Tools

• What tools are available to support the completion of Step 1b?

  For recommendations on tools and data sources to use in the value chain assessment, please see the Step 1 Toolbox.

  For options beyond this, we recommend identifying tools that (1) meet SBTN’s tool and data criteria; and (2) work with the starting data and expertise you have in-house. We are open to suggestions for new tools to include in the SBTN Toolbox. Please contact our team if you have insights on this.

• If we do select multiple datasets for Step 1, they will have different outputs, with some being indices based on multiple variables, and many being on different scales. How are these outputs comparable?

  The process of combining data is one that you should be careful about and use only in ways that are suggested in the methods. For example, the process of harmonizing spatial scales can be used to bring together multiple state indicators (when they represent the same variable, e.g., multiple indicators for the state of nature for biodiversity) or in the context of normalizing pressure and state of nature data before calculating a pressure index for a given location. In all other cases, data should not be combined across pressure categories and should be kept separate during the analysis. There may be some limits to comparison when data are not in compatible units beyond harmonizing the spatial scale, and scaling (i.e., normalizing) the values across datasets.

• What further support can SBTN provide us now for identifying what pressures/data sources to use?

  For recommendations on tools and data sources to use in the value chain assessment, please see the Step 1 Toolbox. For options beyond this, we recommend identifying tools that (1) meet SBTN’s tool and data criteria; and (2) work with the starting data and expertise you have in-house that also meet SBTN tool and data criteria. We are open to suggestions for new tools to include in the SBTN toolbox. Please contact our team if you have insights on this.

  To fill data gaps, as long as it is compliant with antitrust policies, we recommend collaboration with peers and supply chain partners to gather data.

Task 6. Select business units for target setting

• What is the Business Unit Approach? And If I use the Business Unit Approach, do I need to include my company’s entire enterprise in the Step 1a screening?

  The Business Unit Approach may be considered after a company has completed the materiality screening (Step 1a) for the full organizational boundary at the enterprise level. Companies may choose to focus target setting on a business unit within their enterprise, rather than the entire enterprise. In such cases, the company must select business units that are already established within the company’s operating structure, as reflected in its financial reporting.

Task 7. Map your value chain activities and locations

• Upstream exclusions: Which, if any of our upstream activities can we exclude from our value chain assessment? Can any of this be dictated by proportion of procurement (e.g., if an investment represents less than 1% of procurement) or variations in spend/procurement? To what extent can we exclude any activities that involve high-impact activities?

  For the Step 1b assessment, companies must assess the impacts associated with at least 67% of all production volumes (including HICs) and at least 90% of the combined HIC volumes for each pressure category. If HICs constitute more than 67% of the company’s purchases by volume, the company may focus on just these for their upstream assessment.

  Please refer to Table 5: “Assessment boundaries for value chain segments in the pressure and state of nature assessment” for further details.

• Are SBTi Scope 2-related activities included in the SBTN process (e.g., water consumption from purchased electricity)?

  The pressures associated with utilities consumed by the company must be included for all direct operations activities, as explained in Task 8 of Step 1:

  “In this assessment, companies must include the pressures associated with utilities (energy, water, waste management, wastewater management) consumed in their operations. For example, companies assessing their water use must account for their water use coming both from their direct withdrawals (e.g., from their own wells) as well as water supplied by a municipal grid; and companies assessing their water or soil pollution would account for nutrients they release directly to the environment (e.g., from their water pipes or nutrient application) as well as those found in waste and wastewater treated by municipal facilities.”

• What are the expectations of SBTN on purchased services? For example, we report on IT, post services, etc. How do we report these services later in terms of volumes and pressures?

  Purchased services should not be included in the materiality and value chain assessments. Only direct operation activities and goods classified as production inputs are in scope. Please refer to Box 4: “Value Chain Segments” for further details on the value chain segments relevant to the SBTN methods.

• For high-impact commodities, which upstream tiers do we need to include? For example, would a food company need to include the fertilizer applied to the high-impact commodities it uses?

  Please refer to:

  – Table 4: “Overview of spatial data requirements and associated target boundaries in Steps 1–3.”

  – Table 5: “Assessment boundaries for value chain segments in the pressure and state of nature assessment.”

  For any production inputs that are HICs or that contain HICs, companies must identify the location of the most impactful stage (for each pressure category defined as material in Step 1a for that commodity) in the value chain of that commodity.

  Companies should assume that the most impactful stage will in most cases be primary production (e.g., farming, animal husbandry, forestry, fishing or aquaculture, mining and extraction). For some value chains, however, other stages (such as processing) might be more impactful.

  Note that the most impactful value chain stage may be different depending on the pressure category that is assessed, so for one commodity multiple locations may have to be defined. It is the company’s responsibility to identify or double-check the most impactful node for each pressure per commodity.

  For a food-producing company, we would expect that fertilizer application, which happens at the farming stage, would indeed be the main driver of soil and water nutrient pollution. Hence, the company would be required to estimate this pressure (nitrogen and phosphorus loading, or an equivalent) for this stage of the value chain (farming or food production).

  Providing cradle-to-gate analysis of impacts (as an output of life cycle assessment methods) is acceptable, but location data, to inform the Step 2 prioritization, should be associated with the most impactful stage of production (for HICs) as stated above.

• How to choose the assessment period?

  Please refer to the “temporal variability in value chain activities” paragraph in the Step 1b_Task 7 technical guidance:

  “Given that value chain activities may vary from year to year, when selecting the time period covered by the data used in the value chain assessment (e.g., for the upstream volumes and supplier locations), companies must select a ‘representative year.’ This must be a 12-month period, occurring as recently as possible, that is representative of their business, as well as of societal and environmental conditions.

  “The representative year must be no earlier than five years before the date of the method application unless evidence is submitted showing the past five years as non-representative. Explanation of the year selected may be requested in the validation process for Step 1. The nominal year associated with the models and data used in the assessment may vary but should align with the choice of representative year as closely as possible. Companies should collect primary data within the representative year. Companies may also produce representative data by averaging the data from all representative years within the last five years of operations.”

Task 8. Quantify the environmental pressures of your activities

• How and whether to cover climate impacts during the value chain assessment?

  All companies using the SBTN methods are required to include climate in their screening of material issues (Step 1a). If climate is found to be material, companies are required to use SBTi and GHGP methods to inventory and manage these. They do not need to submit their climate data to SBTN as part of the validation of their work for Steps 1–2, but they will need to show that they have a validated climate target, or are working toward one, when submitting targets for validation.