To ensure compliance with the Corporate Sustainability Reporting Directive (CSRD), defining and managing material questions/data points is essential in your ESG (Environmental, Social, Governance) data collection process. This article will guide you through understanding double materiality, determining material questions, and efficiently using the data collection module.
1. What is Double Materiality?
Double materiality is a core concept in ESG reporting, considering two key perspectives:
Impact Materiality: How your company’s operations affect environmental and social aspects.
Financial Materiality: How sustainability trends and external factors affect your company’s financial performance.
By assessing both dimensions, the company identifies the most relevant sustainability areas for reporting, ensuring that both ESG impacts and financial risks are addressed.
2. Outputs of the Double Materiality Analysis
The double materiality analysis produces several outputs, including:
Coverage of all ESG topics required by the CSRD, such as climate change, pollution, and workforce issues.
Definition of ESG sub-topics for each ESRS, helping identify impacts, risks, and opportunities.
Determining material sub-topics through the scoring system and final decision made by the company in our dedicated module.
Breakdown of sub-topics into specific impacts, risks, and opportunities, providing a clear pathway for both impact materiality and financial materiality.
3. Connecting Materiality with Data Collection
In the CSRD framework, there are over 1,100 data points, all covered by our ESG data collection modules (hundreds of forms and questions). Materiality helps filter out the most relevant questions that your company needs to address.
The materiality of a question is determined based on:
Single sub-topic relevance: If the question pertains to a material sub-topic.
Multiple sub-topic relevance: If a question spans multiple material sub-topics.
No specific sub-topic: If the question is still material due to its alignment with broader ESRS sub-topics.
Non-material questions are not mandatory for reporting, simplifying the process by reducing the number of questions that need attention.
4. Reporting Materiality in the Data Collection Module
Once you’ve validated your double materiality analysis in the previous module, the materiality information is automatically populated across relevant forms in the data collection module. You can easily map sub-topics to forms to see which questions are material for your company.
Example: The form related to “Heat consumption” might be linked to the sub-topic “E1.3 - Energy,” highlighting its material importance.
The module allows you to filter and prioritize questions using the “Materiality” filter, displaying only the forms or questions that are relevant for reporting.
5. Filtering Material Forms in the Data Collection Module
To streamline the data collection process, use the built-in filter to only display material forms by selecting “Material Only.”
This filter ensures that your team focuses on the most important aspects of the ESG reporting process, simplifying workflow and ensuring efficient data management.