Understanding Materiality: The Key to a Strong Sustainability Strategy
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September 17, 2025
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The Importance of a Materiality Assessment in Sustainability Strategy Development
A materiality assessment is a crucial first step in developing a robust ESG strategy. This process benefits companies in multiple ways, creating a shared understanding of sustainability while providing insights that go beyond traditional financial considerations. Here’s how a materiality assessment can support your organisation:
- Creating a shared sustainability language: It establishes a common framework for discussing sustainability goals and initiatives across the organisation.
- Identifying risks and opportunities: The assessment highlights risks and opportunities often overlooked in financial materiality, helping companies address broader concerns.
- Engaging stakeholders: It facilitates meaningful discussions with suppliers, customers, employees and other stakeholders, ensuring their priorities are reflected in your strategy.
- Defining strategic priorities: The assessment clarifies decision-making by pinpointing what should and shouldn’t drive your sustainability efforts.
Single vs. Double Materiality
Companies can adopt one of two approaches to materiality, depending on their goals and regulatory requirements:
- Single materiality: This approach focuses on how sustainability issues impact a company’s growth and financial performance. It is typically sufficient for communicating with capital markets.
- Double materiality: Adds a layer of analysis, examining how a company’s operations and business model impact the environment and society. This approach is better suited for engaging a broader stakeholder base, including communities and employees.
Why Materiality Matters
An ESG strategy rooted in materiality is essential for credibility and effectiveness. Without it, defending your sustainability efforts becomes significantly harder. By tailoring your approach to your regulatory landscape and stakeholder needs, your organisation can build a resilient and impactful ESG framework.
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Published
September 17, 2025
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