Sustainability from two Perspectives
The EU Corporate Sustainability Reporting Directive (CSRD) requires companies to disclose detailed non-financial information in the areas of environment, social affairs and governance in their management reports. One of the significant innovations associated with the CSRD is double materiality. Companies are to use a materiality analysis to narrow down which sustainability topics are relevant to them. Materiality is always considered from two perspectives:
- The outside-in perspective (“financial materiality”) takes into account opportunities and risks of sustainability issues for the financial situation of a company and the future viability of its business model.
- With the help of the inside-out perspective (“impact materiality”), companies determine what actual and potential positive and negative impacts their corporate actions have on various sustainability issues.
Double materiality or materiality analysis helps companies to identify the sustainability issues that are material to them by showing impacts on people and the environment as well as risks and opportunities for business success in connection with these issues. The results form the basis for taking further steps toward comprehensive ESG management:
By identifying the key sustainability topics, companies fulfill a central requirement of the CSRD and can prioritize their reporting and the data collection required for it by topic. This can reduce the reporting effort.
If companies are clear about which sustainability issues are important to their stakeholders, their expectations can be better met and stakeholder trust and loyalty can be strengthened. A materiality analysis can serve as a prelude or part of a regular stakeholder dialog.
Materiality analysis enables companies to identify risks and opportunities at an early stage and take measures to respond to them in a targeted manner. This enables risks to be contained and potential sustainability-related opportunities to be exploited.
- Structured approach to identify focus topics for you step-by-step.
- Mit unserem Wissen über die Komplexität der Zusammenhänge, helfen wir Ihnen aufbauend auf der Wesentlichkeitsanalyse, eine fundierte ESG-Strategie zu entwickeln.