CSRD Carbon Reporting Requirements: What US Suppliers Need to Know
Introduction
For many US-based businesses, the European Union's Corporate Sustainability Reporting Directive (CSRD) felt like a "far-away problem" until recently. However, as we move through 2026, the directive's reach has crossed the Atlantic. If your company exports goods or services to Europe, or if you are a supplier to a major EU-headquartered corporation, you may be seeing new clauses in your contracts regarding "sustainability disclosure."
The CSRD is one of the most ambitious ESG regulations in the world, requiring companies to report on everything from carbon emissions to human rights in their value chain. While the law primarily targets EU companies, its "ripple effect" reaches US suppliers. Large EU customers may ask you for data, and the 2026 changes to the law also limit what they can require from smaller suppliers. This guide breaks down the latest 2026 thresholds, the concept of Double Materiality, and the data your European partners are most likely to ask you for.
Section 1: The 2026 CSRD Thresholds and Scope
The landscape of CSRD changed significantly in early 2026 with the EU's Omnibus simplification package, adopted as Directive (EU) 2026/470 and published on 26 February 2026, which aimed to reduce the administrative burden on smaller firms. It is crucial to understand if you fall into "Direct" or "Indirect" scope.
Direct Scope (The 2026 Rules)
Your US company, or part of it, falls directly in scope if it has:
- An EU subsidiary or EU group with more than 1,000 employees and net turnover above EUR 450 million. These companies report from financial year 2027.
- A significant presence in the EU: EU turnover above EUR 450 million in each of the last two financial years, plus an EU subsidiary or branch with net turnover above EUR 200 million. In that case the EU subsidiary or branch publishes a sustainability report for the group, from financial year 2028.
Indirect Scope (The "Supplier Effect")
This is where most US SMBs sit. Even if you don't meet the thresholds above, your EU customers may. Under the ESRS E1 (Climate Change) standard, companies in scope disclose their gross Scope 3 emissions when climate change is material to them (ESRS, Delegated Regulation (EU) 2023/2772). To do that, they may ask for your data, or estimate it: the directive lets them use information obtained from suppliers or estimates.
There is a limit on what they can demand. If your company has 1,000 employees or fewer, Directive (EU) 2026/470 makes you a "protected undertaking." Your CSRD customer may not require you to provide more than the EU's voluntary sustainability reporting standard for smaller companies (VSME) specifies, and a contract clause that does so is not binding. If it asks for more, it must tell you which items go beyond that standard and that you have a statutory right to decline them. Delegated Regulation (EU) 2026/1560 sets out that cap for reporting from financial year 2027.
CSRD reporting timeline after the 2025 and 2026 amendments
- Wave 1: Large EU public-interest entities with more than 500 employees. First reports in 2025, on 2024 data. Those that fall below the new thresholds leave the scope from financial year 2027, and EU member states may exempt them for 2025 and 2026.
- Wave 2: All other large EU companies, now only those above the new thresholds (more than 1,000 employees and over EUR 450 million net turnover). Postponed by Directive (EU) 2025/794 to financial year 2027, reported in 2028.
- Non-EU parent companies: Financial year 2028, reported in 2029.
- Listed SMEs: No longer required to report.
Section 2: Why US Suppliers Can’t Ignore This
The CSRD introduces a mandatory concept called Double Materiality. This means EU companies report both how sustainability matters such as climate change affect their finances and how their activities and entire value chain (including you) affect people and the planet.
- Contractual Requests: Some EU procurement teams now build emissions requests into supplier onboarding and contract renewals. If you have 1,000 employees or fewer, a contract term that requires more than the VSME standard is not binding, but answering a reasonable request for Scope 1, 2 and 3 figures helps you keep your place on the supplier list.
- Assured Reports: Unlike previous voluntary frameworks, CSRD requires Limited Assurance (a lighter form of audit) of the sustainability report from year one. Your EU customer's assurance provider will look at how its value-chain figures were estimated, so a supplier figure with a clear method and data trail is easier for them to use than a "best guess."
- The Timeline Moved: The 2025 "Stop-the-Clock" directive postponed the second wave by two years, and the 2026 Omnibus dropped the planned sector-specific standards. The Climate (E1) standard still asks reporters for gross Scope 1, 2 and 3 emissions. For their first three years of reporting, companies can explain gaps in their value-chain data and how they plan to fill them; after that, they must use information from suppliers or estimates. Expect requests to grow as data collection for financial year 2027 begins.
Section 3: What Data Will You Be Asked to Provide?
When your EU partner sends you a "CSRD Supplier Questionnaire," they generally need five key data points to satisfy their ESRS E1 requirements:
- Total Scope 1 & 2 Emissions: Your direct fuel use and purchased electricity.
- Scope 3 Category 1 (Purchased Goods/Services): This is often the most critical for them, as your output is their input.
- Energy Intensity: Your energy use per dollar of revenue.
- Climate Transition Plans: Do you have a plan to reach Net Zero? (Even a simple 2030 or 2050 target is a major plus).
- Data Lineage: Proof that your numbers aren't "made up": the method, the reporting period, and the source of every emission factor. A Carbon Draft cites the source of each factor, and the Disclosure-Aligned Report adds the full priced ledger, with every transaction and its factor.
The directive lets reporting companies use estimates for value-chain information they cannot obtain from suppliers, and spend-based estimates are a common starting point for suppliers who lack primary data. Over time, expect large customers to ask their biggest suppliers for higher-quality supplier-specific data.
Section 4: CSRD vs. SEC Climate Rules
Many US firms ask: "If I prepare for the SEC rules, am I safe for CSRD?" The answer is: Not necessarily.
The SEC's 2024 climate disclosure rule focused on Financial Materiality (how the climate hurts your bottom line). It never required Scope 3, it has been stayed, and on 29 May 2026 the SEC proposed rescinding it. The CSRD is much broader, focusing also on your Impact on the world, and its climate standard includes Scope 3. If you only prepare for the US SEC standards, you will likely have a "data gap" that will frustrate your European customers.
For a US supplier, the safest move is to adopt a GHG Protocol-aligned reporting process. The GHG Protocol is the "common language" of carbon reporting: ESRS E1 tells companies to consider its Corporate Standard, California's SB 253 requires it, and 92% of Fortune 500 companies responding to CDP used it in 2016. Using it keeps your data portable across jurisdictions.
Section 5: Answering a CSRD Supplier Request
If one of your European customers has asked you for carbon emissions data because of CSRD, you are not expected to become an ESG expert overnight. The request usually means you supply goods or services to a company that reports under CSRD, and it needs Scope 1, Scope 2 or Scope 3 figures from you for its own value-chain reporting.
Before you answer, check three things:
- Your size. If you have 1,000 employees or fewer, you can decline anything beyond the VSME standard. Your customer may rely on your own declaration of your size.
- What exactly is asked. Scope 1 and 2 totals, a Scope 3 figure, or spend data the customer will estimate from.
- The format. Some customers send their own template; others accept a PDF report.
A good supplier response states the reporting period, the boundary, the method (GHG Protocol, spend-based or activity-based), the source of each emission factor, and your assumptions and limitations. It is a supplier-facing estimate and is not a statutory CSRD filing. You do not need EU-specific data: your emissions are calculated with factors for the country where you operate. Keep the file, because it is the baseline you refine when your customer asks for an update.
Carbon Draft builds this from your accounting export. Basic ($20) covers Scope 1 and 2. Complete ($49) adds Scope 3 for up to 8 of the 15 categories, where your ledger shows that spend. The Disclosure-Aligned Report ($299) adds a section on CSRD (ESRS E1) that sets out what it requires, what the report contains and the gap. Every report is a screening-grade inventory a reviewer or assurance provider can start from, and it is not assured. If your customer asks for a full VSME report instead, our VSME Report prepares one, including the filled official EFRAG VSME Digital Template.
The CSRD represents a shift from "marketing-led" sustainability to "finance-led" compliance. For US suppliers, 2026 is the year to move from reactive guessing to proactive reporting. By providing your EU partners with a clear, GHG Protocol-based carbon report, you answer their request and protect your most valuable international contracts. To start, turn your spend data into a transparent emissions report.
Ready to answer your EU customers? Upload your accounting export at aisustainablefuture.com/carbon-draft and get a cited, screening-grade carbon report in minutes. Scope 1 and 2 from $20, Scope 3 from $49.
