CSRD Value Chain: What Large Companies Ask from SME Suppliers

If you are an SME that recently received an ESG questionnaire from a large customer and want to understand the bigger picture, start with our sustainability reporting starter guide. This post zooms in on exactly why that questionnaire landed on your desk and what to do about it.

Why your largest customer is suddenly asking for ESG data

The Corporate Sustainability Reporting Directive (CSRD) requires undertakings that remain within its revised scope to report under the European Sustainability Reporting Standards (ESRS). Those standards do not stop at the company boundary — they explicitly require disclosure of value chain impacts, risks, and opportunities.

In practice, that means your customer needs data from you.

Three ESRS requirements drive the bulk of requests flowing to SME suppliers:

1. ESRS E1 — Climate change. Large companies must report Scope 3 greenhouse gas emissions. For most, purchased goods and services (Category 1) and upstream transportation (Category 4) are the largest Scope 3 categories — and the data comes from suppliers.
2. ESRS S2 — Workers in the value chain. Companies must describe their approach to labour conditions across the supply chain, including any due diligence on supplier workforce practices.
3. ESRS G1 — Business conduct. Anti-corruption policies and supplier payment practices feed into the governance disclosure.

What exactly gets asked

Based on the questionnaires we see arriving at SME desks, the typical data request breaks down into five categories:

Emissions and energy

• Total energy consumption (MWh), split by source (grid electricity, natural gas, diesel, renewables)
• Scope 1 greenhouse gas emissions (tonnes CO₂e) — direct fuel combustion and fugitive emissions
• Scope 2 greenhouse gas emissions (tonnes CO₂e) — purchased electricity, location-based method
• Occasionally: carbon intensity per unit of revenue or per product delivered

Workforce

• Total headcount, split by gender and employment type (permanent, temporary, contract)
• Geographic distribution of employees
• Health and safety: recordable incident count, lost-time injury frequency rate

Policies and governance

• Existence of environmental, anti-corruption, and human rights policies (yes/no with reference)
• Supplier code of conduct in place (yes/no)
• Whistleblower or grievance mechanism available (yes/no)

Environmental operations

• Water withdrawal volumes (if material to your sector)
• Waste generation and disposal methods (if material)
• Pollution incidents in the reporting period

Forward-looking

• Emissions reduction targets (if any)
• Climate transition plan elements (if any)
• Science-based targets commitment (if any)

Most SMEs can answer the first three categories from existing records. The last two are optional for VSME Basic and only appear in more demanding questionnaires.

How to respond without overbuilding

The mistake we see most often: an SME receives a questionnaire, panics, and either ignores it (risky) or tries to build a full sustainability department overnight (expensive and unnecessary).

The proportionate response:

1. Recognise the pattern. If one customer asks, more will follow. This is not a one-off request — it is the new normal for SMEs in CSRD supply chains.
2. Produce a VSME Module Basic report. It covers the data points above. One report, reusable across counterparties. See our VSME reporting guide for the full walkthrough.
3. Share proactively. Do not wait for the next questionnaire. Send your VSME report with your next commercial proposal. It positions you ahead of competitors who are still scrambling.
4. Track what gets asked beyond Basic. If a customer asks for Scope 3 or targets, note it — that signals when to consider Comprehensive. But do not build Comprehensive on speculation.

Timeline: when the requests arrive

The former rollout was changed in 2026:

• 2024 reporting year: First-wave NFRD entities reported under the original timetable and continue to need value-chain information where material.
• 2025–2026 reporting years: National law and the transition derogation matter. Member States may exempt undertakings that no longer meet the revised general test — normally both more than 1,000 average employees and more than €450 million net turnover.
• From the 2027 reporting year: Undertakings remaining in scope move to the revised ESRS; group, third-country and national implementation rules still require case-specific review.

See Directive (EU) 2026/470. Supplier requests can continue even when the supplier or customer leaves direct scope, but the reason may be procurement, financing or another in-scope customer rather than a new statutory reporting wave.

What happens if you do not respond

You will not be fined — CSRD imposes no obligation on non-listed SMEs. But the commercial impact is real:

• Procurement deprioritisation. Suppliers who provide ESG data score higher in ESG-weighted procurement. Those who do not may lose tenders.
• Proxy data penalty. If your customer cannot get actual data from you, they will use industry averages — which almost always overstate your emissions and make your products look worse in their report.
• Relationship friction. Repeated follow-up requests from a customer’s sustainability team signal that your account is flagged for data gaps.

The cost of inaction is not regulatory. It is commercial.

Where to read next

This post explains why the data request exists. The next steps:

• For an overview of SME sustainability reporting, read our starter guide
• To learn what VSME Basic and Comprehensive actually require, read our VSME reporting guide
• To start with the most common data point — carbon emissions — read our guide on carbon accounting for SMEs