For many years, sustainability has been discussed primarily through the lens of regulation, reporting and compliance. Companies invested time and resources because they had to. When obligations tightened, sustainability moved higher on the agenda. When regulation relaxed, interest faded. Today, that logic no longer holds because we are entering a phase in which sustainability is becoming less about legal obligation and more about business eligibility—particularly in complex value chains such as retail and FMCG.

And this shift creates one of the most significant strategic challenges for 2026.

The Real Pressure Has Moved Downstream

Large retailers and FMCG groups are increasingly expected to demonstrate sustainability performance not only within their own operations, but across their entire value chain. Recent regulatory changes under the EU Omnibus package have reduced mandatory reporting obligations for many companies, but they have not eliminated sustainability-related pressure. They have merely shifted it downstream.

In practice, large companies remain under scrutiny from investors, banks, rating agencies and global customers, while their suppliers—often much smaller and unevenly prepared—are still required to provide ESG data. As a result, data requests continue to multiply, even as data quality remains inconsistent.

What is often overlooked is where the real risk actually sits.

“The risk does not sit with the small supplier struggling to complete a sustainability questionnaire,” said Mihaela Croitoru, CEO of Sustainability Lens. “It sits with the retailer whose business continuity, reputation and access to capital depend on the weakest links in the value chain. This is no longer a reporting issue—it is a strategic risk management issue.”

The Omnibus package makes this shift explicit. While it simplifies ESRS requirements and significantly narrows the scope of companies subject to mandatory reporting and due diligence, it also confirms that companies exiting the reporting perimeter do not exit the value chain. Many will continue to be asked for sustainability information by larger partners, albeit under a new framework that introduces proportionality, limits excessive data requests and allows for estimates where data is not available.

In this context, the real differentiator is no longer minimum compliance, but the ability of companies to manage sustainability-related risks strategically—using tools such as double materiality analysis to prioritize what truly matters in their value chain and to align sustainability efforts with business resilience and competitiveness.

Sustainability Risk Is Supply Chain Risk

In retail and FMCG, value chains are long, fragmented and increasingly exposed to external shocks—energy volatility, resource scarcity, labor shortages, regulatory divergence, reputational scrutiny.

When sustainability is treated as a box-ticking exercise, companies respond by asking for “everything from everyone”: full ESG questionnaires, multiple platforms and ratings duplicated data requests. In this case the result is predictable: supplier fatigue, low-quality data, delayed responses and also hidden vulnerabilities. Ironically, this approach increases risk instead of reducing it.

The Missing Question in Boardrooms

For many leadership teams, the challenge is not simply the volume of sustainability data, but its uneven availability and limited usefulness. Large retailers often face a paradox: they receive large amounts of fragmented ESG data from some suppliers, while lacking basic, reliable information from others whose sustainability maturity remains low.

This imbalance is compounded by a limited understanding among many suppliers of why these data are being requested in the first place. Sustainability requirements are often perceived as bureaucratic and burdensome, rather than as tools that help identify risks, vulnerabilities and operational blind spots within their own businesses.

“Without a structured approach to analyze these data and integrate them into risk management processes, sustainability information remains disconnected from decision-making—both for retailers and for their suppliers. In this context, sustainability becomes noise rather than insight, and real risks in the value chain remain poorly understood and unmanaged”, said Mihaela Croitoru.

Double Materiality Analysis: A Strategic Tool

Double materiality analysis is still unfamiliar to many risk management functions and is often perceived as a regulatory concept linked exclusively to sustainability reporting. In reality, it is one of the most underused management tools available to companies today.

At its core, double materiality provides a structured way to assess sustainability from two perspectives simultaneously: how a company’s activities impact the environment and society, and how those impacts translate into financial risks, costs and opportunities. When applied to the value chain, it enables organizations to move away from blanket data requests and toward a risk-based approach.

Rather than asking all suppliers for all data, responsible teams can start asking smarter, decision-relevant questions: which suppliers are critical for business continuity, where a disruption would have the highest financial or reputational impact, and which sustainability issues are truly material in practice—not just in theory.

This shift fundamentally changes the conversation. When sustainability is embedded into risk management, sustainability teams no longer operate in isolation; procurement, finance and risk functions become actively involved; data requests become targeted and proportional; and suppliers are engaged more constructively. Most importantly, sustainability discussions move to the level where real decisions are made—investment priorities, supplier strategies, contract design and long-term resilience.

This is where sustainability stops being a compliance exercise and starts contributing directly to competitiveness.

Why This Matters in 2026

In 2026, retailers and FMCG companies will continue to be assessed—by customers, financiers and partners—on how well they understand and manage sustainability-related risks in their value chains. The most resilient companies will not be those that collect the most data, but those that ask the right questions, prioritize intelligently and integrate sustainability into their core risk management processes. The shift from compliance to competitiveness is already underway. The question is whether organizations are prepared to lead it—or be shaped by it

About Sustainability Lens
Sustainability Lens works with companies and leadership teams to integrate sustainability into risk management, strategy and decision-making. The firm supports organizations with market-driven sustainability assessments, double materiality analyses, EcoVadis evaluations, training programs and targeted sustainability reporting.