ESRS S2: Japan Has No Standard That Answers It

The questionnaire arrives from a customer in Germany or the Netherlands. It asks about working hours at your plants, about the agencies that supply your seasonal labour, about grievance channels, about the tiers below you. Somebody forwards it to the sustainability team, who look at the SSBJ programme they have spent two years building and find nothing in it that answers a single question.

The gap sits between two systems. It is worth understanding precisely, because since February 2026 there is a legal limit on how much of it is your problem.

S2 is about your workers, not your customer’s

ESRS S2 is titled Workers in the value chain. The name is written from the reporting company’s point of view, so it is easy to misread from the other end. If a European company is reporting under S2, the value chain workers it is reporting on include the people you employ.

The standard is explicit about the boundary. It “covers all workers in the undertaking’s upstream and downstream value chain who are or can be materially impacted by the undertaking,” and “includes all workers who are not included in the scope of ‘own workforce’” (Commission Delegated Regulation (EU) 2023/2772, Annex I, ESRS S2 §4). Own workforce is ESRS S1, and S1 says the same thing from its side: it “does not cover workers in the undertaking’s upstream or downstream value chain; these categories of workers are covered in ESRS S2.”

So the two standards divide the world at your company’s front door. Your employees are S1 to you and S2 to your customer.

In the 2023 standards there are five disclosure requirements, and their titles tell you what the questionnaire will be made of:

• S2-1 Policies related to value chain workers
• S2-2 Processes for engaging with value chain workers about impacts
• S2-3 Processes to remediate negative impacts and channels for value chain workers to raise concerns
• S2-4 Taking action on material impacts on value chain workers
• S2-5 Targets related to managing those impacts, risks and opportunities

Note what is mostly not there. Four of the five are about process, not metrics. Your customer is mostly asking whether a process exists and who is accountable for it.

Those titles are the 2023 text, which still governs reporting for financial years before 2027. The Commission adopted the revised ESRS on 3 July 2026, and the revision merges and simplifies the S2 requirements on engagement, grievance channels and remedy, adds a datapoint on substantiated human rights incidents, and adds four policy datapoints under S2-1 covering trafficking, forced labour, child labour and the supplier code of conduct. The revised standards apply to financial years beginning on or after 1 January 2027. Check the final numbering against the Official Journal text, and see our guide to S2 after the July 2026 adoption for the detail.

One more thing worth knowing before you answer: S2 only bites where it is material. It “applies when material impacts on and/or material risks and opportunities related to value chain workers have been identified through the materiality assessment process laid out in ESRS 2.” If your customer has not done that assessment, or has done it and concluded S2 is not material, the questionnaire on your desk may be pre-emptive rather than required.

SSBJ has not issued a social standard

This surprises people, so it is worth stating plainly against the source.

The Sustainability Standards Board of Japan has published three standards and one practical-guidance standard. They are the Universal Standard on applying the disclosure standards (5 March 2025, amended 13 March 2026), Thematic Standard No. 1, the General Disclosure Standard, Thematic Standard No. 2, the Climate-Related Disclosure Standard, and a June 2026 practical standard on using GHG figures measured under the SHK system (SSBJ).

There is no Thematic Standard No. 3. Nothing covers social topics, human capital or human rights.

SSBJ built on the ISSB baseline, and the ISSB started with climate. The consequence is that a Japanese group which has done everything right, on time, and at the top of the Prime Market still has no domestic framework that produces an S2 answer. The dataset you built is a climate dataset.

The same holds from the other direction, which we have written about separately: ESRS S1 is about people and IFRS S1 is not, so an SSBJ or ISSB programme leaves the whole social pillar unbuilt.

What Japan does already publish

Not nothing. One social datapoint is already a legal disclosure obligation for a large share of Japanese employers, and it maps onto what European questionnaires ask for.

Under the Act on the Promotion of Women’s Active Engagement in Professional Life, employers with 301 or more regular employees have been required to publish their gender wage gap since 8 July 2022. From 1 April 2026 the obligation extends to employers with 101 to 300 regular employees (Ministry of Health, Labour and Welfare).

That figure is calculated on a Japanese basis and will not slot into an ESRS datapoint unchanged. ESRS computes the gap on gross hourly pay, and a Japanese disclosure built on annual figures will read differently where part-time work is concentrated. But it exists, it is already public, and it is already governed. Starting from a number your legal team already signs off is a better position than starting from a blank cell.

Beyond that, most of what S2 asks for is not a number at all. A supplier code of conduct, a grievance line and a record of what happened when someone used it, the audit reports you already hold for your own tier-one suppliers: those are S2-1 through S2-3 answers, and most manufacturers have them filed somewhere that is not the sustainability team’s folder.

Since February 2026, there is a ceiling on the ask

This change has not reached most Japanese suppliers yet.

Directive (EU) 2026/470, agreed on 24 February 2026 and published in the Official Journal on 26 February 2026, rewrote the CSRD. It did two things that matter to you.

First, it narrowed who has to report at all. Sustainability reporting at individual level is now limited to undertakings with net turnover above EUR 450,000,000 and more than 1,000 employees on average during the financial year. A number of the European customers who sent you a questionnaire in 2025 are no longer in scope themselves.

Second, and more directly, it introduced what the directive calls protections for undertakings in the value chain. The reasoning is stated in the directive’s own recitals: “There is evidence that undertakings in the value chain, including small and medium-sized enterprises, receive disproportionate requests for information from reporting undertakings.” The remedy is a ceiling. The reporting standards “should not specify disclosures that would require undertakings to obtain from undertakings in their value chain that have up to 1 000 employees on average during the financial year any information that goes beyond the information to be disclosed pursuant to the sustainability reporting standards for voluntary use” (Directive (EU) 2026/470).

If your company averages 1,000 employees or fewer, that is a floor under your workload, and it lands on exactly the population S2 is about: small subcontractors, labour agencies and seasonal operations.

One carve-out matters. Gross Scope 1, 2 and 3 greenhouse gas metrics sit outside the cap, so the emissions half of the questionnaire stays askable in full. The protection is real for labour data and does not extend to your carbon numbers. The detail of what the cap covers is in our separate piece on the value chain cap.

The directive also amended the transition rule. For the first three years, where value chain information is not all available, the reporting company explains the efforts it made and why it could not get the rest. After that, it “shall meet the reporting requirements for value chain information by using information directly obtained from undertakings in its value chain or estimates for that information, as appropriate.”

Read that last clause carefully, because it is the strategic point of this whole article. Your customer is permitted to estimate. If you do not supply a number, an estimate goes into a European filing about your workforce, and you will not see it before it is published.

What to actually do

Answer the process questions first. S2-1 to S2-3 are policy, engagement and remediation, and you can almost certainly answer them from documents that already exist. Getting those three right removes most of the questionnaire.

Publish the gender wage gap you already calculate, and say on what basis you calculated it. A stated basis is what makes a number usable by someone applying a different definition.

Ask your customer, in writing, whether it has concluded that S2 is material to it and whether your company sits under the 1,000-employee protection. Both answers change what you owe.

And build the evidence trail while you collect, not afterwards. Every one of these answers will be asked for again next year, by this customer and probably by another one. The teams that suffer are the ones who answer by email each spring and keep no record of where the answer came from.

That is the problem Socious Report is built for: one dataset, drafted into CSRD, SSBJ and ISSB outputs, with an independent Socious Verify credential behind each figure so the person receiving it can check it without phoning you.

If you want to see where your own answers would break, the free CSRD readiness check takes about three minutes and needs no registration to see the result.