The 2018 guidance issued by the European Commission on the Non-Financial Reporting Directive (NFRD) marked a subtle yet meaningful tightening of expectations around corporate disclosure, particularly in relation to supply-chain transparency. For many firms—especially large retailers operating across multiple jurisdictions—this wasn’t entirely unexpected. The signals had been there for some time. What stood out in 2018, however, was how explicit the guidance became in calling for more detailed reporting on social and environmental metrics deep within the supply chain. It wasn’t enough, any longer, to speak in general terms about ethical sourcing or environmental commitments. The bar had been raised, and the challenge for companies was figuring out how to meet it without overcommitting in ways that might prove operationally difficult to sustain.
Retailers found themselves under pressure to demonstrate that they could see beyond their immediate Tier 1 suppliers. The revised NFRD guidance suggested that transparency had to extend to second- and even third-tier suppliers where risks were material. And yet, mapping these supply-chain layers accurately, let alone reporting on their social and environmental performance, proved no small task. The use of standardized frameworks became, in many ways, indispensable. It was in this context that the Global Reporting Initiative (GRI) open database emerged as a valuable resource. The GRI standards, already familiar to many sustainability teams, offered a structured language for describing supplier practices and outcomes in ways that regulators, investors, and civil society could interpret and, importantly, compare across firms.
Integrating GRI metrics into supply-chain reporting required, at the outset, a thorough internal review of what data was already available and where the gaps lay. Many large retailers found that while Tier 1 supplier data was generally accessible—at least for major categories like apparel or consumer electronics—information further down the chain was fragmented or reliant on voluntary disclosures that varied in scope and reliability. The first step, therefore, often involved working with procurement teams to identify critical supply-chain nodes where social or environmental risks were highest. From there, firms could prioritize data collection efforts, focusing limited resources where the materiality of the information was clearest.
Publishing an integrated NFRD-compliant supply-chain digital report posed its own challenges. The Commission’s guidance encouraged firms not just to report, but to do so in ways that linked non-financial data to overall corporate strategy and risk management. The digital format enabled richer storytelling—through data visualizations, interactive maps, and narrative explanations—but also exposed companies to greater scrutiny. Errors, inconsistencies, or omissions became easier to spot when reports were published in open, searchable formats. This reality made internal validation processes all the more critical. Before any digital report was published, cross-functional reviews involving sustainability, legal, finance, and communications teams became standard practice at many firms.
The actual mechanics of building an NFRD-compliant report varied. A common approach involved using the GRI open database as a baseline, extracting the relevant social and environmental indicators for suppliers, and mapping those against the company’s own supply-chain tiers. This might include data on labor practices, waste management, water use, or greenhouse gas emissions—depending on the sector and the specific risks identified. Firms then had to decide how granular to make their disclosures. Should performance be reported by supplier, by region, or by product category? And to what extent could data be aggregated without losing meaning? There was no single correct answer, and in many cases, companies ended up experimenting with different formats across reporting cycles.
One recurring theme was the tension between transparency and practicality. While the 2018 guidance encouraged more detailed disclosures, it also implicitly recognized the limits of what could be known or verified within complex global supply chains. Some firms, perhaps wary of overpromising, included qualifiers in their reports, noting where data had been estimated, modeled, or drawn from supplier self-assessments without independent verification. These admissions, far from undermining credibility, often had the opposite effect—making the reports feel more honest and grounded in operational reality.
It’s worth noting that the move toward integrated digital reporting under the NFRD wasn’t simply about regulatory compliance. For many retailers, the process catalyzed broader internal conversations about supply-chain management and corporate responsibility. Sustainability teams found themselves working more closely with procurement and logistics colleagues, and in some cases, with IT departments tasked with building the digital infrastructure needed to support open reporting. What began as an exercise in compliance often evolved into a wider strategic review of how the company engaged with its suppliers and what values it wanted those relationships to reflect.
The 2018 revisions to the NFRD guidance didn’t resolve all the ambiguities that firms faced in navigating supply-chain transparency. But they did set a clearer direction of travel, one that pointed toward deeper disclosure, more robust data collection, and greater accountability across the corporate landscape. How individual firms rose to meet these challenges varied, of course, and continues to vary. But what became unmistakable in 2018 was that supply-chain transparency was no longer a peripheral issue. It was becoming central to how companies were judged—not just by regulators, but by investors, consumers, and the broader public.