Materiality Assessment

A materiality assessment identifies and prioritizes ESG topics that are most significant to a company's business and stakeholders.

Double Materiality

Financial Materiality — ESG issues that affect enterprise value (IFRS S1/S2, SASB)
Impact Materiality — Company's impacts on environment and society (GRI, ESRS)

The EU Corporate Sustainability Reporting Directive (CSRD) requires double materiality assessment covering both perspectives.

Materiality Assessment Process

Step 1: Identify ESG Topics

Review industry-specific ESG topics from frameworks like SASB Materiality Map, GRI Sector Standards, and peer company reports.

Step 2: Engage Stakeholders

Conduct surveys, interviews, and workshops with:

• Investors and analysts
• Employees
• Customers and suppliers
• Local communities
• Regulators

Step 3: Assess Significance

Rate each topic on two dimensions:

• Significance to stakeholders (Impact materiality)
• Financial impact on company (Financial materiality)

Step 4: Prioritize and Validate

Create a materiality matrix plotting topics by significance. Validate with senior management and board.

Step 5: Review Annually

Materiality changes over time. Review and update assessment annually.

Common Material Topics by Sector

Financial Services: Data security, responsible lending, financial inclusion
Manufacturing: GHG emissions, waste management, worker safety
Technology: Data privacy, energy consumption, supply chain labor
Retail: Supply chain sustainability, product safety, labor practices

From ESG Library

• ESG Reporting Made Simple (IFRS/SASB) — SASB materiality approach
• ESG & GRI Reporting Made Simple — GRI materiality process

View all books →

Key Resources

• GRI Materiality Guidance
• EFRAG Double Materiality Guidance
• ISSB Financial Materiality

Part of ESG Hub | Curated by Ascent Partners Foundation