EU to limit sustainability data demands on small suppliers

The European Union is implementing new measures to reduce the administrative burden on small and medium-sized enterprises (SMEs) caused by sustainability reporting requirements. Under Delegated Regulation (EU) 2026/1560, published on September 21, the EU will set a cap on the amount of information large corporations can demand from their suppliers to fulfill their own sustainability obligations.

This regulation aims to prevent large companies from passing excessive data requests regarding emissions, energy, water use, and human rights down to smaller partners that have fewer than 1,000 employees. The new rules, which take effect on January 1, 2027, will limit these requests to specific data points established by new voluntary standards.

In the context of these evolving requirements, experts suggest that SMEs should approach sustainability by focusing on issues most relevant to their specific operations. Rather than attempting exhaustive reporting, businesses are encouraged to conduct materiality analyses to identify key risks and opportunities, such as climate impact, working conditions, or resource consumption, to meet the increasing demands from customers and financial institutions.