Understanding Materiality and Priorities

Accelerating interest of capital markets in ESG data is increasingly creating urgency for small and mid caps to start ESG reporting. But in the absence of ESG regulation, most wonder what sustainability detail to disclose and what stakeholders see as most important.

Disclosure of non-financial information does not require a company to report all relevant or interesting sustainability-related information. The question of what information to disclose rests on the concept of materiality.

Investors are primarily interested in how sustainability issues affect a company’s financial position or operating performance, while other stakeholders look for transparency around how a company’s actions impact society – combined, these are often called “double materiality”.

A materiality assessment is an important part of an ESG framework. It allows Management to review the framework’s disclosure metrics to identify each ESG topic’s materiality to the business – as well as risks, opportunities, and priorities. 

There is great value in including external stakeholders in your materiality assessment process. By making sure that questions of ESG materiality and priority are also considered by your key stakeholders, you will be able to get a full picture (ie. double materiality) of what non-financial information is seen as relevant for disclosure. It’s also important to regularly reassess materiality as regulations, frameworks, and stakeholders' demands evolve.

Materiality assessments can come in many shapes and forms – from simple and quick to complex and protracted. To get started, a brief and rapid ESG materiality assessment can offer many valuable insights and help define priorities. Speak to our team at Socialsuite about our Materiality Assessment Tool to quickly identify material topics and understand which risks and opportunities your stakeholders see as a priority for your business.

Over 90 public companies and 70 non-profit organizations use Socialsuite for tracking and reporting on their impact. With the help of our ESG software and expert team, businesses can easily get started on impact reporting, disclose faster, and save money compared to traditional methods. Whether you're new to impact reporting or looking to enhance your current practices, Socialsuite offers the tools and expertise needed to achieve your sustainability goals. Contact us to learn more about our solutions.