ESRS S2 to S4: value chain, communities and consumers

Most of the people affected by a company's activities are not its employees: they work in supplier factories and mines, live near its plants, or use its products. ESRS S2 to S4 ask companies to report how they identify and address impacts on them, which for brands, retailers, miners and technology companies is often the most material part of the social pillar. This guide explains what each standard covers, the four disclosure requirements, what changed in the revision, works through a consumer electronics company's disclosures, and covers due diligence, phase-ins and how GRI and the ISSB treat these topics.

By Hamza Fida, Chartered Accountant. Reviewed by Mirza Fahad Baig, Chartered Accountant. 4 minute read.

Short answer

ESRS S2 to S4 are the European Sustainability Reporting Standards on people affected by a company beyond its own workforce. ESRS S2 covers workers in the value chain, such as people working for suppliers, contractors and logistics providers. ESRS S3 covers affected communities, people living or working near the company's operations or elsewhere in its value chain, including indigenous peoples. ESRS S4 covers consumers and end-users, including product safety, privacy, access to products and responsible marketing. Each applies only when material. In the revised ESRS, set by Delegated Regulation 2026/1563 and mandatory from financial years starting in 2027, each standard has four disclosure requirements, matching ESRS S1: policies; engagement, channels to raise concerns and remediation; actions; and targets, with metrics where the company uses them. Strategy disclosures moved to ESRS 2 and human rights policy disclosures were centralised there. The standards build on human rights due diligence under the UN Guiding Principles and the OECD Guidelines, and wave one companies may omit S2 to S4 information for 2026, other companies for their first two years. In this guide's example, a consumer electronics company reports under all three.

At a glance

S2
Value chain workers
S3
Affected communities
S4
Consumers and end-users
Each has
Four requirements
Built on
UN and OECD due diligence
Phase-in
Early years optional
ESRS S2 to S4: value chain, communities and consumersS2: Value chain workers; S3: Affected communities; S4: Consumers and end-users; Each has: Four requirements; Built on: UN and OECD due diligence; Phase-in: Early years optional.KEY FACTS AT A GLANCEESRS S2 to S4: value chain, communities andconsumersS2Value chain workersS3Affected communitiesS4Consumers and end-usersEach hasFour requirementsBuilt onUN and OECD due diligencePhase-inEarly years optionalTax BakersESRS S2 to S4: value chain, communities and consumersS2: Value chain workers; S3: Affected communities; S4: Consumers and end-users; Each has: Four requirements; Built on: UN and OECD due diligence; Phase-in: Early years optional.KEY FACTS AT A GLANCEESRS S2 to S4: value chain,communities and consumersS2Value chain workersS3Affected communitiesS4Consumers and end-usersEach hasFour requirementsBuilt onUN and OECD due diligencePhase-inEarly years optionalTax Bakers
Key facts at a glance, as set out in this guide.

What do ESRS S2 to S4 cover?

  • ESRS S2 Workers in the value chain: working conditions, equal treatment and other work-related rights, such as child and forced labour, of people working in the upstream and downstream value chain who are not in the company's own workforce.
  • ESRS S3 Affected communities: communities' economic, social and cultural rights, such as land, water and security; civil and political rights; and the particular rights of indigenous peoples.
  • ESRS S4 Consumers and end-users: information-related impacts such as privacy and access to quality information, personal safety such as health and product safety, and social inclusion such as non-discrimination and access to products and services.

Impacts on the company's own employees and non-employees are in ESRS S1. See ESRS S1 own workforce.

What are the four disclosure requirements?

  1. Policies for the affected group, including commitments on human rights.
  2. Engagement, channels and remediation: how the company engages with the people affected or their representatives, the channels through which they can raise concerns, and how it provides or enables remedy.
  3. Actions to prevent, mitigate and remediate negative impacts and pursue opportunities, and how their effectiveness is tracked.
  4. Targets for managing material impacts, risks and opportunities.

The general disclosure requirements in ESRS 2 apply to each, and companies add metrics they use to track performance. See ESRS 2 general disclosures.

What changed in the revised ESRS S2 to S4?

The revision aligned all four social standards on the same structure, merged engagement with channels and remediation into one requirement, with channels placed first in line with the UN Guiding Principles, moved the strategy and business model disclosures to ESRS 2, and centralised human rights policy disclosures in ESRS 2's requirements on policies. New glossary definitions, such as for human rights incidents, apply across the social standards. See the revised ESRS.

ESRS S2 to S4 in practice: a consumer electronics company

A consumer electronics brand that outsources assembly finds material impacts under all three standards.

A consumer electronics company's S2 to S4 mattersA consumer electronics company's S2 to S4 mattersMaterial matterExample disclosureS2 Value chainworkersOvertime and forced labourrisk at suppliersAudits, hotline,remediated casesS3 AffectedcommunitiesWater and land nearcobalt minesEngagement through anindustry initiativeS4 Consumersand end-usersData privacy andbattery safetyRecall actions,privacy complaints
Each group gets policies, channels, actions and targets.

Under S2, it reports its supplier code, that 96 of its 120 tier 1 suppliers, 80%, were audited in the year, the worker hotline it runs in supplier factories, and that 29 of 34 grievances raised were remediated, with a target to audit every tier 1 supplier by 2028. Under S3, it describes its engagement, through an industry initiative, with communities near the mines supplying cobalt for its batteries. Under S4, it reports its privacy policy, a battery recall and the actions taken, and complaints about data use. See stakeholder engagement.

How do S2 to S4 relate to due diligence?

The standards rest on the due diligence process described in the UN Guiding Principles on Business and Human Rights and the OECD Guidelines: identify and assess impacts, act on them, track effectiveness and communicate, with remedy where harm occurs. Evidence comes from risk assessments, supplier audits, grievance mechanisms and engagement with affected people. The EU's due diligence directive now applies only to the largest companies after the Omnibus, but the reporting standards apply to every ESRS reporter for which the topics are material. See impact materiality.

Which phase-ins apply?

Wave one companies may omit S2, S3 and S4 information for financial year 2026, and other companies for their first two years, giving minimal transparency about the topics instead. The phase-ins reflect how hard value chain information can be to obtain; the value chain cap also limits what can be requested from smaller suppliers. See the value chain cap.

How do GRI and the ISSB cover these topics?

GRI covers them through standards such as GRI 408 Child Labor, GRI 409 Forced or Compulsory Labor, GRI 414 Supplier Social Assessment, GRI 413 Local Communities, GRI 416 Customer Health and Safety and GRI 418 Customer Privacy, several of which are being revised. The ISSB has no social standard, but the SASB Standards include topics such as supply chain management, data security and product safety where they are financially material. See GRI topic standards.

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Questions people ask

What do ESRS S2 to S4 cover?

Workers in the value chain (S2), affected communities (S3), and consumers and end-users (S4), each reported only if material.

What are the disclosure requirements in ESRS S2 to S4?

Policies; engagement, channels to raise concerns and remediation; actions; and targets, with metrics where the company uses them.

Can ESRS S2 to S4 disclosures be phased in?

Yes. Wave one companies may omit them for 2026, and other companies for their first two years.

How do ESRS S2 to S4 relate to human rights due diligence?

They build on the UN Guiding Principles and OECD Guidelines, asking how the company identifies, addresses and remedies impacts on people beyond its own workforce.

Sources

Every fee, date and rule on this page was taken from these official and primary sources.

  1. EFRAG: ESRS S1 to S4 simplification, overview of main changes
  2. Rödl: final ESRS exposure drafts, overview of the amendments to the social standards, December 2025
  3. EY: European Commission adopts revised ESRS delegated act, July 2026
  4. Commission Delegated Regulation (EU) 2026/1563 revising the ESRS, published 21 September 2026
  5. EFRAG: Commission publishes delegated act on revised ESRS and voluntary standard

Rules and fees change. If you are reading this long after October 12, 2026, confirm the figures with the source before you rely on them.

SustainabilityESRS S1: own workforceSustainabilityImpact materialitySustainabilityStakeholder engagement for materiality

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