Vision Core · Responsibility · Module

Impact and materiality

Which of the organisation’s effects matter, judged outward by their weight on people and the environment and inward by their financial effect on the organisation.

The idea

How it works

Materiality is a filter. An organisation touches more issues than it can manage well, and the assessment decides which ones receive attention, targets and disclosure. Double materiality asks the question twice: how much does this issue affect people and the environment, and how much does it affect the organisation’s own finances? An issue that passes either test is material.

The two directions are kept apart on purpose. An issue can be severe for the people affected and financially trivial for the organisation, or the reverse. Collapsing them into one score lets the financially convenient reading win quietly, which is the specific failure the concept was introduced to prevent.

Working with it

In practice

  1. 01

    List impacts before ranking them

    Start from activities across the value chain, not from a standard list of ESG topics. A generic list finds the issues everyone has and misses the ones particular to this business.

  2. 02

    Score the two directions separately

    Severity for people and the environment in one column, financial effect in the other. Combine them only at the point of deciding what is material.

  3. 03

    Write the threshold down before scoring

    A threshold set after the scores are known tends to land just below whatever was uncomfortable.

  4. 04

    Pass inward risks on

    The financial risks found here go to the risk register in Governance, where they are owned and monitored. This module identifies them; it does not manage them.

One level in

The components of impact and materiality

A component is something that exists afterwards which did not exist before — a deliverable or a mechanism, not an intention.

  1. Impact register

    Every identified effect of the organisation’s activities on people and the environment, with who is affected and how severely.

    Learn

  2. Double materiality assessment

    The scoring of each issue in both directions, the threshold used, and the resulting list of material topics.

    Learn

  3. Value-chain boundary

    How far upstream and downstream the assessment reaches, and what was left out and why.

    Learn

Set the materiality threshold before the scores are in. Set afterwards, it tends to fall just below the uncomfortable issue.

The other modules in responsibility

Commitments and targets

What the organisation commits to about its material impacts, measured from a recorded baseline, with milestones close enough to be missed and an owner who would notice.

Learn

Ethics

How people are expected to act where the law is silent or permissive — the conduct standards, the dilemmas already reasoned through, and the response when someone raises a concern.

Learn

Disclosure

What the organisation states publicly about its sustainability impacts, commitments and progress, and the evidence standing behind each of those statements.

Learn
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