🧾 Scope and sustainability matters covered

ESRS S2 applies to workers in the upstream and downstream value chain who are not employed or controlled directly by the undertaking, for example:

• Supplier and subcontractor workers,
• Workers in logistics, distribution and franchise networks,
• Other individuals performing work under business relationships.

The sustainability matters addressed mirror those in ESRS S1 but extend them to external workers:

• Working conditions – secure employment, working time, adequate wages, social dialogue, freedom of association, collective bargaining, work‑life balance, health and safety.
• Equal treatment and opportunities for all – gender equality, equal pay for work of equal value, skills development, integration of persons with disabilities, measures against violence and harassment, diversity.
• Other work‑related rights – child labour, forced labour, adequate housing, water and sanitation, privacy.

All disclosures are dependent on materiality. Companies must therefore perform a robust materiality assessment focused on value chain labour and human rights issues.

📜 Links to other ESRS and international frameworks

ESRS S2 operates together with:

• ESRS 1 (general requirements) and ESRS 2 (general disclosures),
• ESRS S1 (Own workforce), ESRS S3 (Affected communities) and ESRS S4 (Consumers and end‑users).

The standard is grounded in international norms, including:

• ILO Declaration on Fundamental Principles and Rights at Work,
• International Bill of Human Rights,
• OECD Guidelines for Multinational Enterprises,
• UN Global Compact Principles,
• UN Guiding Principles on Business and Human Rights.

Undertakings are expected to align their value chain policies and processes with these instruments and to disclose any significant non‑compliance.

⚙️ General disclosures on value chain impacts

Through ESRS 2 SBM‑2 and SBM‑3, undertakings explain how affected value chain workers’ interests influence the strategy and business model, and how material impacts, risks and opportunities (IROs) are connected to that model.

Key disclosures include, where material:

• Whether all relevant value chain workers are covered by the assessment and reporting boundary.
• Geographies or commodities with high risk of child, forced or compulsory labour.
• Whether material negative impacts are systemic in certain contexts or arise from specific incidents or relationships.
• The main risks and opportunities stemming from impacts and dependencies on value chain workers, and whether some relate to specific groups (for example migrant workers or women workers).

These general disclosures provide the overarching narrative to which the topical S2 disclosures are linked.

🛡️ Policies and human rights commitments (S2‑1)

Undertakings must describe policies addressing material IROs related to value chain workers, including:

• The content, scope and communication of policies and any supplier code of conduct.
• Whether policies apply to all value chain workers or only to particular groups.
• Provisions on worker safety, precarious work, human trafficking, and the use of forced or child labour, and consistency with applicable ILO standards.
• How policies align with internationally recognised standards such as the UN Guiding Principles on Business and Human Rights.
• The extent and nature of reported cases of non‑respect of these standards in the value chain.

In addition, companies disclose human rights policy commitments relevant to value chain workers, processes to monitor compliance, and their general approach to respecting, engaging and providing remedy for human rights impacts.

🤝 Engaging with value chain workers (S2‑2)

ESRS S2‑2 requires transparency on how perspectives of value chain workers inform decisions about impacts.

Undertakings report:

• With whom engagement takes place – workers directly, their legitimate representatives, credible proxies, and vulnerable or marginalised groups such as women workers, migrant workers or workers with disabilities.
• The stage, type and frequency of engagement (for example participation, consultation, information; regular or event‑driven; integrated into decision‑making).
• The function and most senior role with operational responsibility for engagement, and whether staff receive training or capacity‑building.
• Any agreements (including global framework agreements or collective bargaining) that enable insight into workers’ views.
• How the undertaking assesses the effectiveness of engagement, including resulting agreements or changes.

Where no general engagement processes exist, undertakings must state this explicitly.

🧮 Remediation processes and channels for concerns (S2‑3)

ESRS S2‑3 focuses on how companies provide remedy and enable workers to raise concerns:

• Description of the approach and processes for providing or contributing to remedy for adverse impacts.
• How the effectiveness of remedies is assessed.
• Existence and characteristics of channels to raise concerns or needs, such as grievance mechanisms, hotlines, trade unions or other dialogue processes, whether operated by the undertaking or third parties (government bodies, non‑governmental organisations or industry schemes).
• Processes to support the availability of such channels in workplaces of value chain workers.
• Systems to track, monitor and follow up issues raised.
• How channel effectiveness is reviewed, including input from intended users.
• Assessment of workers’ awareness of and trust in these mechanisms and policies against retaliation.
• Where relevant, a statement on the absence of channels or lack of support for them.

🔧 Actions, resources, metrics and targets (S2‑4 and S2‑5)

Actions and resources (S2‑4)

Undertakings disclose:

• Summary information on actions and resources to manage material IROs, including any severe human rights incidents in the value chain.
• Processes to determine what action is required for a specific actual or potential impact.
• Approaches to addressing impacts, including changes to purchasing practices, internal procedures, capacity‑building and collaborative initiatives.
• Measures taken to provide or enable remedy for actual material impacts and any initiatives primarily designed to deliver positive outcomes for value chain workers.
• How the effectiveness of actions is tracked and assessed.
• How processes to provide or enable remedy are ensured to be available and effective where material negative impacts occur.
• How the undertaking avoids contributing to negative impacts through its own procurement, sales and data use practices.

Metrics and targets (S2‑5 and MDR‑M)

Where targets are set, undertakings report:

• Performance against each disclosed target, including trends or significant changes.
• How targets are monitored and reviewed, and whether progress is aligned with initial plans.

For metrics, they describe:

• Indicators used to evaluate performance and effectiveness in relation to material IROs affecting value chain workers.
• Whether metric measurements are validated by an external body (other than the assurance provider) and which body, if applicable.

✅ Applicability and transitional relief

Undertakings or groups with an average of 750 or fewer employees may omit ESRS S2 disclosures for the first two years of preparing their sustainability statement.

During this period they still need to comply with ESRS 2.17 and should prepare systems, data and controls for full ESRS S2 reporting after the transitional phase.

All disclosure requirements under ESRS S2 are subject to materiality assessment, which means information is required when the impacts, risks or opportunities related to value chain workers are material for the undertaking or its stakeholders.

🤝 How ComplyMarket Supports ESRS S2 Compliance

Adapting to ESRS S2 Workers in the value chain involves more than updating narrative disclosures.

Undertakings must map value chain worker populations, evaluate human rights risks, establish effective grievance and remediation mechanisms, and generate reliable metrics and targets that withstand assurance.

ComplyMarket supports these efforts by:

• Helping companies structure their value chain mapping and materiality assessment in line with ESRS requirements.
• Reviewing and improving supplier codes of conduct, human rights policies and contractual clauses for consistency with international standards referenced in ESRS S2.
• Providing guidance on designing and documenting engagement processes and grievance channels that are accessible to value chain workers and protect against retaliation.
• Assisting in the definition of actions, resources, metrics and targets so that ESRS S2 disclosures are complete, comparable and audit‑ready.

With structured support from ComplyMarket, undertakings can integrate ESRS S2 into their broader sustainability reporting framework and demonstrate credible, value‑chain‑wide human rights due diligence.