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.
Preparation
Key datapoints to prepare
＋ Show SBM-1 sub-elements (LRA working checklist)
Describe what comes in from suppliers and other upstream parties.
Describe what goes out to customers and other downstream parties.
State where the entity sits in the value chain.
Explain any material changes during the reporting period.
Show how the business model links to sustainability goals.
Identify the main markets and customer segments that matter most.
Identify the products or services that are most significant.
State the share of revenue from those significant products or explain why they are significant.
Give the sector classification used for the entity.
Describe the internal activities that are most significant.
Indicate whether the entity is involved with chemicals.
Indicate whether the entity is involved with controversial weapons.
Indicate whether the entity is involved with fossil fuels.
State the revenue linked to those fossil-fuel activities.
Indicate whether the entity is involved with tobacco.
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.
Industry examples
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
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Assurance readiness
For each claim, check the evidence
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.
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.
Wrong period basis
The team pulls information from a different reporting window or cut-off date, so the data does not match the period being reported.
Mixed counting method
One pack combines turnover, headcount and other measures without separating the basis for each, which makes the figures impossible to compare or trace.
Source labels lost
Original 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 merged
Distinct 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 trail
The file set does not keep the supporting notes, extracts and approval history together, so reviewers cannot see who checked the data or when.
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.
How to describe links in the supply and customer chain when visibility is partial
If 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 significant
When 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 name
If 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 year
For 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 populations
Where 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.
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.
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
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
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
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 →Hide answer ↑Use a plain description of what the group sells, where it sits in the chain, and the main steps before and after its own operations. The answer should be broad enough to show how the business works, but specific enough that a reader can see the main inputs, the organisation’s own role, and the main routes to customers.
Why this matters · The description should let a reader understand the business model and its place in the wider chain, not just list products.
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 →Hide answer ↑Include the offerings and customer groups that are most important to how the business makes money and to how it is affected by, or affects, sustainability matters. If something changed during the year, explain that change and why it matters for the organisation’s sustainability aims, even if it is not yet the largest source of turnover.
Why this matters · Significance is not only about size; it also depends on whether the item matters to the sustainability story and any changes in the period.
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 →Hide answer ↑State the sector classification, then describe the main internal activities that drive the business. If one activity is especially important, either show the share of turnover it represents or explain clearly why it is significant, so the reader can see what really drives the organisation.
Why this matters · A sector label alone is not enough; the report should show the activities that actually matter inside the business.
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 →Hide answer ↑Go through each screening point separately and give a clear yes or no for each one. If any answer is yes, identify the related turnover; if the answer is no, the response should still be clear and complete, so the reader can see that the group has checked each area rather than leaving it implied.
Why this matters · Each screening item needs an explicit answer, and any positive case should be linked to the relevant turnover.
Framework references
Related framework references
How this disclosure maps across the major reporting frameworks.
Primary
Related & explore
General Basis for Preparation of Sustainability Statements → Guide ✓Disclosures in Relation to Specific Circumstances → Guide ✓Actions and Resources in Relation to Material Sustainability Matters → Guide ✓Metrics in Relation to Material Sustainability Matters → Guide ✓Policies Adopted to Manage Material Sustainability Matters → Guide ✓Targets in Relation to Material Sustainability Matters → Guide ✓Show all 14 related disclosures →
FAQ
Questions this page answers
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
More questions this page can help with
SBM-1 disclosure checklist: what datapoints should I gather first?How do I evidence the sustainability link in SBM-1?How do I handle period changes when drafting SBM-1?What should I ask the business owner for when collecting SBM-1 inputs?How do I build an assurance-ready file for SBM-1?What are the six assurance claims to verify for SBM-1?What are the five items in the SBM-1 evidence pack?How can I avoid the most common SBM-1 reporting gaps?How do I use the SBM-1 workbook and library card together?Where can I find example SBM-1 disclosures on the page?How do I write the narrative starter for SBM-1?Is there a content-index line example for SBM-1?
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63171 pages with page-level citations
272 practitioner guides
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