Sustainability is becoming an increasingly important component of corporate strategy and, as a result, businesses are increasingly recognizing the need to understand both their impact on the world and the world’s influence on them. A materiality assessment is a foundational tool in this journey, helping companies identify and prioritize sustainability issues that matter most to their operations and stakeholders. Double materiality, in particular, pushes this understanding further by examining not only what affects a company financially but also the company’s own impact on society and the environment.
What is a Materiality Assessment?
A materiality assessment allows organizations to systematically evaluate which sustainability topics hold the greatest relevance, both internally and externally. By assessing these factors, companies gain clarity on where to focus their sustainability efforts—aligning with stakeholder values and setting a clear, actionable roadmap for change.
Why conduct a Materiality Assessment?
The primary reasons for conducting a Materiality Assessment are as follows:
- Strengthen Your Sustainability Strategy
Engaging with stakeholders, both within and outside the organization, helps ensure a balanced approach that reflects diverse perspectives and reduces potential blind spots. - Enhance Communication and Transparency
The insights from a materiality assessment clarify which issues are genuinely important, enabling companies to communicate these priorities effectively with stakeholders and demonstrate a thoughtful approach to sustainability. - Prepare for Regulatory Requirements
For companies affected by the EU’s Corporate Sustainability Reporting Directive (CSRD), a double materiality assessment is not only valuable but increasingly essential, as it evaluates both financial and broader societal impacts.
What are the advantages of a Double Materiality approach?
For companies ready to go beyond traditional materiality, double materiality offers a more comprehensive perspective. Here’s how this approach strengthens a sustainability strategy:
- Align with Broader Sustainability Goals
Double materiality assesses not only what impacts the business financially (single materiality) but also how the company’s actions affect society and the environment. This dual focus helps businesses align more deeply with global sustainability goals and the expectations of a wider range of stakeholders, from investors to local communities. - Build a Future-Ready Strategy
By addressing both inward and outward sustainability impacts, double materiality positions companies to better anticipate and adapt to new regulatory standards, such as the CSRD. It also strengthens risk management by revealing potential long-term impacts that might otherwise go unnoticed. - Enhance Stakeholder Trust
Double materiality provides a transparent framework for sharing priorities with stakeholders. When stakeholders see that a company has carefully considered both internal and external impacts, they’re more likely to view the company’s sustainability commitments as genuine, which fosters trust and credibility.
What are the steps for conducting a Double Materiality Assessment?
A successful materiality assessment involves a structured approach. Here’s a simplified guide:
- Define Sustainability Issues
Begin by identifying the range of sustainability topics relevant to your industry and specific operations. This may include environmental issues like climate resilience, social factors like diversity and inclusion, and governance topics such as data privacy. Sector-specific standards, competitor benchmarks, and insights from key internal teams can all help build a robust list. - Engage Stakeholders
Double materiality requires input from a wide range of stakeholders who both influence and are affected by the company. This often includes investors, board members, customers, suppliers, industry associations, and NGOs. The chosen stakeholders should be selected thoughtfully to capture diverse perspectives. - Conduct Surveys and Interviews
Use a combination of surveys and in-depth interviews to gauge stakeholder views on each topic’s significance. Surveys can provide quantitative data on perceived importance, while interviews allow for a deeper, qualitative understanding of stakeholder expectations and concerns. - Analyze and Visualize Results
Compile and rank findings in a materiality matrix, mapping issues based on their significance to stakeholders and their impact on the business. This visualization offers a clear view of priority areas, laying the foundation for a strategy that balances business objectives with broader societal impact.
What are the key Methodology considerations?
Materiality assessments can be tailored to a company’s specific needs and resources. For example:
- Qualitative approaches rely on in-depth interviews and focus groups, yielding nuanced insights but requiring more time and resources.
- Quantitative methods use surveys to provide a broader picture, quickly gathering input from a larger sample of stakeholders.
- Combined methods offer the most balanced approach, beginning with broad survey data and following up with targeted interviews to validate and deepen understanding of key areas.
Why do regular assessments matter?
Sustainability priorities and expectations are continuously evolving, so conducting a materiality assessment isn’t a one-time exercise. Revisiting the process every three to four years enables companies to stay aligned with changing regulations and stakeholder expectations, adapting to new challenges and opportunities as they emerge.
A materiality assessment—and especially the double materiality approach—lays the groundwork for an informed, forward-thinking sustainability strategy. By understanding both internal risks and external impacts, companies can confidently steer their sustainability journey in a way that not only supports long-term growth but also contributes meaningfully to the world around them.
Achilles’ sustainability consultants are available to help you to get started with a Materiality Assessment. Contact us to arrange an initial consultation.
