CSRD Value Chain Reporting: How to Collect Upstream and Downstream Data

The Value Chain: CSRD's Most Challenging Dimension

The Corporate Sustainability Reporting Directive (CSRD) expects companies not to limit their sustainability impacts to their own operations. Reporting on impacts, risks, and opportunities across the value chain — from suppliers to end consumers — is a core principle of the CSRD.

While this requirement sounds straightforward in theory, it represents one of the most challenging reporting areas in practice. Many companies have yet to robustly report even their own Scope 1 and 2 emissions, let alone collect data from hundreds or thousands of suppliers and customers.

This guide explains ESRS value chain requirements and provides practical data collection approaches.

Value Chain Definition in ESRS

ESRS 1 Chapter 5: Scope and Boundaries

Chapter 5 of ESRS 1 defines the reporting scope for value chain information. Under this chapter, a company's sustainability statement must cover both its own operations and its value chain (Commission Delegated Regulation 2023/2772, ESRS 1, Paragraphs 62-71).

Value chain under ESRS includes:

• Upstream: Raw material suppliers, component manufacturers, logistics providers, service providers
• Downstream: Distributors, retailers, end consumers, end-of-life product management
• Related parties: Joint ventures, franchise relationships, investee companies

ESRS Standards Requiring Value Chain Information

Value chain information is required across virtually all topical ESRS standards:

The Proportionality Principle

ESRS does not expect companies to collect every detail across the value chain. The proportionality principle keeps data collection efforts within reasonable bounds.

Reasonable Effort

ESRS 1 expects companies to exercise "reasonable effort" when collecting value chain information. This concept means (ESRS 1, Paragraph 69):

• Using information obtainable at reasonable cost and effort
• Using estimates and sector data when information is not accessible
• Disclosing information gaps and the steps planned to address them

Use of Estimates and Proxies

When direct data collection is not possible, ESRS permits the following approaches:

• Sector averages: Emission intensity data for the supplier's sector
• Spend-based calculations: Emission estimates based on the payment amount to the supplier
• Physical quantity-based calculations: Purchased product volumes and product-level emission factors
• Scientific literature and databases: Life-cycle assessment databases (ecoinvent, etc.)

Phase-In Provisions

Acknowledging the difficulty of value chain reporting, the CSRD provides important phase-in reliefs.

First Three Years Relief

Under ESRS 1 transitional provisions, during the first three years of CSRD implementation:

• Internally available data and reasonably obtainable information may be used for value chain information
• Where value chain information is unavailable, the company must disclose this and describe the steps taken and planned to obtain the information
• Additional phase-in time is granted for Scope 3 emissions data

Scope 3 Special Provision

Under ESRS E1, reporting of Scope 3 emissions is optional in the first year (for companies with fewer than 250 employees). This relief gives companies time to establish data collection processes (Commission Delegated Regulation 2023/2772, ESRS E1, Appendix C).

EFRAG Implementation Guidance

EFRAG's Implementation Guidance 2 (EFRAG IG 2) provides detailed practical guidance on value chain reporting. This guidance covers how companies should determine value chain boundaries, prioritization approaches, and data collection strategies (EFRAG, Implementation Guidance 2: Value Chain, 2024).

Upstream Data Collection

Supplier Prioritization

Collecting the same level of data from every supplier is not practical. A prioritization strategy:

Tier 1 — Direct data collection: The top 20-50 suppliers by spend or emissions impact. These suppliers typically represent 60-80 percent of the total supply chain impact. Company-level or product-level emissions data is requested from this group.

Tier 2 — Simplified data requests: Mid-sized suppliers. Short questionnaires or standard data request forms are used. Information on energy consumption, basic environmental policies, and certifications is collected.

Tier 3 — Estimates and proxies: Small and indirect suppliers. Sector averages and spend-based calculations are used.

Supplier Questionnaire Design

An effective supplier questionnaire should have the following characteristics:

• Short and focused: Should not exceed 15-20 questions
• Multi-language: Available in the languages of the countries where suppliers are located
• Standard format: Aligned with CDP Supply Chain or sector-standard questionnaires
• Technical support: A completion guide and helpline should be provided to suppliers
• Feedback: Comparative information on suppliers' own performance should be shared back

Data Collection Channels

• Direct questionnaires: Standard forms via email or digital platforms
• CDP Supply Chain: CDP's supply chain program collects standardized environmental data from suppliers
• Sector platforms: Platforms such as EcoVadis and SEDEX centralize supplier sustainability data
• Procurement processes: Integrating sustainability criteria into supplier selection and evaluation
• Commercial databases: EEIO (Environmentally Extended Input-Output) databases for spend-based calculations

Downstream Data Collection

Downstream data collection is generally more challenging than upstream. A company's ability to control the impacts of its products after they reach customers is limited.

Product Use Phase

In some product categories, use-phase emissions constitute the largest portion of total life-cycle impact (for example, automobiles and energy-consuming appliances).

Data collection approaches:

• Product life-cycle assessment (LCA): LCA studies compliant with ISO 14040/14044
• Use scenarios: Product energy consumption or emissions under standard use conditions
• Customer surveys: Product usage data from B2B customers
• Sector assumptions: Average usage durations and intensities by product category

Product End-of-Life

Recycling, disposal, or reuse rates at the end of the product's useful life:

• National waste statistics: Recycling rates by product category
• Extended Producer Responsibility (EPR) data: Collection and recycling data from companies participating in EPR programs
• Material flow analysis: The material components of the product and the end-of-life scenario for each

Distribution and Logistics

• Logistics service providers: Route- and vehicle-specific emissions data from transportation companies
• Global Logistics Emissions Council (GLEC) framework: Standard calculation methodology for logistics emissions
• Tonne-kilometer calculations: Estimates based on transported product weight and distance

Relationship with GHG Protocol Scope 3

ESRS value chain requirements are closely related to, but not identical to, the GHG Protocol's Scope 3 categories. The GHG Protocol Corporate Value Chain Standard defines 15 emission categories (WRI/WBCSD, GHG Protocol Corporate Value Chain Standard, 2011).

Areas of Overlap and Divergence

Overlap: Categories such as Scope 3 Category 1 (purchased goods and services), Category 4 (upstream transportation), and Category 11 (use of sold products) directly support ESRS E1's value chain emission requirements.

Divergence: ESRS requires value chain information not only on emissions, but also on social impacts (ESRS S2), biodiversity (ESRS E4), and circular economy (ESRS E5). The GHG Protocol covers only greenhouse gas emissions.

Practical implication: An existing Scope 3 inventory covers a significant portion of ESRS's climate-related value chain requirements. However, additional data collection is needed for other topical standards.

Step-by-Step Implementation Plan

Phase 1: Mapping and Prioritization (Months 1-2)

1. Map your value chain: suppliers, customers, logistics partners, waste management service providers
2. Based on your double materiality assessment, identify which value chain segments have the most significant impacts
3. Inventory your existing data sources: procurement data, supplier evaluations, customer data
4. Identify and prioritize data gaps

Phase 2: Data Collection Infrastructure (Months 2-4)

5. Design a supplier questionnaire or data request form
6. Select a digital data collection platform or integrate with your existing supplier portal
7. Test with a pilot supplier group and collect feedback
8. Determine the downstream data collection methodology (LCA, customer survey, sector assumptions)

Phase 3: Data Collection and Validation (Months 4-8)

9. Send supplier questionnaires and follow up
10. Apply proxy and estimation approaches for non-responding suppliers
11. Check the consistency of collected data
12. Compile downstream data

Phase 4: Reporting Integration (Months 8-10)

13. Map value chain data to ESRS reporting templates
14. Document data quality and limitations
15. Develop an improvement plan for future periods

Common Mistakes and Solutions

Mistake: Trying to reach all suppliers at once. Solution: Apply the Pareto principle — the top 20 percent of suppliers typically represent 80 percent of the impact.

Mistake: Sending overly detailed questionnaires. Solution: Focus on fundamental data in the first year, deepen in subsequent years.

Mistake: Limiting the value chain to only the environmental dimension. Solution: Include ESRS S2 (value chain workers) and S3 (affected communities) requirements in the plan.

Mistake: Ignoring phase-in provisions. Solution: Take advantage of the first three years' reliefs, but use this time to build data infrastructure, not to postpone action.

Key Takeaway: Value chain reporting is not an endless quest for perfect data, but a maturation process that improves each year. ESRS's proportionality principle and phase-in provisions create room to start. What is critical is to begin the process and advance systematically.