By Sharon Brooks, Head of Nature Economy, UNEP-WCMC

Earlier this month I attended the UNEP-WCMC convened Nature Action Dialogues, and I was struck by the prevalence of discussion around value chains. The dialogues brought together private sector stakeholders and biodiversity experts to consider opportunities for the private sector to support the delivery of the Kunming-Montreal Global Biodiversity Framework’s goals and targets.  

Understanding value chains is essential, but tricky 

In sessions ranging from corporate assessment and disclosure to integrating social and environmental sustainability, value chains were consistently high on the list of challenges. This is not surprising with the number of policies, standards and frameworks that are setting requirements that extend upstream and downstream of business operations – from the goals of the Kunming-Montreal Global Biodiversity Framework to issue specific EU legislation. The theory is clear, one of raised ambition to drive transformation of business models. But how is this working in practice?  

The definition of value chain action is increasingly understood as decisions that will influence other actors within business value chains – whether upstream suppliers or downstream consumers. But as we know value chains are complex and we hear repeated exclamations that companies have tens of thousands of suppliers, so how on earth can they influence them?  

Measurement must contribute to future impact 

Measurement and traceability are challenges. The lack of location data is often cited. While we have an increasing number of tools and methods that can estimate impacts in value chains with varying accuracy, this takes time and resource. But more importantly, how can companies use this information to act? What I often wonder is, are we sending companies into an endless data gathering frenzy with no action at the end of it - a form of decision paralysis? 

Those of us in the environmental impact space are familiar with the phrase, “you manage what you measure”, but when it comes to value chains, should we consider the need to “measure – at least as a priority - what you can reasonably manage”? If companies are to invest in measurement, there needs to be a pathway to impact. This is aligned with the deep and narrow approach advocated by initiatives such as the Taskforce on Nature-related Financial Disclosures (TNFD) in their value chain guidance that requires you to first focus – and effect change – on the most material issues first. This does not forego the need to move towards improved design and governance of all supply chains, but to focus efforts on measurement and engagement where they can deliver the greatest outcomes for nature and people. But it still leaves the question of what does action look like? 

The need to redistribute value  

Policies and regulations are emerging, such as those focused on deforestation, disclosure and due diligence in the EU. Companies are becoming armed with supplier codes, contractual requirements and clauses to address supply chain risks. However, as this barrage of requirements hits global value chains, what is often missing from the narrative is that of incentives. By definition, value accrues through value chains as we move from production of raw materials to the manufacture, distribution and consumption of goods and services. The way value is distributed across the value chain is determined by market forces, which in turn are governed by trade rules, policies and regulations.  The stark inequitable distribution of value is exemplified in the coffee value chain where the average farmer receives just one penny of a £2.50 cup of coffee. Similarly, the lion’s share of the environmental burden of a value chain is borne by the sourcing landscape, and the people who live there. If we want to transform our value chains and address negative environmental and social impacts and inequalities at source, we need to transform our trade systems and redistribute value. This will require a concerted effort from government, business, and finance actors. 

Value chains require tailored pathways to impact 

We need to have an honest conversation to avoid decision paralysis where actors hide behind an ever-increasing spreadsheet of uncertain data. We need to recognise that not all companies and sectors are equal. Their pathways to impact vary based on the design of their value chains, the connection they have to key value chain actors, the nature of their goods and services, and the spread of their impacts and dependencies.  A global consumer facing company with diffuse impacts spread across thousands of value chains in multiple geographies will have a differing ability to drive impact compared to those with a more direct connection to certain actors in certain landscapes.  We cannot expect similar actions, and we need to use the unique leverage each company holds.  

A common starting point for any company is to screen value chains using easily accessible methods to understand where the most significant impacts (and dependencies) lie. Even these high-level assessments can inform corporate decisions such as how goods and services are sourced, designed, marketed, and used. This can drive more responsible consumer choices in a way that can have a positive impact beyond a company’s value chains.  

At a more granular level, multiple actions exist that can drive change in places where specific value chains connect with nature. Shortened supply chains, landscape level partnerships and provision of financial or technical support are a few examples of ways to transition practices towards those that support both nature and people.  

What else can companies do to manage impacts across their value chains? 

But what should companies do about impacts in their value chain that are challenging to measure and influence, those they cannot reach yet but cannot substitute or otherwise remove from their business? For some companies this will be more significant than others. The array of potential types of impact across different geographies undermines any suggestion of net impact approaches that allow you to offset impacts in one part of your value chain with positive outcomes in another. This would remove the rigour being required for site-level biodiversity net gain approaches. However, the mitigation hierarchy remains relevant and residual value chain impacts are likely significant. Insetting could be an important lever to tackle unmitigated impacts and direct investment to where it is most needed, but some level of traceability will be needed to direct this action in the right way. 

Dependencies can further the business case for investing in landscapes that are connected to value chains in some way.  Dependency assessments can highlight locations where ecosystems and their services are at risk and where investment could be directed. This can mitigate global supply chain risk and support local conservation and sustainable development priorities and national targets under the Kunming-Montreal Global Biodiversity Framework.  

The challenges are many – and consensus is needed - but it really made me wonder about the opportunity that exists for an impact orientated approach to value chains that avoids decision paralysis, one that helps redistribute wealth in value chains to support conservation, restoration and livelihoods in production landscapes – while building resilience in global value chains. 

Those interested in attending the Nature Action Dialogues in March 2025 can register their interest here.

Main image: Life Cycle Assessment Concept by Pcess609, AdobeStock #822290149