Even if your business isn’t directly affected by CSRD, completing a double materiality assessment is now regarded as best practice for an effective ESG strategy.
Best practice for setting your business up for success
Navigating the ever-evolving Environmental, Social and Governance (ESG) landscape can prove challenging for many businesses. The volume of mandatory ESG disclosures is increasing, the scope of companies required to report is expanding, and stakeholder expectations are changing.
It is tempting for a business to address every single ESG issue; however, companies must focus their efforts only on the ESG factors most relevant to them. This can be achieved through conducting a double materiality assessment.
What is a double materiality assessment?
In the world of ESG, double materiality is a relatively new concept which has gained traction through the EU Corporate Sustainability Reporting Directive (CSRD). It is estimated that over 50,000 companies will have to report in accordance with CSRD by 2026. Even though your business might not be immediately or directly affected by CSRD, completing a double materiality assessment is now considered best practice for setting a business up for success.
Put simply, a double materiality assessment analyses how a business is impacted by ESG factors (the outside-in view) and how a business’s activities affect those ESG factors (the inside-out view). This provides a structure for a company to allocate resources to reduce their negative impact and to determine the scope of the business’s ESG reporting requirements.
Conducting a double materiality assessment aligned with the latest regulatory requirements can be daunting. Our team of experts will take you along on the journey and make the process practical and easy to understand. We conduct regular workshops to finalise stages from stakeholder mapping to financial impact assessment collaboratively.
A double materiality assessment is not just for large and listed businesses required to comply with CSRD. It is also for companies who want to leverage best practice tools to understand their true impact on society and the environment and maximise positive outcomes.”Joaska MischkeHead of ESG and Sustainability
How we approach the double materiality assessment
Conducting a double materiality assessment aligned with the latest regulatory requirements can be daunting. Our team of experts will take you along on the journey and make the process practical and easy to understand. We conduct regular workshops to finalise stages from stakeholder mapping to financial impact assessment collaboratively. Our robust but practical approach to double materiality includes the following
Using CSRD’s ESG topic list, best practice frameworks, competitor information, and sector-specific standards, we will establish a concise, yet comprehensive ESG topic list aligned with your business.
2. Identify and engage stakeholders
Stakeholders are pivotal to a robust double materiality assessment. We will conduct a thorough stakeholder mapping exercise with you to identify relevant stakeholders to engage. Stakeholder engagement aims to gain input into your organisation’s environmental and social impacts and insight into the potential risks and opportunities the ESG topics may have on the business.
3. Quantify environmental and social impact
Based on insights from the stakeholder engagement process and a thorough review of your business, we will use the CSRD metrics to quantify the positive, negative, actual and potential environmental and social impacts of the ESG topics.
4. Assess financial opportunities and risks
With the environmental and social impact determined, we work with your financial team to assess and quantify the financial risks and opportunities associated with each ESG topic.
5. Materiality matrix
The results from the impact materiality and financial materiality assessments will be combined to form a bespoke double materiality matrix identifying your critical material ESG priorities.
6. Materiality assessment report
Our final report will provide a detailed overview of the materiality assessment, a discussion of findings, and highlight key themes and opportunities on your priority issues. These results will also inform your ESG reporting priorities in line with regulations, best practice frameworks and standards.
To find out how our team of experts can help you with your ESG and sustainability strategy, contact Joaska Mischke or request a call-back.
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