Getting started with value chain due diligence

Towards responsible business across the value chain

Getting started with value chain due diligence

Towards responsible business across the value chain

As global supply chains become more complex and operate in an increasingly volatile environment, managing ESG risks and impacts in the value chain has become more important. While the focus used to be on an organisation’s own operations, many companies have now begun to identify and manage ESG impacts across the value chain of their products and services: from the extraction of raw materials to the use of products by consumers.

Responsible value chain management has consequently become a strategic imperative, driven by regulatory requirements, investor expectations, and customer demand for responsible business conduct. At the same time, creating transparency in the value chain strengthens resilience, reduces operational risks, and can even provide a competitive advantage.

However, for many, the value chain remains a complex and sometimes daunting area of work. Companies struggle with questions like: "What does my value chain actually look like? What impacts, risks, and opportunities are present in my value chain? How far does my responsibility extend, and how should I address these issues?" These are important questions to ask when companies start to identify, prevent, mitigate, and account for adverse human rights and environmental impacts throughout their operations, as well as upstream and downstream in the value chain.

In this whitepaper we explore these questions and offer practical steps your company can take to ensure your value chain does not remain a black box filled with risk, but instead becomes a strategic opportunity for resilience. You will learn about what value chain due diligence looks like in practice; how key EU regulations connect (CSRD, CSDDD, EUDR, and EUFLR); and how to make value chain due diligence work for you whilst also becoming compliant with the relevant regulations.

Value chain due diligence as necessity to future-proof your business

There is a broad consensus that addressing adverse impacts within the value chain is a fundamental responsibility; organisations (and the people in these organisations) do not want to contribute to negative impacts such as child labour, environmental degradation, or wages that do not help meet basic living standards. The real challenge within many organisations is not recognising this responsibility, but translating this awareness into concrete, decision‑relevant insights and meaningful action. Internal discussions often stall at the same point: we know this matters, but isn’t it too complex, vague or costly to prioritise?

Clarifying the value of value chain due diligence across all layers of the organisation is an important step to get started. Beyond moral or regulatory obligation, value chain due diligence helps address a key business blind spot. The biggest impacts, risks, and opportunities for companies are often found beyond their own operations, in upstream and downstream value chain relationships. This is where the greatest opportunity lies for reducing negative impacts, improving social and environmental outcomes, and building long‑term resilience.

Here are some key reasons why working with your value chain remains a necessity and opportunity for future-proofing your business.

  • Improved risk management - Proactive identification of human rights, environmental risks, and impacts in the value chain before they escalate helps organisations to improve risk management. They can intervene sooner and reduce sudden costs related to supply disruptions, product withdrawals, rework, litigation, remediation, and lost revenue from reputation damage. This will lead to more predictable and reliable operations over time.
  • Greater operational resilience - Better visibility into suppliers, dependencies, and bottlenecks improves continuity of supply and reduces vulnerability to disruptions (e.g., geopolitical events, climate impacts, labour issues, or single‑source dependencies).
  • Reducing operational inefficiencies – Mapping the value chain often reveals structural inefficiencies, such as unnecessary intermediaries and avoidable transport steps. This can help identify opportunities for simplification and cost reduction.
  • New business opportunities - Gaining insight into new commercial opportunities and partnerships (e.g. preferred supplier status, access to new customers and collaboration through sector initiatives) helps companies stay competitive and innovative.
  • Improved chances to win (public) tenders – Large companies and public authorities increasingly expect suppliers to demonstrate robust, risk‑based value chain due diligence. Being able to substantiate how impacts are identified, prioritised, and addressed strengthens an organisation’s position in competitive tenders and concession processes.
  • Access to finance – Value chain due diligence strengthens access to sustainable finance by helping companies evidence alignment with key investor and lender expectations, including the EU Taxonomy’s minimum safeguards. Strong due diligence systems and an auditable evidence trail can also support disclosures and engagement under sustainable finance frameworks, which increasingly influence financing terms and capital allocation.
  • Meeting regulatory requirements – Robust value chain due diligence and reporting help companies comply with increasingly stringent EU regulations such as CSRD, CSDDD, EUDR, and EUFLR, reducing the risk of fines, product bans, withdrawals, civil liability, and adverse assurance findings. Failure to meet these expectations can restrict market access, increase scrutiny from investors and lenders, and ultimately result in lost customers, tenders, and access to capital.

Human rights and competitiveness go hand in hand

Efforts to improve a company’s performance on human rights, including in the value chain, are sometimes framed as a “trade‑off” with competitiveness. However, this is a false dilemma.

As the United Nations Development Program highlights in ‘Human Rights vs. Competitiveness: A False Dilemma?’, companies that proactively address human rights risks are often more resilient, more trusted and better prepared for future regulation and market expectations. Strong human rights due diligence not only reduces volatility and protects long‑term value, but also positions organisations to meet the rising requirements from stakeholders.

The key question is therefore no longer whether to act, but how to act effectively and convincingly. Read more here about our value chain cost assessment.

Value chain due diligence as necessity to future-proof your business

There is a broad consensus that addressing adverse impacts within the value chain is a fundamental responsibility; organisations (and the people in these organisations) do not want to contribute to negative impacts such as child labour, environmental degradation, or wages that do not help meet basic living standards. The real challenge within many organisations is not recognising this responsibility, but translating this awareness into concrete, decision‑relevant insights and meaningful action. Internal discussions often stall at the same point: we know this matters, but isn’t it too complex, vague or costly to prioritise?

Clarifying the value of value chain due diligence across all layers of the organisation is an important step to get started. Beyond moral or regulatory obligation, value chain due diligence helps address a key business blind spot. The biggest impacts, risks, and opportunities for companies are often found beyond their own operations, in upstream and downstream value chain relationships. This is where the greatest opportunity lies for reducing negative impacts, improving social and environmental outcomes, and building long‑term resilience.

Here are some key reasons why working with your value chain remains a necessity and opportunity for future-proofing your business.

  • Improved risk management - Proactive identification of human rights, environmental risks, and impacts in the value chain before they escalate helps organisations to improve risk management. They can intervene sooner and reduce sudden costs related to supply disruptions, product withdrawals, rework, litigation, remediation, and lost revenue from reputation damage. This will lead to more predictable and reliable operations over time.
  • Greater operational resilience - Better visibility into suppliers, dependencies, and bottlenecks improves continuity of supply and reduces vulnerability to disruptions (e.g., geopolitical events, climate impacts, labour issues, or single‑source dependencies).
  • Reducing operational inefficiencies – Mapping the value chain often reveals structural inefficiencies, such as unnecessary intermediaries and avoidable transport steps. This can help identify opportunities for simplification and cost reduction.
  • New business opportunities - Gaining insight into new commercial opportunities and partnerships (e.g. preferred supplier status, access to new customers and collaboration through sector initiatives) helps companies stay competitive and innovative.
  • Improved chances to win (public) tenders – Large companies and public authorities increasingly expect suppliers to demonstrate robust, risk‑based value chain due diligence. Being able to substantiate how impacts are identified, prioritised, and addressed strengthens an organisation’s position in competitive tenders and concession processes.
  • Access to finance – Value chain due diligence strengthens access to sustainable finance by helping companies evidence alignment with key investor and lender expectations, including the EU Taxonomy’s minimum safeguards. Strong due diligence systems and an auditable evidence trail can also support disclosures and engagement under sustainable finance frameworks, which increasingly influence financing terms and capital allocation.
  • Meeting regulatory requirements – Robust value chain due diligence and reporting help companies comply with increasingly stringent EU regulations such as CSRD, CSDDD, EUDR, and EUFLR, reducing the risk of fines, product bans, withdrawals, civil liability, and adverse assurance findings. Failure to meet these expectations can restrict market access, increase scrutiny from investors and lenders, and ultimately result in lost customers, tenders, and access to capital.

Human rights and competitiveness go hand in hand

Efforts to improve a company’s performance on human rights, including in the value chain, are sometimes framed as a “trade‑off” with competitiveness. However, this is a false dilemma.

As the United Nations Development Program highlights in ‘Human Rights vs. Competitiveness: A False Dilemma?’, companies that proactively address human rights risks are often more resilient, more trusted and better prepared for future regulation and market expectations. Strong human rights due diligence not only reduces volatility and protects long‑term value, but also positions organisations to meet the rising requirements from stakeholders.

The key question is therefore no longer whether to act, but how to act effectively and convincingly. Read more here about our value chain cost assessment.