What is downstream compliance?

Downstream compliance is when larger organisations require their suppliers — often smaller businesses — to prove they meet ESG and ethical standards.

As corporate ESG obligations tighten, large companies are now responsible for the sustainability performance of their entire supply chain. This means they must check that their suppliers act responsibly on issues like carbon reduction, diversity, labour standards, and governance.
For smaller businesses, this “downstream” demand can arrive suddenly — often as a questionnaire or mandatory ESG report during tendering or contract renewal. Meeting downstream compliance isn’t just about avoiding exclusion; it’s about protecting your position as a trusted, low-risk partner.