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Due Diligence

Due diligence involves systematically assessing environmental, social, and governance (ESG) factors to uncover gaps between a company’s sustainability ambitions and its actual performance – both within their operations and across their value chain.

Due Diligence

ESG due diligence helps identify potential Environmental, Social and Governance risks and opportunities and guides decision-makers in minimizing negative impacts and promoting sustainability. What risks exist in your operation and across your value chain, and where they are, for you to judge for yourself where unacceptable risk areas are or  identify the highest risk suppliers to prioritize for further assessment. You collect the actionable insights to empower and inform your decision making. 

Environmental due diligence can include examining resource consumption, emissions, pollution, waste management, to energy efficiency and climate change resilience.

Social due diligence can examine labor practices, human rights, employee well-being, community engagement, diversity and inclusion, and supply chain ethics. Social due diligence ensures that business activities align with ethical and socially responsible practices and help avoid reputational damage.

Governance due diligence can examine the quality and effectiveness of an organization’s corporate governance practices – from evaluating board composition, executive compensation, shareholder rights, ethics, transparency, to risk management. Governance due diligence helps prevent governance failures and ensures that decision-makers uphold ethical and responsible business practices.

Due diligence in practice: The Klappir Due diligence feature

Following the OECD Due Diligence Guidance for Responsible Business Conduct, Klappir’s sustainability platform supports a systematic scoping of your risks, and assessment of your actual or potential impact – examining Environmental, Social, and Governance (ESG) factors – both at the organization level and across the value chain.

The Due Diligence tool gives you the actionable insights you need to manage your time, resources, and value chain relationships more effectively — bringing focus and clarity to sustainable impact. 

How is due diligence performed with Klappir's Sustainability Platform:

Klappir's due diligence feature really starts with the Impact Profile. On one hand, you can leverage your sustainability data and demonstrate your ambitions and progress to stakeholders, investors, and regulators. On the other, by identifying your Geographical Risk and Sustainability Completeness Disclosures, you gain visibility into your organization's risks and opportunities – alongside those reflected in the Impact Profiles of other organizations within the Klappir Ecosystem. 

1. Review your Impact Profile

  • Add accurate information about your organization in Impact Profile; Add a current sustainability summary and your sustainability ambitions in the About section and review that your country, sector and publicly available information are represented correctly.
  • Scope your enterprise risk by answering the Disclosures completeness – gain an understanding of your gaps across ESG and your focus areas vs. neglected areas.

2. Scope your suppliers

  • Go to the Value Chain section in the Klappir platform and ensure that all suppliers are added for a full overview of your supply chain.

Review each supplier’s:

  • Geographical risk: Each company is evaluated based on the SDG Index of its geographical location – a ranking from the Sustainable Development Report that measures a country's overall progress toward achieving all 17 Sustainable Development Goals (SDGs). Lower scores on the SDG Index indicate more significant developmental challenges and potential risks, resulting in a higher geographical risk.
  • Disclosure completeness: The Completeness Disclosure process scopes: 
    • Strengths and gaps across ESG (e.g., where you have policies in place and where you do not).
    • Focus areas vs. neglected areas in your sustainability approach.

Identify high-risk suppliers to prioritize for further assessment based on the ESG performance gaps that matter most for your sustainability journey. Tip: Keep a simple Excel list of these suppliers so you can review and discuss them with your team internally.

3. Invite suppliers to complete their Impact profile - Growth and Impact journeys

  • You can now truly lead by example, growing impact at an Ecosystem level by inviting suppliers in your value chain without a complete Impact Profile or disclosure to build their own Core journey – building more transparency and clarity in your value chain.
  • Access Value chain>Invitations to start connecting with your suppliers and invite them to build the Core to their connected, data-driven sustainability practices at no cost.

4. Assess high-risk suppliers

  • Reassess using Geographical Risk scores + Disclosures responses and make a note of the suppliers you need to evaluate further. Tip: Keep a simple Excel list of these suppliers so you can review and discuss them with your team internally.
  • On the Impact journey, you can send detailed surveys in Due diligence>Sent surveys questionnaires to high-risk suppliers to identify areas where risk mitigation strategies need to be prioritized.

5. You control your due diligence priorities 

  • Klappir tools guide you, but context matters.
  • Consider:
    • Criticality of supplier
    • Strength of relationship
    • Spend (financial importance)

It is your sustainability journey — and your due diligence priorities.

Due diligence to drive Impact

Due diligence is a continuous cycle of scoping risks and assessing actual or potential impacts – built on data, expertise, and relationships across value chains to inform better decision-making and collaboration. By connecting efforts and building clarity, you enable transparency, reduce risks, and drive sustainable impact across the entire Ecosystem.