The scope of your value chain
Mapping out your value chain is the first step towards value chain responsibility. But what specific activities should you consider, and how extensive should the mapping be? From the OECD's perspective, covering the full value chain is essential to comprehensively address human rights and environmental impacts. The CSDDD applies a more limited definition of the ‘chain of activities’. We will discuss both.
Understanding the full extent of your value chain involves examining every stage, from the initial design and extraction of raw materials to the manufacturing, transport, and storage processes. Aside from activities that fall under your own operations, this also includes upstream activities such as design, extraction, sourcing, manufacture, transport, storage, and supply of raw materials, products, or parts of products. Downstream activities include distribution, transport, and storage of products.
By thoroughly mapping out your value chain, you create the basis for a clear, data-driven strategy that enables you to manage and mitigate impacts more efficiently, as well as foster a more sustainable, responsible and resilient supply chain.
OECD's perspective on mapping your value chain
Start by mapping out you already know (downstream partners; own operations; tier-1 suppliers; and perhaps some indirect suppliers as well). Add locations, describe activities, and list the main actors. Many companies have limited visibility into their tier 2+ suppliers, leading to blind spots. A first step in addressing these blind spots is to fill in the gaps based on desk research and (documented) assumptions. Throughout the cyclical process that is executed on a best-effort basis, more information will be known throughout the coming years and the value chain mapping can be updated.
Understanding the full extent of your value chain involves examining every stage, from the initial design and extraction of raw materials to the manufacturing, transport, and storage processes. Aside from activities that fall under your own operations, this also includes upstream activities such as design, extraction, sourcing, manufacture, transport, storage, and supply of raw materials, products, or parts of products. Downstream activities include distribution, transport, and storage of products.
By thoroughly mapping out your value chain, you create the basis for a clear, data-driven strategy that enables you to manage and mitigate impacts more efficiently, as well as foster a more sustainable, responsible and resilient supply chain.
Start by mapping out you already know (downstream partners; own operations; tier-1 suppliers; and perhaps some indirect suppliers as well). Add locations, describe activities, and list the main actors. Many companies have limited visibility into their tier 2+ suppliers, leading to blind spots. A first step in addressing these blind spots is to fill in the gaps based on desk research and (documented) assumptions. Throughout the cyclical process that is executed on a best-effort basis, more information will be known throughout the coming years and the value chain mapping can be updated.
OECD's perspective on mapping your value chain
CSDDD scope of your value chain
The CSDDD excludes end-users and product disposal, as well as distribution, transport, and storage of products if not carried out by business partners of your organisation or on behalf of your company. This limitation is intended to balance the need for comprehensive due diligence with the practicalities of implementation, ensuring that companies can effectively manage and mitigate risks within the most critical parts of their value chains. It is important to note that companies are still encouraged to include these downstream parts in their due diligence practices, especially since the CSRD (Corporate Sustainability Reporting Directive) does require detailed disclosure on downstream elements, including social issues relevant to consumers and end-users.
^ a schematic overview of what value chain activities are in scope of CSDDD – this picture is pending the results from the Omnibus negotiations. Please check the Grant Thornton website updates regarding CSDDD and other relevant information. An updated version of this whitepaper with more detailed information on CSDDD will be published once the Omnibus negotiations have been finalised.