Mapping the Value Chain – a Sisyphus’ Task

Blog post by Sune Skadegaard Thorsen, GLOBAL CSR

Companies are increasingly being asked to “map their value chains” – to identify every direct and indirect business relationships in their supply or distribution chain from end to end. The idea is that full visibility enables accountability. But is this requirement expected from the Standard (i.e., the UN Guiding Principles on Business and or Human Rights (UNGPs) and the OECD Guidelines for Multinational Enterprises ( OECDG) – that together forms the Standard) and at all realistic or pragmatic?

In our latest blog post “Mapping the Value Chain – a Sisyphus’ Task”, we take a critical look at this trend.

Key takeaways:

It is not required by the Standard

• Neither the UNGPs, nor the OECDG, mandate companies to map and disclose the identity of the entities in their value chains.

It exposes businesses – especially SMEs – to financial risks

• Revealing your business relationships can lead to risks of you being bypassed, undercut, or made redundant by your buyers and competitors. Large multinationals may commercially benefit from identifying indirect relationships, but most companies bear the inherent risk.

It’s practically impossible and strategically unsustainable

• Even the world’s largest companies acknowledge they will never finish mapping their value chains. Value chains are dynamic – entities merge, disappear, or relocate. Pouring resources into exhaustive mapping meaning diverting attention and budget away from managing real sustainability risks and impacts.

It does not reveal where adverse impacts occur

• Mapping tells you who is in your value chains – not what impacts they may cause or contribute to.

Adverse impacts only happen “out there”? Think again!

• Adverse impacts occur within every company’s own operations. The outdated idea, that impacts only happen “out-there” in the value chains, makes due diligence prone to prejudices and biases, and risk offending your business relationships.

Reminder – All companies are at risk of causing or contributing to severe sustainability impacts, including human rights impacts, regardless of their sector or location. It is illogical and impossible to expect a company to identify and assess risks of severe impacts in all its business relationships, let alone potential non-severe impacts.

What should companies do instead?

• Conduct due diligence on own operations in alignment with the UNGPs/OECD Guidelines.
• Require your business relationships to do the same.
• Engage only when linked to actual severe (material) adverse impacts, not risks/potential impacts.
• Use leverage to make business relationships cease and possibly remediate the actual severe impact and implement the Standard.

Read more via this link (‘Download as PDF‘) to GLOBAL CSR’s latest blogpost “Mapping the Value Chain – a Sisyphus’ Task”.