ESRS S2 Workers in the Value Chain

ESRS S2 (European Sustainability Reporting Standard S2 - "Workers in the Value Chain") is one of the twelve delegated ESRS standards under the Corporate Sustainability Reporting Directive (CSRD). The standard requires reporting companies to disclose actual and potential impacts on all workers who are not part of their own workforce but may be affected by the company's operations or business relationships - typically employees of suppliers, subcontractors and outsourced services as well as self-employed individuals across the upstream and downstream value chain. S2 must be distinguished from ESRS S1, which exclusively addresses the company's own workforce.

Whether and to what depth S2 must be reported follows from the double materiality assessment: disclosures become mandatory only where impacts, risks or opportunities relating to value chain workers are material. In substance, the standard calls for information on policies, on actions and processes for engaging with affected stakeholders, on remediation procedures and grievance mechanisms, and on targets and metrics. Material topics addressed include working conditions (wages, working time, health and safety), equal treatment and equal opportunities, and other work-related rights, including forced labour, child labour and freedom of association.

ESRS S2 is closely aligned with the human rights due diligence concept of the UN Guiding Principles on Business and Human Rights and the OECD Guidelines, and overlaps in substance with the German Supply Chain Due Diligence Act (LkSG) and the EU Corporate Sustainability Due Diligence Directive (CSDDD). Organisations that have already established LkSG-compliant risk analyses, preventive and remedial measures can reuse this data basis for S2 reporting. The disclosures are published in the sustainability statement as part of the management report and are subject to external assurance (initially limited assurance).