The EU’s Corporate Sustainability Reporting Directive (CSRD) makes the analysis of double materiality an indispensable element for companies subject to reporting requirements. But what does this term mean and how can you use this analysis effectively for your sustainability strategy?
What is double materiality?
Dual materiality considers two dimensions: financial materiality (outside-in) and the company’s impact (inside-out) on the environment, its own future prospects and society. This comprehensive approach ensures that both the risks and opportunities for the company itself and the company’s external impact are taken into account. The aim is to obtain a holistic view of the sustainability issues that are important for your company and your stakeholders.
Why is it important to analyse dual materiality?
Conducting a materiality analysis in accordance with the CSRD and the European Sustainability Reporting Standards (ESRS) is not only a legal obligation. It also offers the following significant advantages for your company:
- prioritisation of ESG issues: Identify the material environmental, social and governance issues that most affect your business and stakeholders.
- strategic alignment: develop targeted strategies and actions aligned with the prioritised issues
- transparency and trust: Increase transparency towards investors, customers, employees and other stakeholders through a clearly structured and comprehensive sustainability report.
- risk minimisation and opportunity maximisation: Identify sustainability-related risks and opportunities at an early stage so that you can act proactively.
Practical tips for an effective materiality analysis
The following steps are recommended in order to keep the effort of the materiality analysis under control and at the same time achieve meaningful results:
- stakeholder analysis: involve your internal and external stakeholders in the process. By involving delegates from your employees in the workshops (your sustainability team), interviews with your customers or involving your business partners in the process, you can understand the requirements of your company even better and document them systematically.
- hotspot screening of the supply chain: Determine the value chain for your most important product groups, from raw material production and your internal value contributions through to the end user and disposal. Analyse the hotspots (dicey topics) and also the topics where you are already well positioned.
- collect and analyse data: Use existing data sources and analyses to identify the relevant topics. If necessary, use sustainability software, as standard ERP and finance systems do not map this type of data. An example of this would be the leadity app.
- evaluation of the topics: Evaluate the identified topics with your NH team according to their relevance and impact on your company as well as on the environment and society.
- integration into the strategy: Anchor the results of the materiality analysis in your corporate strategy. Define and agree clear objectives and measures for the prioritised topics.
- Reporting and communication: Document the results of the materiality analysis transparently and comprehensibly in your sustainability report. Communicate your sustainability strategy and the progress you have made to your stakeholders on a regular basis.
Why is my support useful?
Conducting a double materiality analysis is a complex process that requires in-depth knowledge in the areas of sustainability, corporate strategy and stakeholder engagement. An experienced consultant can play a decisive role in organising this process in an efficient and targeted manner. You benefit from the following advantages:
- professional expertise: I bring extensive knowledge and practical experience that enable the analysis to be carried out professionally and in line with the latest legal requirements.
- efficiency and time savings: With me at your side, you can minimise the effort involved and carry out the analysis more quickly and effectively. This gives you more time to concentrate on implementing the results. Using my prepared tools and appropriate software, we collect the relevant topics and data.
- objectivity and impartiality: As an external person, I offer a neutral perspective and can help to identify blind spots and avoid internal bias.
- customised advice and support: I offer tailor-made solutions that are precisely tailored to the needs and specifics of your company.
- best practices and innovative approaches: I have access to proven methods and innovative approaches, primarily based on the approach of the ZNU (Centre for Sustainable Corporate Development at Witten/Herdecke University) that will help you to raise your sustainability strategy to a higher level.
In this way, I can make a significant contribution to making the double materiality analysis not only legally compliant, but also strategically valuable for your company. By supporting you with my expertise and techniques, you can ensure that your sustainability strategy is realistic, realisable and aligned with your company’s long-term goals.