ESRS S2 - Protecting workers in the corporate value chain
What is ESRS S2 – Protection of Workers in the Business Value Chain?
ESRS S2 (an acronym for European Sustainability Reporting Standards) focuses specifically on the workers within a company’s value chain. This standard requires organizations to collect and report information on working conditions, human rights, and social impacts associated with employees working for suppliers, subcontractors, and other key actors in their supply chain.
The primary objective of ESRS S2 is to ensure that companies are not only concerned about their direct employees but also about those who contribute indirectly to their operations by addressing:
- Fair working conditions.
- Respect for human rights.
- Occupational risk prevention.
- Environmental impacts associated with labor activities.
The standard aligns with the principles of the International Labour Organization (ILO) and the United Nations Guiding Principles on Business and Human Rights, reinforcing its focus on social and environmental sustainability.
The importance of ESRS S2 in corporate sustainability
ESRS S2 is pivotal in the transition to more sustainable business models. This standard addresses ethical and human rights issues while also having a direct impact on carbon footprint measurement and management.
1. Transparency in the value chain
A company’s value chain can be a significant source of carbon emissions, particularly Scope 3 emissions, which include indirect emissions generated by suppliers, transporters, and other stakeholders. Implementing ESRS S2 enables companies to identify and address the environmental and social impacts associated with indirect workers, improving their overall sustainability performance.
2. Regulatory compliance
The CSRD requires European companies to report detailed sustainability information, including social and environmental aspects. ESRS S2 provides a clear framework to meet these legal obligations, facilitating the creation of auditable reports aligned with international standards such as the GHG Protocol.
3. Risk management
Risks associated with poor working conditions or lack of respect for human rights can result in legal, reputational, and financial consequences for companies. ESRS S2 helps identify and mitigate these risks, promoting more responsible value chain management.
How to implement ESRS S2 in your company
Implementing ESRS S2 requires a structured approach to collect, analyze, and report relevant data on workers in the value chain. Key steps include:
1. Value chain mapping
The first step is to identify all actors within the company’s value chain, including suppliers, subcontractors, and other partners. This mapping should include information on activities performed, geographic locations, and associated risks.
2. Data collection
Once the value chain is mapped, it is necessary to gather data on working conditions, human rights, and environmental impacts related to workers.
3. Risk assessment
With the collected data, companies should conduct a risk assessment to identify critical areas requiring intervention. This includes analyzing working conditions, carbon emission levels, and social impacts at each stage of the value chain.
4. Implementation of corrective measures
If issues are identified, it is crucial to implement corrective measures to ensure compliance with ESRS S2. This may include improving working conditions, adopting sustainable practices, and collaborating with suppliers to reduce carbon emissions.
5. Reporting and communication
Finally, companies must produce detailed reports that meet ESRS S2 requirements and communicate them to stakeholders.
The link between ESRS S2 and the carbon footprint
ESRS S2 has a direct connection to carbon footprint measurement since labor activities within the value chain generate significant emissions. According to the GHG Protocol, these emissions are primarily classified under Scope 3, including:
- Emissions from the production of goods and services.
- Emissions from transportation and logistics.
- Emissions associated with energy consumption at supplier facilities.
By implementing ESRS S2, companies can identify these emissions and develop strategies to reduce them, such as adopting customized decarbonization scenarios or collaborating with partners to improve energy efficiency.
How Manglai can help your company implement ESRS S2
ESRS S2 is an essential standard for ensuring social and environmental sustainability in business operations. Its implementation not only ensures compliance with European regulations but also contributes to more responsible value chain management and carbon footprint reduction.
Tools like those offered by Manglai can play a key role in this process, facilitating data collection, risk assessment, and the creation of auditable reports.
In a world increasingly focused on sustainability, adopting standards like ESRS S2 is not just a legal obligation but also an opportunity to lead the shift toward a fairer and more sustainable future.
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