FRAMEWORK GUIDE
ESRS/CSRD: a Tier-2/3 supplier response guide
The CSRD (Corporate Sustainability Reporting Directive) is the EU regulation that makes sustainability disclosure mandatory for companies above certain size thresholds, and the ESRS (European Sustainability Reporting Standards) are the detailed standards that define exactly what must be disclosed. A defining feature is the double-materiality requirement — disclosing both financial impact and environmental/social impact — across environment, social, and governance topics. In-scope companies must include value-chain information, including suppliers, within their disclosure boundary.
Who asks for it — and why
OEMs and large parts makers with EU operations or significant EU revenue fall directly under CSRD, and to meet their value-chain due-diligence obligations (identifying human-rights and environmental risks in the supply chain), they end up requesting related data or policy evidence from suppliers. Korean suppliers embedded in an EU-facing automotive supply chain can receive these requests indirectly even without being regulated themselves.
Key requirement areas
- Double materiality assessment
An approach that sets disclosure scope by assessing both financial materiality and environmental/social impact materiality together.
- Value chain due diligence
Requires building a due-diligence process to identify and respond to human-rights and environmental risks across the supply chain.
- Topic-specific disclosure items
Includes detailed disclosure standards for climate, pollution, biodiversity, workers, and consumers.
What Tier-2/3 suppliers should do
For Tier-2/3 suppliers, the practical points are: (1) even without being directly regulated, a large share of EU-facing revenue makes it wise to anticipate more due-diligence requests from customers, (2) documenting baseline human-rights and environmental risk policies and monitoring processes lets you respond quickly when asked, and (3) because the regulatory landscape shifts quickly, periodically checking customer communications is a practical habit.
64 questions in our free self-assessment are grounded in this framework.
Example questions
- Does your company have an environmental policy, and to what extent is it embedded in a management system?
- How mature is your company's greenhouse gas (GHG) emissions management?
- Please provide your company's most recent Scope 1 and Scope 2 GHG emissions and total energy consumption.
- How far has your company gone on Scope 3 (value chain) emissions?
- Which energy efficiency and renewable energy measures has your company implemented?
FAQ
- Does a Korean supplier need to comply with CSRD directly?
- Most Tier-2/3 suppliers are not a direct target. That said, a customer under EU regulation may pass value-chain due-diligence requests down the chain, creating indirect impact.
- How does CSRD relate to CDP and GRI?
- CSRD/ESRS is a legally mandated disclosure regime, while CDP and GRI are voluntary frameworks. Alignment efforts mean substantial overlap in content, so preparing one produces data reusable for the others.
Public sources
Informational only — this does not replace an official ESG evaluation. Independent content; not affiliated with or endorsed by any framework organization.