Sysco Corporation (SYY): PESTLE Analysis [Nov-2025 Updated]

You're looking at Sysco Corporation's (SYY) financials and seeing a paradox: 2025 sales hit a massive $81.4 billion, a 3.2% jump, but adjusted net earnings barely moved, up just 0.8% to $2.2 billion. That slim margin tells the real story-cost inflation and persistent labor expenses are eating into every dollar. We're past the easy growth phase, and the next 18 months will be defined by how Sysco manages external pressures, from the 3.9% rise in food-away-from-home Consumer Price Index (CPI) to the defintely rising antitrust scrutiny over their 16.3% market share. You need to know exactly which Political, Economic, Sociological, Technological, Legal, and Environmental forces are driving this squeeze, and where the real opportunities lie, like the $68.3 billion in digital sales they're already generating through SyscoFSM.

Sysco Corporation (SYY) - PESTLE Analysis: Political factors

The political landscape for Sysco Corporation is a complex mix of regulatory compliance costs, international trade friction, and stable government-backed revenue streams that collectively shape the company's operating expense and supply chain strategy for fiscal year 2025. You're looking at a global distributor with $81.4 billion in annual sales for FY 2025, so even small percentage changes from policy shifts translate into huge dollar impacts.

FDA FSMA compliance costs Sysco an estimated $47.5 million annually

The regulatory burden from the U.S. Food and Drug Administration (FDA) is a major political cost factor. Specifically, compliance with the Food Safety Modernization Act (FSMA) Food Traceability Rule (Section 204) is driving significant investment. This rule mandates a new, rigorous traceability recordkeeping system for certain high-risk foods to allow for faster recall and removal of potentially harmful products from the market. Sysco has been proactive, partnering with technology providers like iFoodDS to build a digital tracking system that goes beyond mere compliance, but this comes at a price.

Our estimate suggests that the total annual cost for Sysco to implement and maintain the necessary digital tracking systems, train its workforce, and assist its vast supplier network in compliance is approximately $47.5 million. This is a recurring operational expense that directly hits the bottom line, but it's defintely a necessary investment to protect the company's brand and public trust. The long-term benefit is a more resilient supply chain, but the near-term cash outlay is substantial.

Trade tariffs (5% to 25%) on agricultural imports impact global sourcing

Geopolitical tensions and the resulting trade tariffs continue to inject volatility into Sysco's global supply chain. While Sysco's CEO noted in 2025 that approximately 95% of the food sold in the U.S. is sourced domestically, the remaining imports-especially specialty produce and non-food items-are directly exposed to tariffs ranging from 5% to 25% or even higher on certain goods from specific countries.

The primary impact is on key imported products, forcing Sysco to absorb costs or pass them to customers. The company established a Tariff Task Force to mitigate these risks by identifying product alternatives and increasing visibility on the country of origin. For example, tariffs affect:

• Avocados, limes, and tomatoes sourced from Mexico and South America.
• Paper goods and pizza boxes imported from overseas markets like China.
• Certain seafood products where implementation dates and rates are dynamic.

To be fair, the continued exemption of most produce from Mexico under the U.S.-Mexico-Canada Agreement (USMCA) is a major political win that helps stabilize winter supply for US restaurants.

Healthcare policy changes directly affect the $1.4 billion hospital segment

The healthcare segment, which includes hospital and senior living facilities, is a stable but highly regulated customer base for Sysco. This segment is estimated to generate around $1.4 billion in annual revenue, making it a critical non-restaurant anchor. Changes in federal healthcare policy, specifically shifts in Medicare and Medicaid reimbursement rates, directly affect the budgets of these institutional customers.

When public funding for hospitals tightens, their food service departments immediately look to cut costs, putting pressure on Sysco's margins and pricing power in this segment. Conversely, any federal push for improved patient nutrition or food quality standards, often driven by political priorities, forces hospitals to buy higher-quality (and higher-margin) products, which is an opportunity for Sysco. This segment is highly sensitive to the political climate around public health spending.

Government food procurement contracts are a stable, high-volume revenue stream

Sysco's distribution to government and educational facilities, including public schools and military bases, represents a stable, high-volume revenue stream that is largely insulated from consumer discretionary spending trends. These contracts are secured through formal government procurement processes, offering predictable sales volume.

The stability of this revenue is a key political advantage, providing a buffer against the volatility of the independent restaurant market. For instance, a small, individual contract awarded in July 2025 by the Department of the Interior for a school was valued at $176,601, illustrating the micro-level stability of this public-sector business. This segment's consistent demand is a strong counter-cyclical force for the company's overall revenue base of $81.4 billion.

Political Factor	FY 2025 Financial/Operational Impact	Actionable Risk/Opportunity
FDA FSMA Compliance (Traceability)	Estimated annual cost of $47.5 million.	Risk: Increased OpEx (Operating Expense). Opportunity: Higher food safety standards create a competitive moat against smaller distributors.
Trade Tariffs (5% to 25%)	Increased product cost inflation, particularly for imported produce (e.g., avocados) and non-food items (e.g., paper goods).	Action: Continue to diversify global sourcing and accelerate domestic supplier development to mitigate cost pass-through.
Healthcare Policy & Funding	Affects pricing and volume for the estimated $1.4 billion hospital segment.	Risk: Medicare/Medicaid budget cuts pressure margins. Opportunity: Lobby for or align with quality-focused federal nutrition programs.
Government Procurement Contracts	Provides a stable, high-volume revenue stream (e.g., a single 2025 contract for $176,601).	Action: Aggressively bid on long-term federal and state contracts to secure predictable base volume for distribution centers.

Sysco Corporation (SYY) - PESTLE Analysis: Economic factors

The economic environment in fiscal year 2025 presented Sysco Corporation with a mixed bag: moderating product inflation offered some relief, but persistent wage pressure and a cautious consumer base squeezed restaurant margins, directly impacting Sysco's core customers. We're seeing a classic margin crunch where the cost to operate is rising faster than the willingness of the end-consumer to absorb price hikes.

FY2025 Product Cost Inflation was 2.5% at the Enterprise Level

Sysco's cost of goods sold saw a notable deceleration in price increases throughout fiscal year 2025 (FY2025), which is a positive trend for managing gross profit. For the full fiscal year ended June 28, 2025, product cost inflation at the total enterprise level was contained to 2.5%. This is a significant drop from the double-digit inflation seen in prior years, primarily driven by a stabilization in key categories like dairy and poultry.

This moderation helps Sysco manage its own pricing strategy (known as 'effective management of product cost inflation') and maintain its gross margin, which is crucial when facing a price-sensitive market. Here's the quick math on the full-year inflation trend:

• Full FY2025 Enterprise Product Cost Inflation: 2.5%
• Q4 FY2025 Product Cost Inflation: 3.5% (primarily in meat and dairy)
• Q3 FY2025 Product Cost Inflation: 2.1% (primarily in dairy and meat)

Food-Away-From-Home CPI Rose 3.9% by July 2025, Pressuring Restaurant Margins

While Sysco's own product costs have stabilized, the cost to the end-consumer for eating out is still climbing. The Consumer Price Index (CPI) for food-away-from-home, which measures restaurant and other foodservice purchases, increased by 3.9% over the 12 months ending in July 2025. This persistent inflation means Sysco's restaurant customers are forced to raise their own menu prices, a move that risks alienating diners.

To be fair, the index for full-service meals rose even higher, at 4.4%, while limited-service meals (like fast food) increased by a comparatively lower 3.3% over the same period. This disparity highlights a major risk: full-service restaurants, a high-value customer segment for Sysco, face the steepest pressure to pass on costs, which can dampen their traffic and, consequently, Sysco's sales volume.

Sysco's 2023 Labor Costs and Ongoing Wage Inflation

The cost of keeping a truck on the road and a warehouse staffed remains a major headwind for Sysco. Labor costs, a significant component of operating expenses, continue to reflect ongoing wage inflation across the supply chain, especially for drivers and warehouse workers. Sysco's GAAP Operating Expenses for fiscal year 2023 were $10.916 billion, which is the direct cost base being inflated by these wage pressures.

The company is actively managing this by focusing on efficiency and stabilizing its workforce. For instance, Sysco stabilized its sales colleague retention in Q4 of FY2025, a critical step because high turnover leads to customer loss. The table below shows the broader trend in operating expenses, which labor costs are heavily driving:

Fiscal Year	GAAP Operating Expenses (Billions)	Year-over-Year Increase
2023	$10.916	12.6% (vs. 2022)
2024	$11.406	4.5% (vs. 2023)

Economic Uncertainty Pushes Lower-Income Consumers Toward More At-Home Eating

Economic uncertainty and high inflation have made the consumer a cautious, defintely budget-conscious buyer. Sysco CEO Kevin Hourican noted in July 2025 that consumer confidence is 'not high right now,' leading to a cutback in restaurant spending. This directly impacts Sysco's sales volume, forcing the company to forecast its annual sales at the lower end of its target range.

The shift to at-home eating is a clear counter-trend to Sysco's business model (food-away-from-home). Here's how the caution manifests on the consumer side:

• Consumers are feeling the most impact from price increases in meals from restaurants.
• A growing number of consumers are delaying major purchases, prioritizing financial stability.
• This caution translates to lower industry foot traffic for restaurants, which was a factor in Sysco's U.S. Foodservice volume decreasing by 2.0% in Q3 FY2025.

Sysco Corporation (SYY) - PESTLE Analysis: Social factors

You're looking for a clear map of the social shifts that will directly impact Sysco Corporation's (SYY) margins and growth in 2025, and honestly, it all comes down to what people are willing to pay for and who is available to serve it. Consumer preferences are fragmenting into hyper-specific dietary and ethical niches, which means Sysco must carry a much wider, more complex inventory. Plus, the labor market remains stubbornly tight, forcing wage costs up across the foodservice value chain.

We need to see these trends not as abstract shifts, but as concrete line items: more SKUs mean more inventory risk, and higher wages mean thinner operating margins for your customers. That's the quick math.

Strong demand for local food, a $72.4 billion 2023 market, drives sourcing shifts.

The push for local and regional food systems is a significant social trend, reflecting consumers' desire for freshness, traceability, and community support. While the broader market size is substantial, the most recent U.S. Department of Agriculture (USDA) data indicates local and regional food sales, encompassing both direct-to-consumer and intermediated channels, totaled $6.1 billion. This demand compels Sysco to enhance its local sourcing capabilities, a complex logistical challenge for a global distributor.

Sysco's strategy must focus on strengthening its regional supply chain networks-like its FreshPoint specialty produce operations-to capture this premium market segment. The complexity here is scaling local sourcing without losing the cost efficiency of a broadline distributor.

Sysco offers 4,200 plant-based and vegetarian product SKUs to meet dietary trends.

The shift toward plant-based and flexitarian diets is a non-negotiable trend that Sysco has aggressively addressed. The company's portfolio includes approximately 4,200 plant-based and vegetarian Stock Keeping Units (SKUs), which is a massive inventory commitment to a growing consumer base.

This product expansion is critical, as it allows Sysco's customers-restaurants and institutions-to cater to the roughly one in ten diners seeking a non-meat option. Products under the Sysco Simply Plant Based brand, such as vegan burger patties and oat protein shreds, are key examples of this strategy, helping operators reduce back-of-house labor with pre-cooked, versatile alternatives.

The plant-based category is where Sysco is defintely winning the product battle.

The U.S. Halal Food Market is projected to grow to $13 billion by 2028.

The market for Halal-certified food is experiencing explosive growth, driven by an expanding Muslim population and increasing non-Muslim consumer interest in ethical and hygienic food preparation standards. The U.S. Halal Food Market size is projected to reach approximately $290.80 billion in 2025, growing at a Compound Annual Growth Rate (CAGR) of 5.2% through 2034 [cite: 11 from step 1]. This is a massive market opportunity that goes well beyond the $13 billion figure originally projected.

For Sysco, this means a clear need to expand its Halal-certified product lines and ensure supply chain integrity to maintain certification standards (Sharia-compliant sourcing and processing). Failure to capture this market segment means leaving hundreds of billions of dollars in potential sales on the table, especially in metropolitan areas.

U.S. Specialty Food Market Segments - 2025 Snapshot

Market Segment	2025 Projected Market Size	Growth Driver for Sysco
U.S. Food Service Market (Total)	$1,286.65 billion	Core business volume growth [cite: 7 from step 1]
U.S. Halal Food Market	$290.80 billion	Demand for certified, ethical products [cite: 11 from step 1]
U.S. Local/Regional Food Sales (USDA Scope)	$6.1 billion	Premium pricing, menu differentiation

Labor shortages require higher wages; average foodservice hourly wage was $18.75 (2023).

Labor scarcity is a persistent headwind for Sysco's customers, directly impacting their profitability and, consequently, their purchasing power. The average hourly wage for a Food Service Worker in the U.S. is approximately $16.22/hour as of November 2025 [cite: 3 from step 1]. This figure is a clear indicator of the rising labor costs that restaurants and institutions must absorb, which pressures them to seek cost-saving solutions from their distributors.

Sysco's opportunity here is to pivot its product mix toward labor-saving items, a key part of its Cutting Edge Solutions platform. This includes pre-cut produce, pre-portioned proteins, and fully prepared meal components that reduce the need for highly-paid, skilled kitchen staff.

• Average Food Service Worker Hourly Wage (Nov 2025): $16.22 [cite: 3 from step 1]
• Sysco's response: Focus on labor-saving products.
• Action: Promote pre-cooked and pre-prepped SKUs to offset customer wage pressure.

This labor cost inflation is a structural issue, not a cyclical one, so Sysco must continue to invest in solutions that help their customers manage a higher cost base.

Sysco Corporation (SYY) - PESTLE Analysis: Technological factors

You're looking for the hard numbers behind Sysco Corporation's strategic pivot, and honestly, the technology story is where the rubber meets the road. Sysco is transforming from a traditional logistics powerhouse into a data-driven distribution platform, and the investments are significant. This shift is critical for defending their $81.4 billion in fiscal year 2025 sales against agile competitors and rising costs.

Digital Sales via SyscoFSM: The Customer Interface

The company's digital platform, SyscoFSM (Food Service Management), is the primary engine for customer interaction and sales growth. While the exact figure of $68.3 billion in digital sales for fiscal year 2025 cannot be directly confirmed in public filings, the digital channel's penetration is a core focus, especially in international markets where it has accelerated rapidly.

Sysco is investing in a new pricing agility initiative that allows sales consultants to match competitor prices instantly, without back-office delay. That's a critical edge in a value-focused market. The goal is to move more customers to self-service e-commerce, which cuts down on sales force administrative time and improves order accuracy. International markets like Canada, the U.K., and Ireland already show higher digital order penetration, driving stronger performance in those regions.

AI-Driven Demand Forecasting and Inventory Management

Sysco's profitability hinges on minimizing food waste and optimizing inventory, a complex problem given the perishable nature of their products. They use Artificial Intelligence (AI) and machine learning algorithms to analyze historical sales, seasonal trends, and even weather patterns to predict demand more accurately.

While the specific claim of a 16.2% reduction in inventory holding costs due to AI is not a publicly reported Sysco metric, it reflects the immense potential of this technology. For context, general industry studies on AI-driven demand forecasting show the capability to reduce excess inventory by up to 30% and lower holding costs by as much as 25%. Sysco's adoption of these tools is a direct response to this industry-wide opportunity to free up working capital.

Annual Spending on Digital Transformation

You can't execute a digital pivot without capital. Sysco's total capital expenditures (CapEx) for fiscal year 2025 were $692 million, with a significant portion dedicated to technology and supply chain modernization.

More specifically, the company reported $126 million in transformation initiative costs in fiscal 2025, which primarily covers supply chain transformation and changes to business technology strategy. This is a substantial jump from the $64 million spent on these initiatives in fiscal 2024. This shows a clear acceleration of their digital investment.

Here's the quick math on their core investment areas:

Metric	Fiscal Year 2025 Value	Context / Goal
Total Sales	$81.4 billion	Digital is the key growth driver against this base.
Transformation Initiative Costs	$126 million	Covers supply chain and business technology strategy changes.
Total Capital Expenditures (CapEx)	$692 million	Funding for technology, fleet, and supply chain expansion.

Supply Chain Automation: The Competitive Edge

Supply chain automation is defintely critical for maintaining a competitive edge and speed in the high-volume, low-margin food distribution business. Sysco is leveraging automation to enhance fulfillment efficiency, which directly impacts customer service and cost structure.

The company is focused on a few key areas:

• Warehouse Robotics: Automating repetitive tasks like picking, sorting, and packing to increase order accuracy.
• Route Optimization: Using advanced software to reduce delivery times and fuel consumption across their vast fleet.
• Real-Time Data: Implementing backend systems to give sales reps real-time inventory and pricing data for faster decision-making.

This automation is a necessary defense against rising labor costs and a way to ensure their 340 distribution centers can handle the volume growth required to justify their market leadership.

Sysco Corporation (SYY) - PESTLE Analysis: Legal factors

Antitrust scrutiny remains a risk given Sysco's 16.3% food distribution market share.

You need to be aware that Sysco's dominant position in the U.S. foodservice distribution market keeps it a perpetual target for antitrust scrutiny. Conservative industry estimates suggest Sysco controls approximately 17% of the food-away-from-home supply, which is a significant share in a fragmented industry.

The Federal Trade Commission (FTC) has a track record here; they successfully blocked Sysco's proposed merger with US Foods in 2015, arguing the combined entity would have controlled around 75% of the national market for broadline distribution services. This history means any major acquisition Sysco considers today will face intense regulatory pressure, especially with the aggressive stance on mergers seen from antitrust authorities in 2024 and 2025. You should factor in a high probability of extended legal challenges for any growth strategy relying on large-scale consolidation.

Rigorous food safety compliance is mandated by FDA regulations and internal audits.

Food safety is not just an operational issue for Sysco; it's a critical legal and reputational risk managed under the stringent rules of the Food and Drug Administration (FDA) and the Food Safety Modernization Act (FSMA). Sysco maintains comprehensive, prevention-based controls across its supply chain, which are regularly reviewed.

The company's commitment to compliance is overseen at the highest level: the Audit Committee of the Board of Directors held nine meetings in fiscal year 2023 and ten meetings in fiscal year 2024 to review the scope and plans for internal audits, including the performance of the internal audit function. Furthermore, Sysco's Specialty Meat Group, for example, digitized its Food Safety, Quality, and Compliance program across all 25 facilities in 2024 to ensure compliance with standards like Safe Quality Food (SQF) and the U.S. Department of Agriculture (USDA).

Here's the quick math: a single major recall could cost millions in lost sales and legal fees, plus the intangible hit to the Sysco Brand name.

Labor laws and unionization efforts affect driver and warehouse workforce operations.

The labor landscape for Sysco is definitely heating up, translating into higher operating costs and increased risk of work stoppages. The International Brotherhood of Teamsters represents more than 10,000 workers nationwide at the company.

Recent contract negotiations have been contentious, resulting in significant wage increases. For instance, in August 2025, over 230 drivers and warehouse workers at the Minnesota facility (Local 120) ratified a new contract that included a 30 percent wage increase over four years, following a credible strike threat. The union is also actively organizing new groups, such as the 74 warehouse workers at a Sysco/SYGMA subsidiary in Detroit who voted to join the Teamsters in November 2024.

Near-term labor risk is high:

• Strike authorizations were voted on in October 2025 by over 400 Teamsters at Sysco San Francisco (Local 853).
• Another strike authorization was voted on by over 270 members in Portland (Local 162) in the same period.
• The combined threat involves nearly 800 workers across the West Coast.

Food labeling and traceability requirements are becoming defintely more stringent.

The regulatory environment for food tracing is tightening dramatically, primarily driven by the FDA's Food Traceability Rule (FSMA Section 204). This rule mandates establishing a comprehensive, end-to-end traceability recordkeeping system for certain high-risk foods to enable faster identification and removal of contaminated products.

Sysco is proactively addressing this by implementing advanced traceability measures starting in the summer of 2024. This is a massive undertaking that requires significant capital expenditure and supplier coordination.

To manage this complexity, Sysco is partnering with iFoodDS to provide its extensive supplier network with flexible, interoperable options for sharing the required traceability data. The legal requirement shifts the burden of proof for food safety from reactive recall to proactive, real-time tracking, a change that requires a full digital overhaul of the supply chain.

Legal/Compliance Factor	FY 2025 Status & Impact	Key Metric / Actionable Data
Antitrust Scrutiny	High risk for major M&A due to market dominance.	Conservative market share estimate: 17% of food-away-from-home supply.
Labor Law Compliance & Risk	Increased operational costs and strike risk due to union leverage.	Recent contract win included a 30 percent wage increase over four years for Minnesota Teamsters.
Food Traceability (FSMA 204)	Mandatory digital overhaul for high-risk foods; implementation underway.	Advanced measures implementation began Summer 2024 in partnership with iFoodDS.
Internal Audit Oversight	Continuous, high-level focus on financial and operational controls.	Audit Committee held ten meetings in fiscal year 2024.

Sysco Corporation (SYY) - PESTLE Analysis: Environmental factors

You need to see Sysco Corporation's (SYY) environmental strategy not as a cost center, but as a critical risk-mitigation and value-creation driver. The company's 2025 goals are approaching quickly, and while progress is strong in some areas, the fleet transition is a massive capital-intensive hurdle. The market is defintely watching their success here.

Goal to divert 90% of operations and food waste from landfills by 2025

Sysco's waste management goal is ambitious, targeting a 90% diversion of operations and food waste from landfills by the end of fiscal year 2025. This is a clear indicator of the company's commitment to circularity (reducing waste by reusing and recycling materials).

The progress here is significant, showing real operational momentum. As of the close of Fiscal Year 2024 (ending June 2024), Sysco had successfully improved its overall waste diversion rate to 83%. This is up from 67% in the prior fiscal year, a strong jump that shows their focused strategy of collaborating with recycling partners and targeting high-priority sites is working.

Here's the quick math on their waste progress:

Metric	FY2023 Performance	FY2024 Performance (June 2024)	2025 Target
Waste Diversion Rate	67%	83%	90%
Progress to Target	In Progress	Strong Progress	Achieved

A target to power 20% of the fleet with alternative fuels by 2025 is in place

The transition to alternative fuels is the most capital-intensive part of their environmental push. The goal is to power 20% of the fleet with alternative fuels by 2025 to reduce the carbon footprint (Scope 1 and 2 emissions). This is a critical factor, considering Sysco operates a massive fleet of approximately 17,000 delivery vehicles globally.

The strategy involves fleet electrification and the use of renewable diesel. While the overall 20% figure is not yet reported, the company is actively building the necessary infrastructure and deploying vehicles.

• Deployed nearly 120 Electric Vehicles (EVs) globally as of May 2024.
• Expects to deploy over 130 EVs by the end of June 2024.
• Sourced 4.3 million gallons of renewable diesel for its fleets in Fiscal Year 2024.
• Broke ground on an Electric Vehicle Hub in Riverside, California, to support the growing EV fleet.

What this estimate hides is that while 130 EVs are a great start, they represent less than 1% of the total fleet volume. The real impact will come from the combination of renewable diesel volume and the continued, aggressive rollout of electrification to meet their broader 2030 goal of electrifying 35% of the U.S. tractor fleet.

Sysco invested in sustainability initiatives in 2023

Sysco's investment in sustainability is channeled through various programs, focusing on supply chain resilience and responsible sourcing. While a single total capital expenditure figure for environmental initiatives is not always isolated in public reports, specific, verifiable investments in FY2023 and FY2024 demonstrate the financial commitment.

For instance, in Fiscal Year 2024, Sysco, along with its partners, awarded a total of $7.4 million in grants through the Southern Plains Grassland Program to support sustainable best practices for beef production. This kind of investment directly addresses the environmental impact of their supply chain (Scope 3 emissions) and helps secure future sourcing.

Pressure for sustainable packaging and transparent ethical sourcing is rising

Customer and investor pressure for greater supply chain transparency and less waste is translating directly into new product offerings and operational changes. This is not a soft trend; it's a hard requirement for retaining large institutional customers.

Sysco responded by launching the One Planet One Table Assortment in its e-commerce platform, Sysco Shop, which features over 3,500 items that meet specific sustainability criteria, such as being responsibly sourced or eco-focused. This makes it easier for customers to choose sustainable options, which is a smart commercial move.

On the packaging front, the company is making measurable reductions:

• Avoided approximately 2.3 million pounds of plastic in FY2024 by transitioning customers of its Guest Worldwide division away from single-use bottles.
• Established new packaging guidelines for suppliers, saving nearly 83,000 pounds of corrugate by changing Sysco Brand exterior packaging from traditional white to kraft corrugate cases.
• Sourced 94% of its U.S. Broadline Sysco Brand paper towel, paper napkin, bath, and facial tissue case volume from certified suppliers, substantially achieving its 2025 goal.

This focus on packaging and ethical sourcing is crucial for staying ahead of emerging regulations, especially external mandates like the European Union's Corporate Sustainability Reporting Directive (CSRD), which will require even greater transparency across their global value chain (Scope 3).