Normally, any information that is significant, explanatory, and informative regarding a phenomenon of interest to the company is defined as material.
In the context of sustainability, the concept of materiality is extended towards the concept of “double materiality”.
That is, in Sustainability a topic (or information in general) must be included in the sustainability report generated by the company when it is material (that is, "significant") from the perspective of impact relevance and financial relevance.
The ESRS1 and ESRS2 standards specify that it is necessary to carry out the materiality assessment process to determine which topics and/or information must be represented within the sustainability report generated by the company.
The evaluation process therefore requires:
- Business Context Analysis
- Identification of IRO (I = negative or positive impacts, R = negative financial effect related to sustainability, O = positive financial effect related to sustainability)
- Double materiality assessment
- Reporting
The EU Directive 2022/2464 refers to the previous directive 2013/34/EU regarding what organizations must report "both on the impact of the company's activities on people and the environment, and on how sustainability issues affect the company."
The directive explicitly mentions double materiality, in which the financial risk that the company faces and the impact it produces each represent a relevant perspective. Therefore, this directive promotes a new model that combines the analysis of financial risks with the assessment of the impact on the environment and society.
Therefore, the “Materiality Analysis” module of 626Suite helps the Client to prepare (in an assisted manner) this analysis, which is a prerequisite for the preparation of the related sets of indicators to be used during reporting, through a new assessment model that combines the analysis of financial risks with the evaluation of the impact on the environment and society.