 1). That is why your customers ask you for data.

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

Since the Omnibus I directive (Directive (EU) 2026/470, in force 18 March 2026), these requests have a legal ceiling: a value-chain partner with an average of 1,000 employees or fewer can decline to give a CSRD reporter more than the voluntary standard specifies (source 2). The cap does not stop every extra question. Information needed under other EU or national law is outside it, and practitioner analysis of the 2026 Voluntary Standard reads climate targets (VSME C3), climate risks (C4) and Scope 3 data as outside it too (source 3). Even so, it makes VSME the benchmark for what a reasonable request looks like.

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?

No SME is in scope of CSRD since Omnibus I: mandatory reporting now applies only to companies with more than 1,000 employees and more than €450 million turnover (source 2). 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. Estimates are common practice, and the VSME standard’s own guidance uses them where direct measurement is not possible (for example, estimating water withdrawal from calculation models or industry standards). Document the method and assumptions so your client can rely on the figure. 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.

Sources

1. Directive (EU) 2022/2464 (CSRD), recital 9.
2. Linklaters, EU Omnibus I Directive published in the Official Journal of the EU: Directive (EU) 2026/470 published 26 February 2026, in force 18 March 2026; CSRD scope of more than €450 million net turnover and more than 1,000 employees; value-chain undertakings with an average of up to 1,000 employees may decline requests beyond the voluntary standard.
3. Fiegenbaum Solutions, Five gaps in the EU value-chain cap: Annex II of the Voluntary Standard delegated act as the exhaustive cap; C3, C4 and Scope 3 outside it; exemption for obligations under other Union or Member State law. This is a practitioner reading, not official guidance.

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 the requests far less daunting, and will earn the trust that keeps them in the supply chain.

The practical shortcut is to collect each figure once and reuse it. An ESG answer bank stores your energy, waste, and workforce answers with their sources, ready for every questionnaire that arrives, and a free VSME report tool generates a finished report from those answers at no cost.

Before you assess supply chain transparency requirements, see our Scope 3 categories guide for SMEs to identify the categories most relevant to your operations.