ESRS S2 - Protecting workers in the corporate value chain

ESRS S2, 'Workers in the value chain', is one of the social standards within the European Sustainability Reporting Standards (ESRS) that underpin the EU's Corporate Sustainability Reporting Directive (CSRD). It requires companies to report on the working conditions, human rights and social impacts of people who work in their value chain, beyond their own employees.

What is ESRS S2?

ESRS S2 focuses specifically on workers in a company's upstream and downstream value chain, for example employees of suppliers, subcontractors and other business partners. It requires organisations to identify and disclose the material impacts, risks and opportunities related to these workers, covering areas such as:

• Working conditions (working time, fair wages, health and safety, social dialogue).
• Equal treatment and opportunities.
• Other work-related rights, including those of vulnerable groups.

The standard is grounded in international frameworks such as the International Labour Organization (ILO) conventions and the UN Guiding Principles on Business and Human Rights. It sits alongside ESRS S1 (own workforce) and ESRS S3 (affected communities).

Why ESRS S2 matters

What a company has to report under ESRS S2 depends on its double materiality assessment: it must disclose value-chain worker topics that are material either to people and the environment or to the business itself.

1. Transparency across the value chain

Much of a company's social and environmental impact sits in its value chain rather than its own operations. ESRS S2 brings these often-hidden impacts into scope and makes them visible to investors and other stakeholders.

2. Regulatory compliance

The CSRD requires in-scope companies to report sustainability information following the ESRS. ESRS S2 provides the framework for the value-chain workforce part of that reporting, in a form that can be assured.

3. Risk management

Poor working conditions or human rights breaches in the value chain can create legal, reputational and financial risks. ESRS S2 helps companies identify and manage these risks, in close connection with the due diligence expected under the Corporate Sustainability Due Diligence Directive (CSDDD).

How to approach ESRS S2

1. Map the value chain

Identify the actors in the value chain, including suppliers and subcontractors, along with their activities, locations and associated social risks.

2. Assess materiality and risks

Use the double materiality assessment to determine which value-chain worker topics are material, and identify the most salient human rights and labour risks.

3. Gather data and engage

Collect information on working conditions and human rights, engaging with affected workers or their representatives where possible.

4. Act and report

Define actions and targets to prevent or remedy negative impacts, and disclose policies, actions and metrics in line with ESRS S2.

Relationship with carbon and the wider ESRS

ESRS S2 is a social standard: its focus is people, not emissions. In practice, however, mapping the value chain for ESRS S2 often draws on the same supplier information used to estimate Scope 3 emissions under the environmental standard ESRS E1. The two are conceptually distinct but can share data and supplier engagement, so companies often tackle them together as part of a single value-chain programme.

The ESRS simplification (Omnibus)

The ESRS are being simplified under the EU's Omnibus initiative. EFRAG delivered draft revised standards at the end of 2025, cutting mandatory datapoints by more than 60% and removing voluntary ones, and the European Commission consulted on a revised set in 2026. The revised ESRS are expected to apply for financial years beginning on or after 1 January 2027, with voluntary early use possible, while the 2023 ESRS remain the legal reference until the new set is adopted. In parallel, the CSRD scope was narrowed (broadly to companies with more than 1,000 employees and over 450 million euros in turnover), so fewer companies will be required to report.

How Manglai can help

ESRS S2 is a key part of social reporting under the CSRD. At Manglai we help companies organise their sustainability data, run their materiality assessment and prepare auditable reporting aligned with the ESRS, including the data behind their carbon footprint. Discover how Manglai can help you.