Sourcing Risks

Sourcing risks

Purpose

Starting from the commodity inventory, this module identifies nature-related risks embedded in a company's supply chain by flagging commodities with known high biodiversity impact potential.

Flagging approach

Two flags are applied to each commodity in the inventory:

HICL flag — SBTN High Impact Commodity List

Based on the SBTN HICL v1, a science-based reference list of 47 commodities identified as material drivers of nature loss across three socioeconomic systems:

• Food system: e.g. cattle, cocoa, soybean, oil palm, timber, sugarcane, aquaculture
• Energy and extractives: e.g. crude oil, coal, copper, gold, lithium, nickel
• Built environment: e.g. cement, sand

For each commodity, material pressure categories are documented from the scientific literature and ENCORE, covering: land use change, freshwater/marine ecosystem use, water use, climate change, and various forms of pollution (soil, freshwater, marine, air). The number displayed on the HICL flag indicates the count of material pressure categories identified for that commodity.

EUDR flag — EU Deforestation Regulation

Flags commodities subject to the EU Deforestation Regulation, which applies to cattle, cocoa, coffee, palm oil, soya, wood, rubber and their derived products. Companies placing these commodities on the EU market must demonstrate they are not linked to recent deforestation.

Examples