Human rights under CSRD: what companies need to report

The Corporate Sustainability Reporting Directive (CSRD) asks companies to disclose material impacts, risks and opportunities connected to people: their own workforce, workers in the value chain, affected communities and consumers. There is no separate human rights report to file. The work sits inside the double materiality assessment, backed by due diligence, stakeholder engagement and evidence that holds up in a Sustainability Statement.

Start with a clear-eyed assessment of where your company touches people, and how severe the harm could be when something goes wrong.

In short: if human rights impacts, risks or opportunities are material to your company or your value chain, you need to explain the governance, policies, actions, targets and metrics connected to them in your Sustainability Statement.

Before we dive in, a note from Kōan. 

Companies are often scared of talking about human rights. The issue seems too complex — and too political.

But there’s no need to be. Companies have a legitimate voice on human rights and, alongside governments, an important role in helping protect them. Do the right thing, and companies can enhance their reputation.

That means, first, admitting that risks exist. That basic human rights need protecting — including in company factories, warehouses and offices, as well as upstream in farms and plantations.

Then, taking a clear, open and responsible approach to reducing or eliminating these risks, investigating violations and repairing any damage done if violations do occur.

What follows covers the European Sustainability Reporting Standards (ESRS) that apply, how double materiality decides what gets reported, what a credible disclosure contains, and where the separate due diligence duties under CSDDD sit alongside CSRD. It is based on the revised ESRS Delegated Act adopted by the European Commission on 3 July 2026, mandatory for financial years beginning on or after 1 January 2027.

Does CSRD require human rights reporting?

CSRD requires companies in scope to report material sustainability matters in their Sustainability Statement. Human rights can be material through a company’s own operations, its subsidiaries or its value chain. Whether they are material for your specific company is the question your assessment has to answer.

Materiality under CSRD has 2 dimensions:

• Impact materiality: how the company affects people, including actual and potential negative and positive impacts on workers, communities and consumers.

• Financial materiality: how human rights issues could affect financial performance, access to markets, reputation, operations or value chain resilience.

Start from a well-evidenced double materiality assessment rather than a list of ESRS datapoints. The revised ESRS, adopted by the European Commission on 3 July 2026, cut mandatory datapoints by more than 60% against the original 2023 standards. Fewer datapoints raises the bar on the ones that remain. What you disclose needs to be evidence-led and tied to your material topics.

Which ESRS standards cover human rights?

The ESRS address human rights through the 4 social topical standards, ESRS S1 to S4. Each covers a different group of stakeholders a company may affect through its operations or value chain.

Your materiality assessment determines which standards apply, and to what depth. A company with a small, direct workforce and no local community footprint may find S3 is not material. A software business with a limited physical supply chain may have little to report under S2. For a breakdown of what each standard requires, and how the revised ESRS changed the disclosure obligations, see our guide to ESRS S1 to S4 and the social standards.

How do human rights fit into a double materiality assessment?

The double materiality assessment is where human rights reporting begins. It determines which topics are relevant to your company, and for human rights it has to look beyond your own walls. Many of the most significant impacts on people occur in supply chains, contracted services, community relationships and product use.

A practical double materiality process for human rights covers 5 areas:

1. Map where people may be affected: own workforce, contractors, supply chain workers, communities and consumers.

2. Identify actual and potential impacts, using the companies direct activities, sector intelligence, geographic risk data and supplier information rather than internal policy documents alone.

3. Engage relevant stakeholders. Workers, trade unions, community representatives and civil society organisations often surface risks that internal teams miss. 

4. Assess severity and likelihood. For impact materiality, severity is judged on scale, scope and whether the harm can be remedied. Potential impacts add likelihood.

5. Document decisions and evidence: why topics were judged material or not, what data informed the call, and any limits in the evidence base.

For the full methodology, including how to handle severity for actual versus potential impacts, see our detailed guide to human rights in a double materiality assessment.

Key point: an assessment that stops at the direct workforce is incomplete. The credible ones follow the people, wherever the business touches them.

What should companies disclose when human rights are material?

When human rights topics are material, your Sustainability Statement needs to address them across 5 areas, consistent with the general disclosure structure in the revised ESRS:

• Governance and accountability: who owns the topic at board and executive level, and how human rights risks reach decision-making, i.e. procurement, investments, risk management, acquisitions, etc.

• Policies and commitments: what is in place, whether it extends to suppliers and business partners, and how it maps to recognised frameworks such as the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises.

• Actions and remediation: what you are doing to prevent, mitigate, stop or remedy impacts. A line like “we work closely with our suppliers” tells a reader nothing. Credible actions are specific: audit coverage, corrective action timelines, grievance mechanisms people can reach.

• Targets and measures: targets tied to material topics, with baselines and progress.

• Metrics and evidence: quantitative and qualitative data linking the impact you identified to the action you took and the outcome you got.

Avoid boilerplate. A policy on its own proves very little. Readers and auditors look for a visible line between impact, action and outcome. 

What are common human rights risks in sustainability reporting?

Human rights risks vary by industry, geography and business model. Areas that often turn out to be material include forced labour and child labour in complex supply chains, unsafe working conditions, discrimination and harassment in the workplace, and land acquisition or community displacement linked to operations and sourcing.

Treat these as prompts for your assessment. Your own risk profile decides which ones matter. A fashion company sourcing from South-East Asia faces a completely different risk profile from a professional services firm with a mostly European workforce, and the materiality assessment should show that difference plainly. 

How does CSRD differ from CSDDD on human rights?

CSRD and CSDDD are related but distinct. CSRD requires companies to report material sustainability matters in their Sustainability Statement. CSDDD (Directive (EU) 2024/1760, as amended by Directive (EU) 2026/470) requires large companies in scope to identify and address adverse human rights and environmental impacts through a structured due diligence process, covering their own operations, subsidiaries and chains of activities.

The practical overlap is where this gets useful. A company that has done rigorous due diligence already holds much of the evidence it needs for credible CSRD disclosures: risk maps, stakeholder engagement records, corrective action plans and grievance outcomes. A Sustainability Statement written without that work behind it is hard to substantiate.

Timing has moved more than once. Under the Omnibus I amendments, Member States must transpose the CSDDD changes by 26 July 2028 and apply them from 26 July 2029. Check how the current rules land on your group structure and your markets before drawing conclusions about either framework.

5 practical steps to improve human rights reporting now

Wherever you are in the reporting cycle, these 5 steps will strengthen the quality and credibility of your human rights disclosures.

1. Review your double materiality assessment and confirm it covers people across the whole value chain. If S2, S3 or S4 were excluded on non-materiality grounds, check the reasoning is documented and defensible.

2. Map the distance between stated policies, identified impacts, actions taken and measurable outcomes. That distance is the most common weakness in human rights disclosures.

3. Strengthen engagement with workers, suppliers, communities and representative groups. Engagement is the most reliable way to find risks that internal processes miss.

4. Connect risk assessment to reporting, so that material topics visibly flow into governance, specific actions, measurable targets and reported metrics.

5. Write for scrutiny. Under ESRS 1 and ESRS 2, disclosures have to meet the fair presentation requirement and the qualitative characteristics: relevant, faithfully represented, comparable, verifiable and understandable.
   
   
   

How Kōan supports human rights reporting under CSRD

Human rights is where the distance between a policy and the evidence behind it shows up fastest. Getting the disclosure right takes due diligence that reaches into the value chain, and a clear read on what the revised ESRS requires. That's what our end-to-end reporting services are built for.

We work with companies to turn that into clear, defensible reporting decisions. For human rights in a DMA and Sustainability Statement, we can support:

• ESRS interpretation for material human rights topics.

• Impact mapping across own operations and the value chain.

• Stakeholder engagement with workers, communities and representative groups.

• Materiality scoring, and documentation of the reasoning behind it.

• Drafting human rights disclosures for the Sustainability Statement.

• Connecting due diligence evidence to CSDDD obligations, and communicating with boards and assurance providers.

If you're assessing human rights materiality for the first time or want a second opinion on disclosures you've already drafted, get in touch, we're happy to discuss where you are in the process.