Supply chain

This directive imposes reporting obligations on large EU companies to publish information relating to ESG matters. While it is not part of UK law post-Brexit, many UK businesses will still be affected.

EU parent companies will be required to disclose ESG information for their entire group, including non-EU entities, and the scope of the CSRD extends to non-EU undertakings with significant EU subsidiaries or branches.

This directive imposes obligations on large EU companies – and non-EU companies with operations in the EU – to implement human rights and environmental due diligence measures across their supply chains.

The UK’s ESG reporting framework increasingly requires businesses to align with the Taskforce on Climate-related Financial Disclosures (TCFD) recommendations.

These include reporting on Scope 3 greenhouse gas emissions—those generated from sources outside the organisation’s direct activities, including from suppliers and purchased products.

Scope 3 emissions disclosures are becoming mandatory for a wider range of organisations, with many voluntarily adopting them to strengthen ESG credentials and stakeholder trust.

The Environment Act requires organisations to address and report on supply chain impacts on deforestation related to certain forest risk commodities in UK commercial activities.

Companies looking to place certain commodities linked to deforestation, and some derived products, on the EU market must demonstrate robust due diligence practices.

This regulation will mandate operators placing rechargeable industrial batteries or electric vehicle batteries larger than two kWh on the EU market to establish supply chain due diligence policies, with a particular focus on raw materials that may have adverse social or environmental impacts.

Economic operators will be required to submit compliance documentation for third-party verification.