Due diligence in the value chain

Due diligence in the value chain

A company’s value chain consists of inflows and outflows related to partnerships, raw materials, commodities and services. It is estimated that 60–80% of the sustainability impacts of companies come from the value chain*.

We offer the following value chain services:

  • value chain definition
  • identifying and assessing the impacts, risks and opportunities of social and environmental factors
  • definition of sustainability targets related to the value chain
  • building processes for continuous supply chain assessment, impact mitigation and auditing
  • preparation of a road map based on the required actions from the GAP analysis
  • the necessary operating principles (policies) and ethical guidelines (Code of Conduct).

We identify significant impacts and risks related to the value chain through country-, product- and raw material-specific scoring and by preparing an extensive report on the operations of the client company. The output is a detailed description of supply chains, from the origin of key raw materials to the sustainability classification of suppliers. By looking at the entire value chain, a company can optimise both its own sustainability and its activities. Risk raw materials and sourcing in countries with high risk ratings can present financial challenges and unexpected cost items for the company.

*Source: Carbon emissions embodied in product value chains and the role of Life Cycle Assessment in curbing them | Scientific Reports).

Supply chain sustainability and risk management are key aspects of supply chain management for companies and organisations. They ensure that products and services are sourced sustainably and efficiently, while minimising various risks. 

Sustainability in the supply chain means taking environmental, social and economic aspects into account in the procurement process. The aim is to ensure that procurement supports long-term sustainable development. Ensuring sustainability in the supply chain, for example through cooperation with partners, also smooths availability challenges and optimises the costs of materials and services.  

We support your company in the sustainability efforts related to the supply chain: 

  • energy efficiency and low carbon emissions
  • recyclable and ecological materials
  • sustainable use of water and natural resources
  • respect for the rights of employees (e.g. remuneration, working conditions)
  • fulfilment of human rights in the supply chain
  • compliance with fair trade and ethical standards
  • transparency and ethics in the supply chain
  • anti-corruption and anti-bribery
  • long-term financial stability.

Risk management in the supply chain 

Our risk management services support the identification, analysis and minimisation of potential disruptions and uncertainties. 

We help your company to assess the most important types of risk and plan and implement effective management models:

  • Operational risks: disruptions in the supplier’s ability to deliver, production interruptions
    • multi-supplier model, contingency plans, real-time monitoring 
  • Financial risks: price fluctuations, exchange rate fluctuations, financial bankruptcies
    • long-term contracts, currency hedging, monitoring of suppliers’ financial position 
  • Geopolitical risks: trade wars, tariff changes, political instability  
    • regional diversification, local procurement options
  • Environment and weather risks: natural disasters, impacts of climate change
    • taking climate scenarios into account, ensuring local resources
  • Ethical and social risks: child labour, poor working conditions, corruption  
    • audits, sustainability certificates (e.g. FSC, Fairtrade), cooperation with reliable suppliers   

The sustainability and risk management of the supply chain are essential for the competitiveness and responsibility of companies. Companies need to adopt proactive operating models, work closely with suppliers and leverage digital tools such as AI and data analytics to optimise the supply chain. 

The Supplier Code of Conduct is a guideline that defines the requirements and expectations of the company’s suppliers in relation to ethical, social and environmental practices. It is part of a sustainable sourcing policy and ensures that suppliers adhere to the company’s values and standards throughout the supply chain. 

We help you to develop a Code of Conduct that fits your business model and value chain:

  • definition of objectives and target group 
  • definition of values and ethical principles, taking into account the company’s material sustainability topics as well as product safety and quality management 
  • identifying and preventing risks (e.g. corruption, environmental risks, health and safety) 
  • creating clear and easy-to-understand content 
  • Integrating the Code of Conduct into the company and partner cooperation.

A solid Code of Conduct supports the organisation’s ethical operations and strengthens its reputation as a sustainable party. Policies prepared for the supply chain reduce risks, promote sustainable business, improve supply chain transparency and ensure compliance with international regulations and standards. Clear principles, effective communication and regular follow-up also ensure that policies do not remain a paper exercise, but also guide day-to-day operations.

Companies may require signatures and audits from suppliers to ensure that the Supplier Code of Conduct is being followed in practice. 

Read more about ESG risk survey.

We help your company to define EU Taxonomy-aligned activities that support biodiversity and ecosystem status and the related development opportunities. We guide your company, for example:  

    • in the calculation of the natural footprint 
    • in preparing a biodiversity strategy  
    • in producing road maps aligned with the objectives 
    • in the development of EU Taxonomy-aligned operations.

Our services related to biodiversity and ecosystems help your company to identify the impacts, risks and opportunities associated with them. In the assessments, we comply with international and European standards.

We can prepare a scenario analysis of your operations, support you in creating a transition plan and resilience analysis, and provide recommendations for the preparation of technical and scientifically verifiable metrics.

Our services are based on international frameworks, such as the Earth’s planetary boundary indicators and related thresholds, as well as the targets of the Kunming-Montreal Global Biodiversity Framework. With regard to policies, targets and actions, we also take into account the EU’s biodiversity strategy, the Birds and Habitats Directives and the Marine Strategy Framework Directive. 

 

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Vesa Vuorinen

IFRS Country Leader
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