What constitutes “reasonable effort”?

The concept of “reasonable effort” is used to determine when an undertaking must report an estimate of value chain information instead of reporting information collected from actors in its value chain. Reasonable effort should take into consideration the undertaking’s specific facts and circumstances and the conditions of the external environment in which it operates. What constitutes reasonable effort is therefore likely to vary from undertaking to undertaking. The FAQ indicates that it is expected that undertakings will more frequently have recourse to the use of estimates in the first years of application and that the use of estimates will become less common over time. In all cases, the undertaking should consider whether the use of estimates is likely to affect the quality of the reported information (enhances the quality or alternatively is not appropriately reliable). The FAQ indicates that, when determining reasonable effort, the following criteria could offer useful guidance, alone or in combination:

• The size and resources of the reporting undertaking in relation the scale and complexity of its value chain;
• The technical readiness of the reporting undertaking to collect value chain information;
• The availability of tools to access and share value-chain information;
• The size and resources of the actor in the value chain;
• The technical readiness of the actor in the value chain;
• Level of influence and buying power; and Connected to the level of influence,
• The proximity of the actor in the value chain.