Disclosure focus
The practical focus is on whether the organisation has considered its full business, not just a few headline sites or activities. It should describe how the material matters are reflected across operations, value chain and decision-making, and where there are differences in relevance by geography, business line or site type. The aim is to show the breadth of coverage and the real strategic implications, in a way that is clear and specific to the organisation.
This LRA educational guidance supports disclosure preparation. For the exact requirements, always refer to the official European Commission source.
Prepare
What to collect before drafting
Tick each field as the evidence lands. Owners are the teams that usually hold the source files.
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Interaction with strategy
Strategy / sustainability teamDescribe how the issue links with the organisation’s strategy, including the practical way it affects or is affected by that strategy.
Evidence Strategy papers, board packs, risk registers, business planning notes.
Watch for The description is written as a generic narrative and does not tie back to the approved strategy or the source business plan.
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Strategic response
Strategy / executive managementSet out the organisation’s chosen strategic response to the issue, in plain terms that show the direction of travel and the main actions at a high level.
Evidence Strategy refresh papers, executive committee papers, transformation roadmap.
Watch for The response is mixed up with operational actions and does not match the agreed strategic response in the planning documents.
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Planned response
Business planning / programme managementCapture the actions the organisation plans to take in response to the issue, including the intended measures and implementation approach.
Evidence Action plans, programme plans, project trackers, management approvals.
Watch for Planned actions are omitted or described at the wrong level, so the disclosure does not reconcile to the approved action plan.
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Revenue effect
Finance / commercial teamExplain the expected effect on income, including the main revenue streams that may change and the direction of that change.
Evidence Budget models, revenue forecasts, commercial plans, finance review papers.
Watch for Revenue is reported on a different basis from the forecast model, or gross and net revenue are mixed.
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Cost effect
Finance / procurement / operationsExplain the expected effect on costs, including the main cost categories that may rise or fall and the direction of that change.
Evidence Budget and forecast files, cost centre reports, procurement plans, finance commentary.
Watch for Cost impacts are taken from a different period or category set than the budget, so the figures do not reconcile to the management accounts.
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Balance sheet effect
Finance / treasury / accountingDescribe the expected effect on assets and liabilities, including which balance sheet items may change and how.
Evidence Forecast balance sheet, impairment papers, provisioning memos, treasury papers.
Watch for Asset and liability impacts are captured at the wrong reporting date or mapped to the wrong balance sheet line item.
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Cash movement effect
Treasury / financeExplain the expected effect on cash movements, including the main inflows or outflows and when they are expected to arise.
Evidence Cash flow forecast, treasury model, capex plan, working capital analysis.
Watch for Cash flow is confused with profit impact, or the timing of the cash movement does not match the treasury forecast.
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Expected financial change
Finance / strategyState the financial changes the organisation expects from the issue, covering the relevant measures of performance, position and cash.
Evidence Integrated forecast, scenario outputs, finance papers, board reporting.
Watch for The expected changes are described qualitatively but do not reconcile to the underlying forecast assumptions or model outputs.
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Assessment periods
Strategy / risk / financeSet out the time periods used for the assessment, making clear which horizons were considered and how they were grouped.
Evidence Scenario pack, planning assumptions, board papers, risk assessment notes.
Watch for The time horizons are inconsistent across documents, so short-, medium- and long-term effects are mixed together.
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Planning basis
Strategy / risk / financeExplain the basis used for the assessment, including the scenario or planning approach and the assumptions behind it.
Evidence Scenario analysis pack, planning assumptions log, sensitivity analysis, governance approvals.
Watch for The disclosure refers to one planning basis while the analysis was built on another, so the scenario basis does not match the model.
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Why not quantified
Finance / sustainability reportingRecord why the effect could not be measured in numbers, including the specific barrier to quantification.
Evidence Methodology note, finance memo, data gap log, management review comments.
Watch for The reason given is generic and does not identify the actual data gap, method limit or estimation constraint.
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Qualitative financial effect
Finance / strategy / riskDescribe, in words, how the issue is expected to affect the organisation’s finances when a numeric estimate is not available.
Evidence Management commentary, risk assessment, scenario notes, business impact analysis.
Watch for The qualitative description is too vague and does not explain the specific financial mechanism or direction of effect.
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Affected statement lines
Finance / accountingList the financial statement line items that are likely to be affected by the issue, using the organisation’s reporting categories.
Evidence Chart of accounts mapping, financial statement draft, accounting memo, audit trail.
Watch for The line items named do not match the reporting structure used in the financial statements, or a relevant line item is missed.
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Resilience assessment
Strategy / risk / sustainabilityDescribe how the organisation’s business model and strategy hold up under the issue, including the main conclusions from the resilience review.
Evidence Resilience assessment, scenario analysis, board papers, strategy review documents.
Watch for The resilience narrative is not aligned to the actual assessment results, or it omits the main weakness identified in the review.
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Assessment method
Strategy / risk / financeExplain the method used to test resilience, including the analytical approach, inputs and any key assumptions.
Evidence Methodology paper, scenario model, assumptions log, validation notes.
Watch for The method described in the disclosure does not match the one actually used in the analysis, so the basis of the conclusion is wrong.
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Assessment periods used
Strategy / risk / financeState the time periods applied in the resilience assessment, showing the horizons actually tested.
Evidence Scenario analysis outputs, planning timetable, board materials, assumptions schedule.
Watch for The periods reported do not match the periods tested in the model, so the assessment horizon is misstated.
Before you start
- Which impacts, risks, and opportunities are we actually covering here, and which parts of the business sit outside this write-up?
- For any figures we mention, have we fixed the period, the planning basis, and the time bands we are using?
- Can every number or statement be traced back to a source we can point to and explain?
- Have we agreed the business definitions we will use for the effects on sales, spend, assets or liabilities, and cash movement?
- If we cannot put a figure on something, have we settled why not and what qualitative explanation we will give instead?
- Have we chosen the method we will use to test how robust the business is, and the time bands for that review?
How to prepare it
Request the data
Request the strategy-and-financial impact evidence
Translate the disclosure into an internal business question — then adapt it to your organisation's own language.
How do the main sustainability-related issues connect to the business model, what actions are being taken, and what financial effects or planning assumptions support that story?
Use your organisation’s own labels first, then map them to the reporting categories. For example, if you talk about business drivers, investment cases, budget pressures, forecast assumptions, or balance sheet items internally, keep that language in the request and only translate it later for reporting.
Weak request
Please provide the ESRS 2:SBM-3 evidence for material impacts, risks and opportunities, including interaction with strategy and business model, financial effects, resilience, and any non-quantified items.
Why it fails: It uses framework language that many internal owners will not recognise, so they may not know which pack, model, or decision paper to send. It also does not point to the business issue, the source file, the planning basis, or the specific financial outputs needed.
Better request
Please send the latest internal pack for [internal issue name] that shows how it affects the business model or plan, what response is underway or planned, and any revenue, cost, asset, liability, or cash impacts. Include the scenario or planning basis, the time view used, and any items that were not quantified with the reason and the line items likely affected.
Formal email template
Subject: Request for strategy and financial impact evidence for [reporting period] Dear [name/team], We are preparing the sustainability reporting pack and need your help with the business impacts linked to [internal issue name]. Please share the material you use internally that explains: - how this issue affects the business model or operating plan; - what response is already underway or planned; - any financial effects you have identified, including revenue, cost, asset, liability, or cash impacts; - the planning basis, time view, and any scenario or assumption set used; - any cases where the effect could not be quantified, together with the reason and the related line items that may be affected. Please send the source file or extract, plus a short note on the boundary, period, and owner for the information. If there are multiple versions, please indicate which one is the latest approved or management-reviewed version. Please adapt this to your organisation’s own terminology and check the official source before sign-off. Kind regards, [preparer name] [team] [contact details]
Short Teams / Slack version
Hi [name/team] — could you send the latest internal pack for [internal issue name] covering: business impact, current/planned response, any revenue/cost/asset/liability/cash effects, the planning basis, and any qualitative-only items with the reason they were not quantified? Please include the period, boundary, source file, and owner. Please adapt this to your organisation’s own terminology and check the official source before sign-off. Thanks, [name]
Industry examples
Manufacturing
Context. A plant team tracks energy cost exposure, equipment downtime risk, and capex for process changes in monthly operations and budget packs.
Adapted request. Please share the latest operations and finance pack for [internal issue name] showing how it affects plant output, cost base, and investment plan, plus any revenue, cost, asset, liability, or cash impacts. Include the budget or scenario basis, the time view, and any items left qualitative with the reason.
Example response. A workbook with plant-level assumptions, a capex note, a forecast bridge, and a short narrative on why one risk was not quantified because the estimate range was too wide.
Retail
Context. A trading and planning team monitors supplier disruption, product mix changes, margin pressure, and stock impacts through forecast and trading updates.
Adapted request. Please send the latest trading and planning pack for [internal issue name] showing how it affects sales, margin, stock, and cash, together with the response plan and any scenario assumptions used. If any effect was not quantified, please explain why and note the line items likely affected.
Example response. A monthly trading pack with sales and margin sensitivities, stock write-down assumptions, a scenario summary, and a note that one supplier risk was described qualitatively because the timing of disruption was uncertain.
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
Set out how the figures were prepared, including what each measure covers, the basis used for any estimates or scenarios, the time periods applied, and the reason where an effect is described without a number.
Context note
Explain what the reported amounts and descriptions mean for the business, linking the interaction, the response taken, the expected financial effects, and the parts of the accounts that may be affected.
Fluctuation statement
If the numbers or expectations change, point to shifts in the underlying issue, the response plan, the time horizon, or the planning assumptions used to estimate the effect.
Content index entry
SBM-3 Material Impacts, Risks and Opportunities and Their Interaction with Strategy and Business Model — [location / page] / [notes]Download Centre
Preparation tools & forms
Download preparation tools for SBM-3 with free verified email access for 24 hours. Source-report links remain public.
Check
For each claim, check the evidence
We based the coverage figure on the same boundary we used for the rest of the report, and we can show why any sites, entities or activities were left out.
Risk Assurer checks whether the boundary is consistent, whether exclusions were deliberate rather than accidental, and whether the figure could be overstated or understated by missing parts of the business.
Evidence to check Boundary memo; list of included and excluded entities/sites/activities; consolidation or reporting scope workpapers; management sign-off on scope decisions; reconciliation of the coverage figure to underlying population data.
We explained how the disclosed operations link back to our business model and strategy, and we kept working papers showing the basis for that mapping.
Risk Assurer probes whether the narrative is supported by evidence, whether the link to strategy is genuine, and whether material items were omitted because they were not traced through the business model.
Evidence to check Strategy papers; business model diagrams; materiality assessment outputs; mapping of impacts, risks and opportunities to business activities and value chain stages; board or management papers approving the linkage.
We set out the actions already taken and the actions planned to deal with the identified matters, and we retained the decision papers behind those choices.
Risk Assurer checks whether the response described is real, current and approved, and whether the report overstates progress or omits planned actions that are still needed.
Evidence to check Action plans; investment or change programme approvals; project status reports; governance minutes; implementation trackers; evidence of completed and planned measures.
We described the current financial effect using the figures we could support, and where we did not quantify it we kept the reasons and the related line-item references.
Risk Assurer probes whether the numbers tie to finance records, whether any unquantified items were properly justified, and whether the affected statement lines were identified correctly.
Evidence to check Finance extracts; calculation sheets; management estimates; audit trail to ledger or reporting packs; rationale for any non-quantified items; mapping to financial statement line items.
We prepared the forward-looking effect view using our planning assumptions and scenario work, and we can show the time bands and the basis used for each estimate.
Risk Assurer checks whether the outlook is grounded in approved assumptions, whether the time horizons are consistent, and whether the estimates are too speculative or selectively presented.
Evidence to check Budget and forecast packs; scenario analysis files; planning assumptions; sensitivity analyses; time-horizon definitions; governance approval of the modelling basis.
Where we did not put a number on an effect, we recorded why, what it means in practice, and which financial statement lines could be touched.
Risk Assurer probes whether the non-quantification is justified, whether the qualitative description is specific enough, and whether the linked financial lines are complete and accurate.
Evidence to check Non-quantification rationale; internal review notes; qualitative impact summaries; mapping to affected line items; evidence that quantification was considered and rejected for stated reasons.
Evidence pack to prepare
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 does not hold the underlying records, so the answer is built from second-hand knowledge instead of the operational source.
- Framework language onlyPeople ask for the data using reporting jargon rather than the business’s own terms, and the right team cannot map the request to its records.
- Scope left vagueNo one states which part of the business, which activities, or which locations are in scope, so different teams collect different slices of the same topic.
- Wrong period basisThe team pulls figures from a different reporting window or cut-off date, so the dataset does not match the period being reported.
- Mixed counting basisHeadcounts, values, or event totals are combined even though they were measured on different bases, which makes the final numbers inconsistent.
- Source labels stripped outOriginal file names, system tags, or reference codes are lost during consolidation, so the reviewer cannot trace each figure back to its source.
- Separate populations mergedData for distinct groups, sites, or business lines is rolled together even though they should stay separate, which hides differences that matter.
- Evidence trail missingThe pack contains the numbers but not the supporting metadata, approvals, or sign-off history, so nobody can show how the data was checked.
Judgement needed
- Acquisitions, disposals, and perimeter shiftsUse the reporting boundary that matches the period you are explaining, and if a buy-in, sale, or reorganisation changes the group of entities covered, say when the change happened and whether the figures include the old or new perimeter.
- Different local definitions for the same topicWhere countries or business units use different operational definitions, pick one basis for the group narrative, explain the main differences, and show any material split or reconciliation needed to avoid mixing unlike data.
- People or activities near the edge of scopeDecide consistently whether to include borderline workers, sites, products, or customers, then disclose the inclusion rule and any exclusions so readers can see how close-to-the-line cases were handled.
- Current period, opening position, or forward-looking viewState clearly whether the effect is being shown using the latest period, a starting point, or a future expectation, and keep the basis the same across the linked narrative and figures unless you explain the change.
- Measured figures versus management estimatesIf a number is partly observed and partly estimated, say which parts come from records and which come from judgement, and explain the main assumptions, methods, and any known limits on accuracy.
- Rounding and small differencesApply one rounding approach across the disclosure, and if totals do not exactly match the parts because of rounding, note that the difference is only a presentation effect.
- Privacy limits on location or people dataWhen detailed breakdowns would identify individuals or sensitive sites, group the information at a higher level, explain the aggregation rule, and make clear what has been withheld for privacy reasons.
- Choosing the time window for expected financial effectsIf the expected effect could sit in more than one period, set out the time bands you used, explain why they fit the business case, and keep the same bands wherever the analysis is repeated.
- Selecting the planning or stress-test basisWhen several internal plans, forecasts, or stress tests exist, identify the one used for the explanation, say why it is the best fit for the issue, and describe any key assumptions that drive the result.
- Linking the issue to the affected line itemsIf an issue could flow through several parts of the accounts, name the line items most likely to move, explain the route from the operational issue to those items, and avoid implying precision where the link is only directional.
Examples
How it reads on the page
Synthetic, written by LRA — not from a company report, not text from any standard.
We explain that a shift in customer demand toward lower-emission products is already changing how we sell, design and source components, so the board and its committees have approved a product redesign programme and a supplier-screening plan for the next two years. In this scenario, we expect a €120 million revenue effect, €18 million of extra operating spend, a €9 million balance-sheet effect and a €6 million cash effect, with the main lines likely touched being revenue, cost of sales, inventories, trade payables and operating cash flow.
- Our forward view is based on a three-scenario planning exercise covering the next 12, 24 and 60 months, using internal demand forecasts and transition assumptions; we expect the largest changes in the medium term, with a smaller effect in the short term and a more material shift by year five.
- We have not put numbers on some parts of the effect because the timing and size are still too uncertain; those unquantified items are described qualitatively as possible margin pressure, higher working-capital needs and occasional asset write-down risk, and they may affect revenue, operating profit, inventories, receivables and cash flow.
- We judge the business model to be resilient because the planned redesign, supplier changes and pricing actions should allow us to keep serving core customers even if the transition is slower or faster than expected.
Synthetic, illustrative only; figures are internally consistent and intended to show how a reporter might describe the interaction, response, quantified effects, unquantified effects and resilience in plain language.
We describe how hotter summers and water constraints are already influencing sourcing, production scheduling and product mix, and our management team has set a response plan covering water efficiency, recipe reformulation and selective price changes. On the basis of a climate-stress test and internal planning assumptions, we expect a €75 million revenue effect, €11 million of added costs, a €4 million asset and liability effect and a €3 million cash effect, with the most likely affected lines being sales, production costs, property and equipment, provisions and operating cash flow.
- Our outlook uses a two-path planning basis over the short, medium and longer term, and we expect the financial effect to build gradually rather than arrive all at once.
- We have left some items unquantified because the evidence is not yet strong enough to support a reliable estimate; qualitatively, those items could mean lower volumes in peak periods, higher utility and logistics spend, and possible impairment pressure on certain sites, affecting sales, operating expenses, fixed assets, provisions and cash generation.
- Even so, we consider the group reasonably robust because the response plan gives us options to shift sourcing, adjust production and protect supply to key customers if conditions worsen.
Synthetic, illustrative only; figures are internally consistent and intended to show a second plausible reporter with a different sector and a different pattern of effects.
Quality ladder
- Basic
I have identified 6 material business issues.
- Better
I have identified 6 material business issues, split across 2 impact areas, 2 risk areas and 2 opportunity areas, based on our latest review.
- Best
I have identified 6 material business issues across our operations and value chain, covering 2 near-term and 4 longer-term items, using our latest planning review, and the increase from last year reflects two newly assessed supply-chain risks and one delayed opportunity because market timing shifted.
Check your understanding
Scenarios to work through
A manufacturer has identified a major transition risk from tighter product standards. The board has approved a shift toward lower-emission product lines, but the finance team has not yet linked that shift to any forecast changes.
A services group expects a new customer requirement to reduce revenue in one region over the next two years, while also increasing compliance spend and contract assets. Management has a rough estimate for revenue and costs, but not for the balance sheet effect.
A retailer has run an internal planning exercise using three climate pathways and a five-year budget cycle. The exercise shows that one pathway would materially affect store refurbishment timing, but the team is unsure whether to present the analysis as a resilience assessment or as a general planning input.
A mining group has identified a long-term water-stress risk that could affect production, but the impact is too uncertain to quantify reliably today. The team can describe likely operational effects and knows the issue may affect impairment testing and provisions.
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Advice, not assurance
Framework references
Relevant ESRS requirements and related disclosures
ESRS
SBM-3
within ESRS 2: General Disclosures
Guides that settle this question
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FAQ
Questions this page answers
Start with the plain-language explainer, then work through the step-by-step preparation section and the draft-output section. The page is designed to help you turn source data into a draft narrative, table and content-index line rather than to act as an official standard.
The page lists the datapoints to prepare, including the interaction with strategy, the strategic and planned response, financial effects, assessment periods, planning basis and any qualitative explanation where figures are not available. Use that list as your collection checklist before drafting.
Use the page’s assessment-period and planning-basis datapoints, together with the resilience assessment and assessment method items, to define what period you are covering and how you reached the result. Keep the approach consistent with the evidence you can show in the pack.
The page is set up for use by a sustainability or ESG manager, HR or data owner, and an assurance reviewer, so ownership should sit with the people who can explain the data and provide evidence. Assign clear responsibility for each datapoint and for the final narrative before you draft.
The page includes a five-item evidence pack for assurance readiness, alongside six assurance claims to verify. Use those items to assemble the documents and support that show how the disclosure was prepared and what it is based on.
The page lists common reporting gaps and mistakes, so it is intended to help you spot missing data, weak explanations and unsupported claims before submission. Check the gaps list against your draft and evidence pack to reduce rework.
Use the synthetic examples as a model for structure, level of detail and how the quantitative table is presented. They are illustrative only, so adapt the format to your own facts and keep any numbers internally consistent.
The page includes a datapoint for why something is not quantified and a qualitative financial effect item, so you can explain the position rather than leaving a blank. Use the narrative starters in the draft-output section to turn that explanation into a clear draft.
The Download Centre provides a Prep & Assurance workbook in .xlsx format and a printable Library Card in .pdf format. Use the workbook to organise preparation and assurance checks, and the card as a quick reference while drafting.
It links to real published reports at the pages where the topic is disclosed, so you can see how others have presented similar information. Use it as a practical reference point, not as a template or official mapping.
The page’s draft-output section gives visualisation ideas, narrative starters and a content-index line to help you package the information for review. Use those elements to move from raw data to a readable draft that an internal reviewer can challenge.
More questions this page can help with