Balancing your materiality assessment

Article

Balancing your materiality assessment

How to move beyond the matrix

Identifying an organization's most important environmental, social and governance (ESG) issues is typically captured in one sweeping concept: (double) materiality. The key issue in driving ESG strategy and performance is knowing which ESG issues and opportunities are more important than others. The upcoming regulatory requirements will shape materiality reporting. Something all corporations will need to bear in mind.

Renewed materiality assessment

The new Global Reporting Initiative (GRI) Standards and the Corporate Sustainability Reporting Directive (CSRD) ask for a new perspective on the materiality assessment. Both reporting standards require increased transparency on company’s positive and negative impacts. We have designed a specific approach applicable to both standards, which you can use when embarking on your own materiality assessment journey.

Balancing your materiality assessment

Building the process

Before you launch the process, several aspects should be considered when creating a balanced materiality assessment: examine your existing operations and value chain, engage your internal and external stakeholders, get risk management and financial departments involved. Depending on the size of your business, time horizons aligned to your investment horizons and the industry you operate in, impacts and material topic granularity can vary. Tailoring the process will help you to define and assess your material impacts more accurately. In this respect, you also need to consider what is the most suitable format of engagement for your stakeholders.

Answering your questions

First time or not, the materiality assessment process can be challenging, especially since the materiality concept has now evolved and includes a financial lens: the double materiality concept. We share the most common challenges that we have identified during discussions with our clients, divided into three main themes: stakeholders, assessment and reporting & strategy.

Fitting your business needs

A balanced materiality assessment will support you in developing a strategic approach towards your organization’s environmental, social and economic impacts and to determine the long-term consequences they have for your financial value. This will help you identify potential blind spots, prioritize your actions and address ESG-related risks and opportunities.

Did you find this useful?