5 steps to prepare for the surge in supplier surveys

Large multinational companies have been dealing with supplier surveys and audits for some time, and the ripple effect is now hitting their middle market suppliers. Companies that supply major manufacturers, big-box retailers and global consumer brands are increasingly asked to produce data on everything from carbon emissions to labour policies, environmental management systems and ethical sourcing practices.

In 2025, we anticipate demands for sustainability-related data in supplier surveys will reach a tipping point. A mix of regulatory pressures, investor scrutiny and consumer awareness is compelling large enterprises to look diligently at their entire value chain. As a result, executives at middle market companies that supply these larger entities face a clear mandate: be prepared or be relegated. In some cases, these surveys may even be mandatory in order for a supplier to be included on approved vendor lists.

Companies failing to establish robust reporting mechanisms, verifiable data and credible compliance frameworks may struggle to maintain key customer relationships, access financing or remain competitive in a rapidly evolving marketplace.

Pressures at play: Regulation, consumers, investors

Regulatory frameworks are tightening worldwide. The European Union is implementing the Corporate Sustainability Reporting Directive (CSRD), which requires companies—within and outside the European Union (EU) that meet certain criteria—to report on environmental and social metrics. Companies are adapting to climate reporting measures recently passed in California, the U.S.’s Uyghur Forced Labor Prevention Act and Canada’s C-59 Prohibition of Greenwashing and Fighting Against Forced Labour and Child Labour in Supply Chains Act, to name a few. Larger companies will need verifiable data from their suppliers to meet their own reporting obligations.

Consumer demand is another factor; as people become more informed about where and how products are made, companies need to demonstrate an understanding of their supplier ecosystems and progress in areas such as carbon emissions, waste reduction and ethical sourcing.

Similarly, institutional investors, financial institutions and governments factor environmental, social and governance (ESG) metrics into their risk analysis. Private equity firms, pension funds, government grants and even banks that finance industrial and consumer product companies demand greater transparency and climate/catastrophic risk modelling. Without robust data, suppliers risk facing more expensive capital or outright loss of investment opportunities.

What’s at stake?

Ignoring the rising tide of sustainability-related data requests is risky. Some potential consequences include:

• Loss of critical customers. As a middle market organization, your top customers—global players, industrial conglomerates, OEMs, tech giants and major retailers—may have strict ESG criteria and scores for their suppliers. Without the data or programs in place, you risk disqualification from long-term contracts or losing out to competitors who can meet these standards.
• Reputational damage. Failure to meet ESG standards could tarnish your brand and hinder future partnership opportunities.
• Regulatory fines and legal exposure. Non-compliance increasingly carries financial penalties. From missed compliance fines or tariffs for excessive emissions to legal action for labour rights violations, the risks are real. The quality of your data will be your first line of defence for reporting companies.
• Competitive disadvantage. If your competitors adapt and you do not, you’ll find yourself on the wrong side of the procurement process. Being unable to demonstrate compliance and forward-thinking sustainability policies can limit market opportunities.

Defensible data: Steps to take now

In 2025 and beyond, your data collection and reporting capabilities need to be robust enough to stand up to the scrutiny of large customers, regulators and the broader public. There are several actions executives should prioritize now to ensure preparation for these demands.

1. Establish centralized ESG data management

Many middle market suppliers have data scattered across spreadsheets, enterprise resource planning (ERP) systems and third-party files from internal and external sources. This fragmentation makes it exceedingly difficult to produce timely, accurate reports. A single source of truth streamlines the reporting, reduces errors and helps you respond promptly and confidently to customer surveys on a timely basis.

Companies should:

• Invest in a technology platform or ESG-focused software solution that can centralize your data.
• Map out your supply chain’s data points based on your materiality assessment, e.g., Scope 1 and 2 emissions, energy consumption, labour practices and supplier audit results.
• Develop standardized procedures for data input, verification and controls. Controls are important as you and your customers may be subject to required limited or reasonable assurance on this data in the future.

2. Align with recognized frameworks and standards

Aligning your data and reporting with widely recognized standards builds credibility. Standardization ensures you speak the same language as your customers and regulators. Customers have come to expect suppliers to reference at least one recognized standard in their supplier survey.

Companies should:

• Identify the frameworks most relevant to your industry and markets. (e.g., Greenhouse Gas Protocol, Task Force on Climate-Related Financial Disclosures, Sustainability Accounting Standards Board and/or Global Reporting Initiative)
• Calculate your Scope 1 and 2 emissions and implement supply chain due diligence regarding forced/child labour. Greenhouse gas (GHG) calculations and anti-modern slavery questions are now the most common due to the regulatory reporting requirements of your larger customers.
• Begin implementing at least one recognized environmental management system, like ISO 14001 and consider aligning with the Science Based Targets initiative if your customers are pushing for emissions reductions.

3. Train your teams and assign clear accountability

Data and technology are only as good as the people inputting, managing and verifying them. For your ESG reporting to be defensible, your teams must understand the importance of these metrics and their accuracy.

Companies should:

• Conduct training sessions so employees understand why this data is important and how to ensure its integrity.
• Assign responsibility for ESG data to a dedicated team or individual. It can be specific sustainability roles and responsibilities, a specialized ESG manager or a cross-functional committee that meets regularly.
• Clearly define the processes for quality assurance and what to do if/when an audit uncovers discrepancies.

4. Engage with your suppliers and solve for the nth tier

You will likely need to pass the pressure you’re feeling from your customers along to your suppliers, their suppliers and so on—down to the nth tier. If you rely on upstream partners for raw materials, components or packaging, their ESG metrics become part of your Scope 3 emissions and social responsibility profile.

Companies should:

• Identify critical suppliers and communicate your data requirements to them.
• Provide guidance and/or training to help them align with your chosen standards.
• Consider establishing supplier codes of conduct with consequences and incorporating sustainability criteria into contracts, scorecards and performance evaluations.

5. Plan for continuous improvement and coming external assurance

Data collection and reporting are not a one-time exercise. Market conditions, regulations and customer expectations will continue to evolve. You must move from a reactive posture to a proactive, continuous improvement mindset.

Companies should:

• Set internal targets for reducing emissions, improving labour standards and/or enhancing product stewardship.
• Regularly update your metrics and share progress with key stakeholders, internally and externally.
• Consider hiring external auditors or assurance providers to validate your data and controls. Independent verification can provide a meaningful layer of credibility when customers and regulators ask for validation.

The bottom line

As a midmarket industrials or consumer products executive, the questions and surveys you receive from your largest customers are not a short-term nuisance—they represent the new normal. Waiting until the pressures reach critical mass could leave you scrambling, making costly mistakes and losing key opportunities.

These demands will be more standardized, rigorous and consequential moving forward. Companies that fail to deliver complete, timely and defensible data risk losing competitive ground, damaging their reputations and potentially facing legal or financial penalties. Those who invest in robust data management systems, align with recognized frameworks, train their teams, push standards upstream to their suppliers and continuously improve will position themselves to thrive in this new environment.