ESRS S2 Workers in the Value Chain: Due Diligence, Data and Supplier Evidence

ESRS S2 due-diligence flow: identify material worker impacts, gather worker-informed evidence, act, remediate and report.

Value-chain worker reporting becomes unmanageable when teams start with a supplier questionnaire instead of material impacts. A supplier list can contain thousands of entities while the most severe impact sits in one commodity, recruitment corridor, outsourced service or downstream relationship. A uniform request then produces low-value declarations and little worker-informed evidence.

ESRS S2 uses a different model: identify materially affected workers, understand the undertaking’s connection, use engagement and credible evidence, act according to leverage and responsibility, provide or cooperate in remedy where appropriate, and report outcomes and limitations. Data collection serves that model; it is not the model itself.

Country or supplier risk scores are inputs, not conclusions. Combine sector, product, labour model, recruitment, location, vulnerable-worker and incident evidence. The same country can contain very different working conditions, and severe impacts can occur in lower-risk jurisdictions.

ESRS S2 due-diligence flow: identify material worker impacts, gather worker-informed evidence, act, remediate and report.

S2-1 states whether policies cover specific worker groups or all workers in the value chain, whether they address trafficking, forced or compulsory labour and child labour, and whether a supplier code exists. The disclosure should also show scope, communication, implementation, escalation and integration into procurement, sales, product and operational decisions.

Identify the commodities, services, geographies, supplier tiers and downstream relationships covered.

Describe expectations on recruitment, wages, hours, association, H&S, accommodation, grievance and remedy.

Explain onboarding, contracts, training, screening, monitoring, corrective action and escalation.

State policy gaps and the improvement plan.

S2-2 explains direct worker engagement, engagement through legitimate representatives or credible proxies, and how the perspectives informed decisions during the reporting year. Direct engagement is not always feasible or safe. A credible proxy can be a trade union, worker organisation, civil-society organisation or specialist with demonstrated knowledge and independence. Explain why the proxy is credible and which workers and issues it represents.

The undertaking describes channels available to workers in the value chain, whether a grievance mechanism exists, how effectiveness is assessed and its approach to remedy where it caused or contributed to harm. A global hotline can still be ineffective for workers without privacy, local language, technology or confidence against retaliation.

Accessibility: language, literacy, disability, technology, working hours and migrant status.

Independence and trust: ability to bypass supplier management and protection from retaliation.

Case governance: intake, triage, investigation, substantiation, escalation, remedy, closure and appeal.

Remedy: restoration, compensation, reimbursement, reinstatement, medical support or other appropriate outcome.

Effectiveness: timeliness, worker confirmation, recurrence and outcome, not case closure alone.

S2-3 requires the actions and resources used to manage material impacts and asks how the undertaking handles tensions with procurement or sales pressures. Labour outcomes can be undermined by short lead times, late order changes, price pressure, unstable forecasting or recruitment arrangements even where the supplier standard is strong.

Supplier termination is not automatic remediation. Disengagement can remove leverage and harm worker income. Consider severity, feasibility of improvement, worker consequences and responsible exit.

For material S2 sub-topics, human-rights incidents connected to value-chain workers are reported subject to privacy. The application requirements focus on substantiated and verified instances; not every open proceeding or concern is a reportable incident. Information can be aggregated by type or affected worker group. Maintain a restricted register with source, location, relationship, status, substantiation basis, severity, action, remedy and public treatment.

Use direct value-chain data where reasonably obtainable and reasonable, supportable estimates where direct data cannot be obtained without undue cost or effort. Intensive collection should follow the material impact and worker population; a baseline supplier-code control can remain broader.

Supplier evidence ladder: triangulate policy, process, independent, worker-informed and outcome evidence.

S2-4 requires qualitative or quantitative targets under GDR-T. S2 does not prescribe the broad standardised metric set seen in S1, so entity-specific metrics may be needed. Select outcomes that follow the material impact pathway: workers reimbursed for recruitment fees, wage gaps remediated, excessive-hours population, grievance accessibility, remedy completion, severe incident recurrence or worker-confirmed outcomes. Define the worker and supplier population, method and limitation.

Confirm the S1/S2 boundary and map material worker groups, locations and relationships.

Identify actual and potential impacts and prioritise severity/likelihood.

Map policies and supplier expectations to material issues.

Design worker, representative or credible-proxy engagement.

Map channels, non-retaliation and remedy.

Identify connection and leverage and change business practices where necessary.

Build the evidence plan by impact and supplier/worker cohort.

Operate the incident and legal/privacy review process.

Set targets and entity-specific metrics and obtain governance approval.

The company retains baseline code coverage, but intensive evidence focuses on the material worker populations. It uses confidential worker interviews through a credible local organisation, recruitment-agent records and grievance cases; changes order and payment controls; reimburses verified fees; and obtains worker confirmation. Deeper-tier coverage combines traceability, industry collaboration and transparent proxies. The report explains screening coverage and the narrower outcome population instead of claiming universal outcome evidence.