CSRD for non-EU companies: what Latin American exporters need to know now

Your largest European client has sent a new supplier questionnaire. Section 3 asks for Scope 1 and 2 greenhouse gas emissions. Section 7 asks about your supplier due diligence process. Section 11 asks whether you report under GRI, CSRD, or another framework.

You don't have most of this data.

Your client is subject to the EU's Corporate Sustainability Reporting Directive and needs to report on their entire value chain. You are part of that value chain. This is exactly how CSRD reaches Latin American companies — not through direct legal obligation, but through commercial pressure that arrives faster, and is harder to escape, than regulation.

Key Takeaways

CSRD applies directly to non-EU companies generating €150M+ in EU annual turnover with EU subsidiaries or branches — reporting from 2028 for FY2027.
The indirect reach is far broader: any Latin American company supplying to a CSRD-obligated European company faces increasing data demands through value chain reporting requirements.
The 2025 Omnibus simplification narrowed the direct scope but did not change the strategic direction — CSRD is not retreating, it is refining.
Research by Diwan & Amarayil Sreeraman (2023) documented that ESG reporting has shifted from voluntary to market-mandatory through investor and buyer pressure — before becoming legally mandatory.
The Sustainability Navigator's ESG Framework Alignment maps your existing data against ESRS requirements and identifies the gaps — typically a far smaller incremental effort than starting from zero.

What CSRD is and how its scope works

The Corporate Sustainability Reporting Directive, adopted by the European Parliament in 2022, replaced the Non-Financial Reporting Directive (NFRD) and fundamentally transformed sustainability disclosure from a voluntary practice into a legal obligation for a broad universe of companies operating in or trading with the EU.

CSRD applies directly to:

Large EU companies with more than 250 employees, €40M in turnover, or €20M in assets
Listed EU companies, including SMEs on regulated markets
Non-EU companies generating more than €150M in annual net turnover in the EU, with at least one EU subsidiary or branch

For non-EU companies at the €150M threshold, direct compliance is required — producing a sustainability report aligned with the European Sustainability Reporting Standards (ESRS) and subject to third-party assurance.

The indirect reach is structurally much broader. CSRD requires large companies to report on their entire value chain — including Scope 3 emissions, supplier social practices, and supply chain due diligence. Any Latin American company supplying to a CSRD-obligated European company will face increasing demands for sustainability data, even without direct CSRD obligation.

The 2025 Omnibus proposals: what changed

In February 2025, the European Commission published Omnibus proposals introducing significant simplifications to both CSRD and the Corporate Sustainability Due Diligence Directive (CS3D). Key changes:

Narrowed scope. The threshold for direct CSRD application was raised, removing approximately 80% of previously in-scope companies from mandatory reporting. Focus shifted toward the largest companies with the most significant EU market presence.

Timeline revision. Implementation timelines were restructured, giving companies more time to build the required data infrastructure.

Value chain protection. Protections were introduced for small and medium-sized companies in value chains, limiting data requests that large CSRD-obligated companies can make of smaller suppliers.

What did not change: the strategic direction. The Omnibus simplification does not signal a retreat from sustainability disclosure — it signals an adjustment of pace while maintaining the fundamental requirement that large European companies demonstrate verified sustainability performance across their value chains.

Research by Diwan and Amarayil Sreeraman, published in Environment, Development and Sustainability (2023), documented a shift in ESG reporting dynamics: the primary drivers have moved from regulatory compliance to market pressure — from investors, asset managers, and large corporate buyers who use sustainability data to make procurement decisions. This market pressure mechanism operates independently of regulatory timelines.

How CSRD reaches Latin American suppliers in practice

The mechanism is straightforward. A CSRD-obligated European company needs to report its Scope 3 emissions — which include the Scope 1 and 2 emissions of its suppliers. It needs to disclose its supplier due diligence process for human rights and environmental risks. It needs to report on the ESG practices throughout its value chain.

To produce this data, the European company sends questionnaires to its suppliers. Initially informal, these questionnaires increasingly become procurement conditions — suppliers that cannot provide the required data are evaluated as higher-risk, and may be replaced by suppliers that can.

The sectors where this pressure is arriving fastest in Latin America:

Agri-food: European food retailers and processors are requiring environmental and social data from Latin American suppliers — covering land use, water consumption, labour practices, and deforestation exposure.

Manufacturing and packaging: European manufacturing companies with sustainability commitments are requiring circular economy data and material provenance from their packaging and component suppliers.

Textiles: European fashion and textile companies are among the most advanced in supply chain ESG requirements — driven by consumer pressure and upcoming EU product regulation.

Mining and metals: European industrial companies face growing pressure on mineral supply chain due diligence, connecting directly to Latin American mining operations.

The ESRS data points most likely to be requested of your company

The European Sustainability Reporting Standards define approximately 1,144 individual data points across 12 topical standards. Not all are mandatory for every company — double materiality assessment determines which topics are material for a specific business. But the data points most commonly requested from suppliers in value chain questionnaires are:

Climate (E1): Scope 1, 2, and 3 greenhouse gas emissions; energy consumption and intensity; renewable energy percentage; transition plan existence.

Water (E3): Water withdrawal volume; water consumption in water-stressed areas; water recycling rate.

Circular economy (E5): Material input types (virgin vs. recycled); waste generation and treatment; product design for circularity.

Own workforce (S1): Wages vs. living wage benchmarks; health and safety incident rates; training hours per employee; gender pay gap.

Supply chain workers (S2): Supplier code of conduct existence; supplier audit process; percentage of suppliers assessed.

Business conduct (G1): Anti-corruption policy; whistleblower mechanism; supplier payment practices.

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Frequently asked questions

Does CSRD apply to my company if it has no legal entity in the EU? Direct CSRD obligations apply to non-EU companies with a legal presence (subsidiary or branch) in the EU and €150M+ in EU turnover. Without an EU legal entity, you are not directly subject. However, indirect pressure through European customers' value chain reporting requirements applies regardless of your legal structure.

When do non-EU companies need to comply? Non-EU companies subject to direct CSRD obligations face reporting requirements beginning in 2028 (for fiscal year 2027). However, the data collection infrastructure needed to produce compliant reports takes 2–3 years to build, making 2025 the practical start date for serious preparation.

Is GRI reporting sufficient, or do I need ESRS specifically? GRI reporting provides a strong foundation and significantly overlaps with ESRS requirements. The Navigator's ESG Framework Alignment maps your existing GRI reporting against ESRS requirements and identifies the gaps — typically a much smaller incremental effort than starting from zero.

What is double materiality and why does it matter? Double materiality requires assessing both how ESG issues affect the company financially (financial materiality) and how the company's activities affect people and the planet (impact materiality). CSRD requires both assessments — unlike traditional financial materiality analysis which only considers financial impact. The Sustrategize™ Baseline includes a double materiality roadmap as part of the Navigator tier.

Sources: European Commission, Corporate Sustainability Reporting Directive; European Commission, Omnibus Proposals on CSRD and CS3D simplification (February 2025); Diwan, H. & Amarayil Sreeraman, B., "From financial reporting to ESG reporting: a bibliometric analysis," Environment, Development and Sustainability (2023); Sustek.co Sustainability Transformation Tiers (sustek.co).

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