The value chain cap and the voluntary standard

What is the value chain cap?

Companies reporting under the CSRD need information from their suppliers and customers, for example for scope 3 emissions or working conditions in the supply chain. The Omnibus I Directive limited what they can demand from smaller companies for that purpose. The detail is in Delegated Regulation (EU) 2026/1560, adopted on 3 July 2026 and published in the Official Journal on 21 September 2026: a reporting company may not require a protected undertaking to provide sustainability information beyond the datapoints in Annex II of the regulation. See the CSRD after the Omnibus.

Which companies are protected by the value chain cap?

A protected undertaking is a company in the reporting company's value chain that did not exceed an average of 1,000 employees in the preceding financial year. Annex II sets a narrower list for companies with ten or fewer employees. Protected companies have a right to decline requests beyond the cap, and a contract term requiring more information for CSRD reporting is not binding on them. They may still choose to share more.

What does the cap not cover?

The cap applies only to information gathered for sustainability reporting under the Accounting Directive. It does not limit requests needed to meet other EU or national laws, such as due diligence, product or import rules, which follow their own conditions, and it does not stop commercial negotiations about other information. Reporting companies can also use estimates, sector averages and other proxies under the revised ESRS when suppliers cannot provide data. See ESRS 1 general requirements.

The value chain cap in practice: a car parts maker's suppliers

A car parts maker in scope of the CSRD sends a 60-question sustainability questionnaire to its suppliers for its 2027 report.

The steel supplier has more than 1,000 employees, so the cap does not protect it; it may still decline, but the parts maker can make the information a condition of the contract. The plastics moulder is protected, so the parts maker can require only the Annex II datapoints and must treat any further answers as voluntary. The family-run tooling workshop, with eight employees, falls under the shorter list. For the gaps, the parts maker uses estimates and discloses that it has done so. See the spend-based method.

What is the voluntary sustainability reporting standard?

The same delegated regulation sets a voluntary standard for companies outside the CSRD, based on the Commission's 2025 recommendation on the VSME, the voluntary standard for SMEs developed by EFRAG. It has two modules. The basic module, B1 to B11, is the minimum and the recommended option for micro-undertakings; it covers general information, energy and greenhouse gas emissions, pollution, biodiversity, water, resource use and waste, the workforce, health and safety, pay and training, and corruption. The comprehensive module, C1 to C9, builds on it with information banks, investors and large customers often ask for, such as strategy, scope 3, climate targets and risks, human rights and governance diversity. A company states which modules it applied.

When does the value chain cap apply?

The regulation entered into force on 24 September 2026, and the cap applies to financial years beginning on or after 1 January 2027. For 2026 reports, companies using the selected reliefs from the revised ESRS can already limit the value chain information they seek. See the revised ESRS.

What should reporters and suppliers do now?

Reporting companies should map suppliers by size, cut questionnaires for protected suppliers to the Annex II datapoints, review contracts and supplier codes, and plan where estimates will replace supplier data. Smaller suppliers can prepare a single report under the voluntary standard and share it with every customer and lender, rather than answering each questionnaire separately. See the 15 scope 3 categories.

This guide is general information. It is not tax or legal advice for your situation.