What is Value Chain Mapping?

What is Value Chain Mapping?

Value chain mapping is the process of identifying and documenting all entities, activities, and relationships involved in creating, delivering, and disposing of a company's products or services. In ESG reporting, it extends beyond traditional supply chain logistics to capture environmental impacts, social conditions, and governance structures at each tier—from raw material extraction through manufacturing, distribution, use, and end-of-life.

Why It Matters

The CSRD and its European Sustainability Reporting Standards (ESRS) require companies to assess and disclose sustainability impacts, risks, and opportunities across their entire value chain—not just direct operations. This means a European retailer must consider the labor conditions at its Tier 3 cotton suppliers, the water impacts of fabric dyeing at Tier 2, and the end-of-life recyclability of its garments at the consumer stage. Without a map of the value chain, this analysis is impossible.

Separately, the EU Corporate Sustainability Due Diligence Directive (CS3D) creates legal obligations for companies to identify, prevent, and mitigate adverse human rights and environmental impacts throughout their value chains. German and French national due diligence laws already impose similar requirements. Companies subject to these regulations need a clear, documented understanding of their value chain structure to demonstrate compliance.

From a risk management perspective, the value chain is where most ESG exposure concentrates. CDP's 2023 supply chain report found that companies' supply chain emissions (Scope 3) average 11.4 times their direct operational emissions. Similarly, the most severe human rights risks—forced labor, child labor, unsafe working conditions—are overwhelmingly found in upstream supply chains, particularly in raw material extraction and primary processing.

The commercial case extends beyond compliance. Companies that understand their value chains make better sourcing decisions, identify efficiency opportunities, and build more resilient supply networks. When disruptions hit—whether from climate events, geopolitical instability, or regulatory changes—companies with detailed value chain maps can respond faster because they know who they depend on and where alternatives exist.

How It Works / Key Components

Tier identification and segmentation establishes the scope of the map. Most organizations start with Tier 1 (direct suppliers and customers) and progressively extend to Tier 2, Tier 3, and beyond. The depth of mapping should be proportionate to risk: high-risk commodities (cobalt, palm oil, cotton, cocoa) may require mapping to the mine, plantation, or farm level, while low-risk inputs (office supplies, standard hardware) may only need Tier 1 visibility.

Data collection and verification gathers information on each value chain node. This includes entity identification (company names, locations, certifications), activity data (what they produce, processes used, volumes), and sustainability data (emissions, water use, labor practices, governance). Sources range from procurement records and supplier questionnaires to third-party databases (Ecovadis, Sedex, CDP Supply Chain), trade data, and on-site assessments.

Risk and impact hotspot analysis overlays ESG risk factors onto the value chain map. Geographic risk indices (for water stress, deforestation, forced labor prevalence), sector risk profiles, and commodity-specific assessments help identify where the most significant impacts and risks concentrate. This hotspot approach allows companies to prioritize engagement and due diligence efforts on the nodes that matter most.

Visualization and integration translates the map into usable formats. Interactive digital platforms, GIS-based mapping, and integration with ERP and procurement systems make value chain data actionable for procurement teams, sustainability managers, and risk functions. The map should be a living document, updated as supplier relationships change and new risk information emerges.

Council Fire's Approach

Council Fire builds value chain maps that serve dual purposes: meeting CSRD and due diligence regulatory requirements while providing genuine operational intelligence. We combine procurement data analysis, supplier engagement, third-party risk databases, and sector expertise to produce tiered, risk-prioritized maps that connect directly to materiality assessments, Scope 3 calculations, and due diligence programs.

Frequently Asked Questions

How far down the value chain do we need to map?

The CSRD and ESRS don't prescribe a specific tier depth—they require coverage of the "entire value chain" but acknowledge data limitations, especially in early reporting years. Practically, you should map to the depth where your most significant impacts and risks occur. For many companies, this means Tier 1–2 for most categories and deeper (Tier 3+) for high-risk commodities or sectors. Document your approach and explain any scope limitations.

What tools are available for value chain mapping?

Several platforms support value chain mapping at scale: Ecovadis and Sedex provide supplier sustainability ratings, CDP Supply Chain collects emissions data from suppliers, and specialized tools like Sourcemap, Transparency-One, and Altana offer multi-tier visibility with geographic mapping. For Scope 3 emissions, tools like Sphera, Watershed, and Persefoni can model value chain impacts using both spend-based and activity-based approaches.

How do you handle suppliers who refuse to share data?

This is common, especially at lower tiers. Start with contractual requirements for Tier 1 suppliers to cascade data requests upstream. Use industry initiatives (like the Responsible Minerals Initiative or Together for Sustainability) that aggregate and share supplier data. Where primary data is unavailable, use sector and geographic proxies—but flag these as estimates in your reporting and describe your plans to improve coverage over time.