Sourcing Risks
Identifying nature-related risks in supply chains using HICL and EUDR flags.
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 pressures are documented across 9 pressure categories (from the SBTN literature review and ENCORE). The number displayed on the HICL flag indicates how many of these 9 categories are material for that commodity. The 9 categories are:
- Land use (terrestrial ecosystem use & use change)
- Freshwater ecosystem use & use change
- Marine ecosystem use & use change
- Water use
- Climate change
- Air pollution (non-GHG)
- Soil / terrestrial pollution
- Freshwater pollution
- Marine pollution
- Invasive alien species (one of the five IPBES pressures) is not covered by the HICL framework.
- The official SBTN HICL v1 lists Freshwater pollution as the only formal pollution sub-category; Darwin formalises Marine pollution as a distinct flag based on individual HICL commodity entries.
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
| Commodity | Type | HICL | EUDR | Material pressures |
|---|---|---|---|---|
| Dairy (from cattle) | Food system | Y (4) | Y | Water use, climate change, soil pollution, water pollution |
| Sugarcane | Food system | Y (5) | — | Land use change, water use, climate change, soil pollution, freshwater pollution |
| Copper | Energy & extractives | Y (6) | — | Land use change, resource overexploitation, water use, climate change, soil pollution, water pollution |