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ESRS 2: General Disclosures · 2026-5010-final

Disclosure Requirement SBM-1

Strategy, Business Model and Value Chain

Practical guidance for preparing this disclosure. Use this card to identify datapoints, verify claims and organise supporting evidence. For exact requirements, always refer to the official EFRAG source.

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Reviewed by Dr Ross Kurinko · Sustainability Reporting Trainer LRA educational guidance · Not issued or endorsed by EFRAG

To prepare this disclosure

16datapoints↓ 6claims to verify↓ 5evidence areas↓ 3report examples↓

Disclosure focus

This disclosure asks an organisation to explain how its strategy and business model are connected to sustainability matters, and how those matters are reflected across the value chain. In practice, it is about showing where sustainability is most relevant to the business, how it affects decision-making, and which parts of the organisation and value chain are considered in that assessment.

The practical focus is breadth and realism, not just a description of a few visible sites or initiatives. An organisation should think about coverage across its operations, products, services, suppliers and other upstream and downstream activities, and explain whether the picture it presents reflects the whole business or only selected areas.

This LRA educational guidance supports disclosure preparation. For the exact requirements, always refer to the official EFRAG source.

Before you start

A quick mental checklist before you prepare this disclosure — tick each as you settle it.

Have you fixed which products and services sit inside this write-up, and which parts of the supply and delivery chain you will describe? Before drafting, have you agreed the business lines, customer groups and any in-period changes that matter for this section? Have you decided which operating segments count as significant, and whether you will explain that using turnover share or another clear business reason? For any yes/no flags on sensitive activities, have you checked the scope against your own definitions so the answer is based on the same rule set throughout? Have you confirmed the figures or statements come from a traceable source and cover the same reporting period and basis across the whole section?

Preparation

Key datapoints to prepare

Datapoint What to capture Evidence hint Owner

Main offerings List the organisation’s main goods and services in plain business terms, covering what it actually sells or delivers in the reporting period. Product catalogue, service line descriptions, sales materials, management reporting, legal entity or business unit summaries. Commercial / strategy

Value chain position State where the organisation sits in the chain from inputs to end use, using an ordinary description of its role in relation to suppliers, operations and customers. Operating model, supply chain maps, business model narrative, procurement and sales process documentation. Strategy / operations

Upstream activities Summarise the main activities that happen before the organisation’s own operations, including the key stages and counterparties it depends on. Supplier maps, procurement records, inbound logistics summaries, value chain analysis. Procurement / supply chain

Downstream activities Summarise the main activities that happen after the organisation’s own operations, including how products or services move on to customers or end users. Distribution maps, customer journey materials, channel reports, after-sales or service delivery documentation. Commercial / supply chain

Key offerings Identify the products or services that are most important to the business, based on scale, strategic importance or impact on the reporting period. Revenue analysis, segment reporting, management accounts, product profitability or volume reports. Finance / commercial

Main customer groups Name the customer groups or markets that matter most to the business, using the organisation’s own commercial segmentation. CRM segmentation, sales reports, market plans, customer concentration analysis. Sales / marketing

Period changes Describe any material changes during the reporting period in the business mix, products, services, markets or operating setup that affect the disclosure. Board papers, management updates, restructuring announcements, acquisition or disposal records, product launch logs. Finance / strategy

Sustainability link Explain how the business model connects to the organisation’s sustainability aims, showing the practical link between what it does and the objectives it says it is pursuing. Strategy documents, sustainability plan, target tracker, board or committee papers, KPI dashboards. Sustainability / strategy

Industry classification Record the sector or industry category the organisation uses for reporting, based on the classification applied in its own reporting or external filings. Statutory filings, investor materials, internal reporting taxonomy, sector codes used in systems. Finance / reporting

Core internal activities List the important activities carried out inside the organisation that are central to how it makes money or delivers its services. Operating model, process maps, business unit descriptions, internal control narratives, management reporting. Operations / business units

Significance basis Show why the identified activity is significant, either by giving the share of revenue it represents or by explaining the business reason it is material. Revenue split by activity, segment reporting, management commentary, significance memo or board paper. Finance / strategy

Fossil fuel flag Confirm whether the organisation has fossil fuel-related activity and record the yes/no answer used for reporting. Business line inventory, revenue mapping, legal entity activity list, management sign-off. Finance / sustainability

Chemicals flag Confirm whether the organisation has chemicals-related activity and record the yes/no answer used for reporting. Product and business line inventory, revenue mapping, legal entity activity list, management sign-off. Finance / sustainability

Weapons flag Confirm whether the organisation has activity linked to controversial weapons and record the yes/no answer used for reporting. Business line inventory, sanctions or restricted activity screening, legal entity activity list, management sign-off. Legal / compliance

Tobacco flag Confirm whether the organisation has tobacco-related activity and record the yes/no answer used for reporting. Product and business line inventory, revenue mapping, legal entity activity list, management sign-off. Finance / sustainability

Related revenue Capture the revenue linked to the flagged activity, using the same scope and period as the yes/no assessment and the organisation’s reported revenue basis. General ledger, segment revenue schedule, product revenue mapping, management reconciliation. Finance

＋ Show SBM-1 sub-elements (LRA working checklist)

How to prepare it

1Set the reporting boundary first: identify the business lines, where they sit in the value chain, and the main upstream and downstream parts that need to be described.

2Decide what counts as material for this disclosure by separating the important products or services, the key customer or market groups, and any changes during the period that affect the picture.

3Gather the support for the narrative and the figures: map the sector label, the main in-house activities, and the basis for any revenue share or other reason used to show why an activity is significant.

4Complete the required yes/no checks for the four sensitive activity areas, and add the related revenue information where it applies.

5Write down any exclusions, scope shifts, or period-on-period changes so a reviewer can see what was left out, what moved, and why the disclosure reads the way it does.

6Before filing, compare the draft with the official source and confirm that each required point is covered, the wording is consistent with the source, and nothing has been missed or overstated.

Request the data

Request the business model and value chain evidence from Strategy / Commercial

Translate the disclosure into an internal business question — then adapt it to your organisation's own language.

What does the business do, where does it sit in the chain, what changed this period, and which activities or revenue streams are most material for sustainability reporting?

Use your own internal labels first, then map them to the reporting fields. For example, describe products, services, customer groups, operating segments, supply chain stages, and any restricted or sensitive lines in the language your teams already use.

Weak request

Please provide the ESRS 2:SBM-1 information on products, value chain position, upstream and downstream overview, significant products and markets, changes in the period, sector classification, internal activities, revenue share, and fossil fuel / chemicals / controversial weapons / tobacco flags.

Why it fails: It uses framework language that many business owners will not recognise, so it is harder to answer quickly and accurately. It also mixes several different asks into one long sentence, which makes it easy to miss the practical evidence needed to support the narrative.

Better request

Please send the business description pack for [reporting period] for [entity / business unit]. We need your own names for the main products and services, where they sit in the chain, the key upstream and downstream stages, the most important customer groups and markets, what changed this period, and the basis for any activity or revenue stream you treat as significant. If any line of business needs separate handling because of policy, legal, or reputational sensitivity, please flag it and include the source files.

Formal email template

Subject: Request for business model and value chain evidence for [reporting period]

Hi [name],

We are preparing the sustainability reporting pack and need your help with the business description and value chain evidence for [entity / business unit].

Please send, for [reporting period]:
- a plain-language description of the main products and services;
- where each sits in the chain from inputs to customer delivery;
- the main upstream and downstream stages we rely on;
- the most important products, services, customer groups, and markets;
- any changes during the period that affect how the business should be described;
- the internal basis for why any activity, product, or revenue stream is treated as significant;
- any lines of business that need separate handling because of policy, legal, or reputational sensitivity.

Please use your team’s own terminology first, and include any source files or links that support the description. A possible LRA training template is attached; please adapt this to your organisation and check the official source before sign-off.

If easier, you can return the information in the table below or in your own format.

Thanks,
[preparer name]

Short Teams / Slack version

Hi [name] — could you share the business description pack for [reporting period] for [entity / business unit]? We need the main products/services, where they sit in the chain, the key upstream/downstream stages, the important customer groups/markets, any changes this period, and the basis for anything treated as significant. Please use your team’s own terms first and attach the source files. I’ve got a possible LRA training template if helpful — please adapt it to your organisation and check the official source before sign-off.

Industry examples

Manufacturing

Context. A diversified industrial group with direct sales, distributors, and outsourced assembly.

Adapted request. Please share the product and channel summary for [reporting period]: main product families, where each sits in the supply chain, key supplier stages, main customer channels, any launches or exits this period, and the basis for treating any product line as significant.

Example response. Product family A; sold through distributors; upstream includes metal parts and packaging; downstream includes installation and servicing; new variant launched in Q2; treated as significant because it represents 42% of revenue and is a core strategic line.

Financial services

Context. A lender with retail and SME lending, brokered distribution, and servicing operations.

Adapted request. Please provide the business line summary for [reporting period]: main lending and fee-based services, where they sit in the delivery chain, key origination and servicing stages, main customer groups, any changes in product mix, and the basis for any line treated as significant.

Example response. Retail mortgages, SME term lending, and servicing fees; origination via branches and brokers; servicing in-house; no new product launches, but broker channel expanded; SME lending treated as significant because it is a major revenue stream and a strategic growth area.

Draft your disclosure

Notes that turn data into a disclosure

LRA training templates — adapt them to your organisation, and check the official source before sign-off.

Method note

Start by explaining how the organisation defined its main business lines, which activities were treated as significant, how upstream and downstream parts of the business were identified, and on what basis any revenue share or significance judgement was made.

Context note

Explain what the figures mean in practice by linking the organisation’s products and services to its place in the value chain, the markets or customer groups they serve, and the business areas that matter most for sustainability strategy.

Fluctuation statement

If there were changes in the period, describe what shifted in the product or service mix, which markets or activities were affected, and whether those changes altered the organisation’s sustainability focus or significance assessment.

Content index entry

SBM-1 Strategy, Business Model and Value Chain — [location / page] / [notes]

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Preparation tools & forms

Professional preparation tools for SBM-1 — free with an LRA Community membership. Register once (it's free) and every download unlocks, together with the Disclosure Library, templates and the LRA AI-assistant.

Free · Community members

01XLSPrep & Assurance workbookDatapoints, risks, evidence to check, owner and evidence pack.Get it free ↧ 02XLSData-request packRequest email, message template, response fields and sign-off structure.Get it free ↧ 03PDFLibrary CardPrintable one-page summary of this disclosure card.Get it free ↧

Go deeper · SBM-1

Learn to prepare this disclosure end-to-end

This guide covers one Disclosure Requirement. The ESRS / CSRD Reporting course walks the full European workflow — double materiality, datapoints, evidence and assurance — with exercises on your own data.

Available as Guided Flex, Live Cohort, 1:1 Expert Mentorship or Corporate Programme.

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Assurance readiness

For each claim, check the evidence

ClaimRiskEvidence to check

We limited the coverage figure to the markets where the product or service is not allowed, and we kept a note of how that boundary was set.An assurer will test whether the boundary is complete and whether any excluded markets were left out without a clear reason.Market list used for the cut-off, legal or policy basis for the restriction, internal scoping note, and sign-off showing who approved the boundary.

We described the business in plain terms by mapping what we sell, where inputs come from, where outputs go, and where we sit in the wider chain.The assurer may check whether the picture is too high-level, omits key links, or misstates the organisation’s role in the chain.Business model summary, value-chain map, operating model papers, procurement and sales summaries, and management review notes.

For the revenue split, we separated the figure into coal, oil and gas lines using the same source records throughout.The assurer will probe whether the split is based on a consistent method and whether any revenue was misclassified or left in a catch-all bucket.Revenue ledger extracts, segment mapping, calculation workbook, source invoices or contracts, and reconciliation to the general ledger.

We used the same business description across the related sections so the coverage stayed aligned from one part of the report to the next.The assurer may look for inconsistencies between sections, duplicated wording that hides differences, or a mismatch between narrative and data tables.Cross-reference matrix, draft comparison file, version history, and final editorial review comments.

We checked that each section of the disclosure matched the underlying operating model before publication, rather than relying on a single team’s draft.The assurer will test whether the narrative reflects the actual structure of the business and whether any late changes were missed.Operating model documents, review emails, change log, and approval trail from finance, sustainability and business owners.

We selected the main product and customer groupings using the same internal basis we use for management reporting, then noted any material changes during the period.The assurer may challenge whether the groupings are genuinely significant, whether the basis is applied consistently, and whether period-on-period changes are complete.Management reporting packs, product and customer segmentation analysis, period comparison schedules, and evidence of any reclassification decisions.

Evidence pack to prepare

The governing policy or written commitment behind this disclosureA methodology / definition note setting out how the disclosure was scoped and preparedSource-system exports the figures or facts were drawn fromThe internal approval / sign-off record for the disclosure before publicationMinutes or records evidencing the relevant engagement or consultation

Common reporting gaps

The information is presented without a date or as-at point.The scope or boundary of the statement is left undefined.Key terms are used inconsistently across the report.Material changes since the previous period are not disclosed.Assertions are made without supporting detail or a source record.Boilerplate is used that does not actually answer what is asked.

Common gaps

Mistakes to avoid when collecting the data

Wrong owner

The request goes to a team that knows the reporting framework but does not own the business facts, so the answer comes back generic and cannot be tied to the actual products, markets or operating lines.

Framework language first

The data call uses reporting jargon instead of the organisation’s own terms, which makes local teams map the wrong activities and miss the right source records.

No clear boundary

People collect figures without agreeing which entities, business lines or activities are in scope, so the same item is counted in one place and left out in another.

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Where judgement is often needed

What sits inside the reporting perimeter after a deal

If a business has been bought or sold during the period, explain which operations are counted in the description of products, markets and supply links, and make clear the cut-off date or averaging basis used.

How to handle different country labels for the same activity

Where local business descriptions or sector labels differ across countries, use one group-wide naming approach, state any mapping used, and explain any material exceptions.

Whether a borderline activity is treated as part of the core offer

For activities that are close to the edge of the main business, state the judgement used to include or exclude them from the description of significant offerings or customer groups.

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Examples

Illustrative examples

Synthetic, written by LRA — not from a company report, not text from any standard.

Illustrative (synthetic) example — Food processing

We describe a business that makes packaged food ingredients and finished products, with our own operations in Europe and North America, plus a supply base for agricultural inputs, packaging and logistics, and customers that include retailers, food manufacturers and foodservice groups. In the period, our main lines were bakery ingredients and chilled meals; these were the largest parts of revenue, and we note that the mix shifted toward higher-margin convenience products, which we treat as more relevant to our sustainability aims because they depend on lower-waste packaging and more traceable sourcing. - We classify ourselves in a food-processing sector grouping; the activities that matter most internally are procurement, manufacturing, cold-chain distribution and product development, and we regard them as significant because they account for 92% of revenue. - We do not operate in fossil fuels, chemicals or controversial weapons.

This example shows how a reporter can summarise what it makes, where it sits in the chain, which products and customers matter most, what changed during the year, why those lines are sustainability-relevant, how it classifies itself, which internal activities are most important, and whether it is linked to the three specified sensitive areas.

Illustrative (synthetic) example — Industrial equipment

We are an industrial equipment business that designs, assembles and services energy-efficient pumps and control systems, with component sourcing from specialist suppliers and sales to utilities, process industries and infrastructure operators. Our most important lines were pump systems and digital monitoring services; together they made up most of the year’s turnover, and we highlight them because they support energy efficiency, asset life extension and lower maintenance waste. - We place ourselves in an industrial equipment sector grouping; the internal work we see as most significant is engineering, assembly, field service and software support, and we consider it significant because it generated 88% of revenue. - We do not operate in fossil fuels, chemicals or controversial weapons.

This example shows a different kind of reporter using the same disclosure to explain its products, chain position, key markets, year-on-year mix changes, sustainability links, sector grouping, major internal functions, and the three sensitive-area flags.

Company reportsReal published reports

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How companies report SBM-1 in practice

Real reports where this topic is disclosed. These are report practice, not exact disclosure templates to copy.

Amadeus IT Group, S.A.

Hotels, Restaurants, Leisure, Tourism Services · Spain · 2025

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Amadeus IT Group’s 2025 Non-Financial Report provides some coverage of its strategy, business model, and value chain, with relevant information found on page 22 and referenced again on pages 32, 39, 208, and 210. The report includes mentions of business conduct policies, risk management, and measures against money laundering (p.215), indicating partial disclosure of governance and risk aspects. However, most specific datapoints under the SBM 1.20 subcategories are not found or clearly addressed in the report, leaving significant gaps in detailed information on the company’s sustainability strategy and value chain elements.

Endesa, S.A.

Electric Utilities / IPP / Energy Traders · Spain · 2025

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Endesa's 2025 Consolidated Annual Report shows that the company has integrated sustainability as a fundamental pillar of its overall strategy, adapting its products and services to align with sustainability objectives (p.166). The report includes some information on the main business activities and value chain related to sustainability (p.166), but there is no quotable evidence found for detailed disclosures on specific aspects such as policies related to workers in the value chain or other subtopics defined in the applicable regulations. Several expected datapoints under the SBM 1.20 series are not covered or are missing from the report.

Sanoma Oyj

Education Services · Finland · 2025

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Sanoma Oyj's 2025 Annual Report includes a covered datapoint on its strategy, business model, and sustainability-related goals on page 63, indicating an integration of sustainability into its strategic framework. However, the report lacks quotable evidence for detailed disclosures on specific elements of the business model and value chain, as well as on impact, risk, and opportunity management related to sustainability, with no findings for multiple expected datapoints. Notably, there is no clear information on the description of material impacts, risks, or opportunities across the value chain, nor on social information concerning workers in the value chain.

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Scenarios to work through

A group sells packaged food through supermarkets and online subscriptions. During drafting, the team can describe the main offerings, but the supply chain map is split across procurement, logistics and sales, and no one has yet agreed which parts sit before the group and which sit after it.

QHow should the preparer decide what to include when describing the business and its chain of activities?

Reveal model answer →

A manufacturer has added a new product line in the year, which now accounts for 18% of turnover, while an older line still makes up 62%. The reporting team is unsure whether to mention only the largest line or also explain the newer line because it is growing quickly and is linked to the group’s sustainability plan.

QWhat should the preparer do when deciding which offerings and customer groups are important enough to explain?

Reveal model answer →

A services group reports under a broad industry label, but its main activity is actually software implementation, with a smaller managed-support arm. The finance team wants to name only the broad sector label and leave out the internal activities because they think the sector code is enough.

QHow should the preparer judge what to say about the sector, the main internal activities, and the revenue split or explanation of importance?

Reveal model answer →

A diversified group has a small chemicals unit, a larger consumer products arm, and no fossil fuel, weapons or tobacco operations. The drafting team is unsure whether they should still answer the industry-screening items and whether a zero answer needs any related turnover explanation.

QWhat is the right approach when checking the industry-screening points and the related revenue information?

Reveal model answer →

Framework references