Identify & assess adverse impacts

Many companies are often part of one or more supply chains. Supply chains involve different companies that work together to produce a product or deliver a service. Each company is a link in the chain and contributes to the final product or service. For example, the coffee supply chain involves the coffee farmer, the cooperative, the trader, a series of logistics companies, coffee roasters, supermarkets, consumers and the company that recycles the coffee cups.


Disclaimer: In this training the term sustainability risks refers to social, environmental and climate-related adverse impacts, both actual and potential.


Supply chain challenges

Supply chains are often international in nature and complex. The last links are becoming increasingly distant from the first. While this may be efficient, it can also be problematic, especially if decisions at the one end of the supply chain harm people at the other. This might be a last-minute change to an order, suppliers being put under pressure to deliver products or services as quickly and cheaply as possible, or late payments for deliveries. This can result in poorly paid, precarious work and high-pressure work environments for workers. It is also important to know what happens to a product after it is sold to an end user: how is it used? Does it lead to human rights violations? How is the product recycled?



Get to know your supply chain

Companies must know their supply chains in order to perform due diligence. But how do you do that? And where do you start? The answer to that question is as simple as it is complex: create an overview, prioritise and engage with suppliers.


It is important to stress that due diligence is expected across the entire supply chain. This means you are responsible for Tier 1 as well as Tier 2 and 3, and so on. Tier 1 is the supplier or buyer you directly do business with. Tier 2, 3 and so on are the subsequent suppliers or buyers (in the chain).


General steps for mapping supply chains

  • Step 1: Create an overview of all ingredients, products and raw materials that your company purchases to produce the goods for sale. Start with the goods that come from the highest-risk countries. From a practical point of view, it may be easier to begin with the largest flows in terms of volume and financial value. Tip: do this with your procurement department. They often already have useful overviews and are directly involved in the process.
  • Step 2: For each product from step 1, indicate from which supplier(s) you buy the product and whether you have a contract with these suppliers. If suppliers change frequently, state that in the overview.
  • Step 3: State from which country or countries each of the products from step 1 originates. If you do not know, mark it in the overview.
  • Step 4: Discuss with your main suppliers (the ones with the largest volume and financial value) where the raw materials come from. Add this information to the overview.
  • Step 5: Determine over what period and in what steps you can complete the product overview.