The reality of materiality

This week, we hosted an engaging session on double materiality.

Companies such as PostNL, Aegon, Rabobank, Corbion, and the Port of Rotterdam gathered around the table to discuss challenges and potential solutions for practically applying the concept within organizations.

Our guest speaker, Jilde Garst, shed light on the current state of materiality through her work with the WBCSD’s "The Reality of Materiality" and her recent article [Materiality Assessment Is an Art, Not a Science: Selecting ESG Topics for Sustainability Reports – Jilde Garst, Karen Maas, Jeroen Suijs, 2022 (sagepub.com)].

 

Three key takeaways:

• Materiality can no longer be treated as a separate reporting exercise. With the upcoming CSRD requirements, companies are expected to present a clear action plan and track progress. Treating materiality as an isolated reporting process will only widen the gap between reporting and true integration of sustainability.
• Financial materiality in sustainability reporting differs from that in financial reporting. It should be viewed through a broader lens of enterprise value, taking into account various forms of capital—such as natural, social, and intellectual—and their relevance to financial performance. For example, talent (social capital) should be considered financially material in the service sector, where turnover and competitiveness are strongly linked to human capital.
• Surveys alone are not sufficient to determine financial and impact materiality. Expert interviews and focus groups are essential for gaining a proper understanding of both perspectives. These can be supplemented with secondary sources such as industry research, peer benchmarking, and media analysis.

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