Assessing Materiality in Business: A Three-Step Approach for Sustainable Impact

Conducting a materiality assessment involves prioritising sustainability topics based on their impact on business and stakeholders. Materiality is a key element to develop an impactful sustainability strategy. If you do not know where to start on your sustainability journey, download the Guaranteed Irish Sustainability Roadmap.

Why is Double Materiality Important?

The concept of double materiality is central to the EU's Corporate Sustainability Reporting Directive (CSRD), which came into force in January 2023. Under this directive, companies are now required to assess and disclose not only the impact of environmental, social, and governance (ESG) factors on their financial performance but also the impact of their business activities on people and the environment.

This dual approach ensures that companies provide a comprehensive picture of their sustainability performance and its relevance. In practice, it enables businesses to take more responsible actions that account for their influence on society and natural ecosystems, beyond financial outcomes alone. As stakeholders—investors, employees, customers, and communities—become increasingly concerned with sustainability issues, double materiality offers a framework that aligns corporate responsibility with tangible business strategy, supporting more transparent, resilient, and forward-looking companies across Europe.

Step 1: Define Double Materiality Scope and Identify Key ESG Topics

Start by distinguishing financial materiality (business impact) and environmental/social materiality (impact on society and environment). Then, identify relevant ESG topics like carbon footprint, water use, data privacy, human rights, and community engagement, which could be material for your industry.

Step 2: Engage Key Stakeholders and Gather Input

Engage with stakeholders—including employees, customers, investors, and regulators—using structured surveys, focus groups, or analytics platforms. This helps capture insights, understand expectations, and refine priority topics.

Step 3: Analyse and Develop the Materiality Matrix

Select robust tools and methodologies that fit your company’s needs. A materiality matrix can visually map out the priority issues, balancing importance for stakeholders with business impact.

Map ESG topics using a materiality matrix, with business impact on the X-axis and stakeholder impact on the Y-axis.

This graph is for illustrative purposes only, providing a sample of how ESG topics may be prioritised by impact on business and stakeholders in a materiality assessment.

Here is an example of a materiality matrix, with "Business Impact" on the x-axis and "Stakeholder Impact" on the y-axis. Each point represents a key ESG topic, helping businesses visualise the importance of each factor based on its potential impact on both business outcomes and stakeholder interests.

Topics with higher scores in both dimensions, like "Carbon Emissions" and "Data Privacy," suggest areas where focusing resources may bring the most value and resilience to the organisation’s sustainability strategy. 

Conclusion

By following these steps, Guaranteed Irish members can gain a clearer understanding of what sustainability issues are most significant, improving their reporting, strategy alignment, and resilience to stakeholder expectations.

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