ESRS 2 — Strategy, Business Model and Value Chain

Q: How do I prepare SBM-1 (ESRS 2: General Disclosures) using the page’s step-by-step guidance?

Use the page’s plain-language explainer, then work through the preparation steps to gather the listed datapoints and build a draft. The page is designed to help you turn source information into a disclosure, not to replace your own judgement or internal review.

Q: What data do I need to collect for SBM-1 before I start drafting?

The page lists the datapoints to prepare, including offerings, value chain position, upstream and downstream activities, customer groups, period changes, sustainability link, industry classification, core internal activities, significance basis, the four product flags, and related revenue. Use that list as your collection checklist so you can see what is already available and what still needs to be sourced.

Q: How should I define the scope and methodology for SBM-1 on this page?

The page gives a practical preparation route and a set of datapoints, but it does not prescribe a formal methodology. In practice, use the page to align the scope of the disclosure with the business information you can evidence, then document how you treated any period changes, classifications, and revenue links.

Q: Who should own the SBM-1 inputs in practice: ESG, HR, finance, or the business data owner?

The page is set up for practitioner use, so ownership should sit with the people who can evidence each datapoint and explain it clearly. A sensible approach is to assign each item in the datapoint list to the most relevant internal owner and keep the evidence pack under one coordinated review.

Q: What should go into the SBM-1 evidence pack for assurance readiness?

The page includes an evidence pack with five items and also gives six assurance claims to verify. Use those together to assemble a file that shows the claim, the risk if it is wrong, and the evidence supporting it, so a reviewer can trace the disclosure back to source material.

Q: What are the common SBM-1 reporting mistakes highlighted on the page?

The page has a section on common reporting gaps and mistakes, which is there to help you spot weak points before sign-off. Use it as a pre-submission check against your draft, especially where the disclosure depends on classification, revenue linkage, or period changes.

Q: How do I use the Prep & Assurance workbook for SBM-1?

The Download Centre includes a Prep & Assurance workbook in .xlsx format. Use it to organise the datapoints, track evidence, and move from source information to a draft disclosure in a structured way.

Q: What is the printable Library Card PDF for SBM-1 used for?

The Download Centre also provides a printable Library Card in .pdf format. It is there as a practical companion to the workbook, so you can keep the key points, checks, and drafting prompts to hand while preparing the disclosure.

Q: How do I turn SBM-1 data into a draft disclosure on this page?

The page includes a draft-output section with visualisation ideas, narrative starters, and a content-index line. Use those prompts to convert your collected data into a first draft, then check it against the evidence pack and the common gaps list.

Q: Does the SBM-1 page show real company examples I can learn from?

Yes. It includes a 'From company reports' table that links to real published reports at the pages where the topic is disclosed, and it also shows synthetic illustrative examples. Use the real-report links for reference and the synthetic example to see how a disclosure can be structured.

Disclosure focus

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 European Commission source.

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]

Download Centre

Preparation tools & forms

Download preparation tools for SBM-1 with free verified email access for 24 hours. Source-report links remain public.

Free · Email access

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 ↧

Check

For each claim, check the evidence

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.
Risk An assurer will test whether the boundary is complete and whether any excluded markets were left out without a clear reason.
Evidence to check 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.
Risk The assurer may check whether the picture is too high-level, omits key links, or misstates the organisation’s role in the chain.
Evidence to check 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.
Risk 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.
Evidence to check 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.
Risk The assurer may look for inconsistencies between sections, duplicated wording that hides differences, or a mismatch between narrative and data tables.
Evidence to check 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.
Risk The assurer will test whether the narrative reflects the actual structure of the business and whether any late changes were missed.
Evidence to check 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.
Risk The assurer may challenge whether the groupings are genuinely significant, whether the basis is applied consistently, and whether period-on-period changes are complete.
Evidence to check 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.

Where drafts go wrong

Mistakes to avoid and where judgement is needed

The left column is what preparers get wrong while collecting; the right column is where you will have to make and explain a judgement.

Mistakes to avoid

Wrong ownerThe 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 firstThe 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 boundaryPeople 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.
Wrong period basisThe team pulls information from a different reporting window or cut-off date, so the data does not match the period being reported.
Mixed counting methodOne pack combines turnover, headcount and other measures without separating the basis for each, which makes the figures impossible to compare or trace.
Source labels lostOriginal system names, file references or line-item labels are stripped out during consolidation, so no one can trace a number back to the first record.
Separate populations mergedDistinct sets such as main products, key customer groups or different activity types are rolled into one bucket, which hides what should be kept apart.
Weak evidence trailThe file set does not keep the supporting notes, extracts and approval history together, so reviewers cannot see who checked the data or when.

＋ Show 4 more

Judgement needed

What sits inside the reporting perimeter after a dealIf 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 activityWhere 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 offerFor 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.
How to describe links in the supply and customer chain when visibility is partialIf the organisation does not have full line-of-sight to every step before or after its own operations, explain the level of detail available and whether the picture is based on direct records, estimates or a mix of both.
Which internal activities count as significantWhen deciding which in-house functions or processes are material enough to mention, explain the threshold or reasoning used and keep the same approach across the group unless a local difference is material.
How to decide whether a business line is material enough to nameIf a product, service or market is close to the significance threshold, disclose the basis for treating it as significant or not, and show how that judgement links to the organisation’s own business model.
How to present changes during the yearFor shifts in the business mix, customer base, operating footprint or supply links during the period, describe what changed, when it changed, and whether the figures or narrative reflect the opening state, closing state or the full-year average.
How to deal with sensitive detail and small populationsWhere naming a market, customer group or activity could expose confidential information or where the population is very small, aggregate the data to a safer level and explain the grouping rule used.

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Examples

How it reads on the page

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.

Quality ladder

Basic
I operate in consumer goods and report that 12% of my revenue comes from higher-risk activities.
Better
I sell household products mainly to retailers in Europe, source most inputs from Asia, and say that 12% of my revenue comes from higher-risk activities because those lines are still material to my business mix.
Best
I sell household products mainly to retailers in Europe, source most inputs from Asia, and report that 12% of my revenue came from higher-risk activities this year, with the share unchanged from last year because my core product mix and customer base stayed broadly stable.

Check your understanding

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 →

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Framework references

Relevant ESRS requirements and related disclosures

ESRS

SBM-1

within ESRS 2: General Disclosures

Open official source →

Guides that settle this question

ESRS 2 General Disclosures: basis of preparation, governance, strategy, business model, stakeholders, material IROs, content index and GDR →

Related & explore

General Basis for Preparation of Sustainability Statements → Card Disclosures in Relation to Specific Circumstances → Card Actions and Resources in Relation to Material Sustainability Matters → Card Metrics in Relation to Material Sustainability Matters → Card Policies Adopted to Manage Material Sustainability Matters → Card Browse all disclosures →

More in ESRS 2 →Browse full catalogue →Search all disclosures →

FAQ

Questions this page answers

How do I prepare SBM-1 (ESRS 2: General Disclosures) using the page’s step-by-step guidance?+

What data do I need to collect for SBM-1 before I start drafting?+

How should I define the scope and methodology for SBM-1 on this page?+

Who should own the SBM-1 inputs in practice: ESG, HR, finance, or the business data owner?+

What should go into the SBM-1 evidence pack for assurance readiness?+

What are the common SBM-1 reporting mistakes highlighted on the page?+

How do I use the Prep & Assurance workbook for SBM-1?+

What is the printable Library Card PDF for SBM-1 used for?+

How do I turn SBM-1 data into a draft disclosure on this page?+

Does the SBM-1 page show real company examples I can learn from?+

	Report A	Report B	Report C
Datapoint 1	✓ p.213	unclear	✓ p.87
Datapoint 2	✓ p.214	—	✓ p.90

Strategy, Business Model and Value Chain

What to collect before drafting

Main offerings

Value chain position

Upstream activities

Downstream activities

Key offerings

Main customer groups

Period changes

Sustainability link

Industry classification

Core internal activities

Significance basis

Fossil fuel flag

Chemicals flag

Weapons flag

Tobacco flag

Related revenue

How to prepare it

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

Notes that turn data into a disclosure

Preparation tools & forms

For each claim, check the evidence

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.

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.

For the revenue split, we separated the figure into coal, oil and gas lines using the same source records throughout.

We used the same business description across the related sections so the coverage stayed aligned from one part of the report to the next.

We checked that each section of the disclosure matched the underlying operating model before publication, rather than relying on a single team’s draft.

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.

Mistakes to avoid and where judgement is needed

Mistakes to avoid

Judgement needed

How it reads on the page

Scenarios to work through

Ask the Knowledge Hub AI Assistant about this disclosure

Check your text

Relevant ESRS requirements and related disclosures

Questions this page answers

Secure your enrolment

Strategy, Business Model and Value Chain

What to collect before drafting

Main offerings

Value chain position

Upstream activities

Downstream activities

Key offerings

Main customer groups

Period changes

Sustainability link

Industry classification

Core internal activities

Significance basis

Fossil fuel flag

Chemicals flag

Weapons flag

Tobacco flag

Related revenue

How to prepare it

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

Notes that turn data into a disclosure

Preparation tools & forms

For each claim, check the evidence

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.

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.

For the revenue split, we separated the figure into coal, oil and gas lines using the same source records throughout.

We used the same business description across the related sections so the coverage stayed aligned from one part of the report to the next.

We checked that each section of the disclosure matched the underlying operating model before publication, rather than relying on a single team’s draft.

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.

Mistakes to avoid and where judgement is needed

Mistakes to avoid

Judgement needed

How it reads on the page

Scenarios to work through

Ask the Knowledge Hub AI Assistant about this disclosure

Check your text

Relevant ESRS requirements and related disclosures

Questions this page answers

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