Introduction
In the evolving landscape of corporate sustainability, understanding the dual impacts of business activities on both the environment and society, as well as their financial implications, is paramount. This comprehensive evaluation, known as a Double Materiality Assessment, is essential for businesses aiming to comply with the European Corporate Sustainability Reporting Directive (CSRD). Greenly's platform simplifies this complex process, guiding users through each step to ensure accurate and efficient reporting. This article will walk you through the process of completing a Double Materiality Assessment using Greenly’s platform, highlighting key features and steps.
1. The Platform’s Landing Page
When you first log into Greenly’s platform, you will be greeted by the landing page. This is your starting point for initiating the Double Materiality Assessment.
2. Determine if Some ESRS are Not Material for Your Company
When beginning the Double Materiality process, our system assumes that all ESG (Environmental, Social, and Governance) topics are relevant for your company by default. However, depending on your industry, operations, or specific circumstances, some topics may not be material, meaning they do not significantly impact your business or stakeholders.
To streamline your assessment, you can perform a materiality check on each ESRS before diving into detailed analysis. Here’s how it works:
Tech Sector Example:
A tech company may determine that biodiversity is not material to its operations because the company’s activities (e.g., developing software, managing data centers) are not directly impacting or relying on biodiversity. Only at the top level of the supply chain (e.g., mining companies extracting metals for servers) might biodiversity issues occur, which are too distant to be considered material for the company itself.Manufacturing Sector Example:
A clothing manufacturer may find that ESRS S2 (Workers in the Value Chain) is not material because, although they source materials from countries with questionable labor practices, these suppliers account for only a small part of their expenses, and there is no evidence that working conditions there are problematic. Without concrete proof and a significant financial impact, they can decide that ESRS S2 is not material.
1. How to Complete the ESRS Materiality Check
Each time you start an ESRS form, you will be prompted with a "Materiality Check" question:
If Yes, proceed with the detailed questions to compute the final materiality scores.
If No, the system will automatically assign a materiality score of zero (0) for both impact and financial materiality. You won’t need to address that ESRS further.
If I don't know, the system will exclude the question from analysis and scoring. You should only use this answer when you really don't know the answer and want to be sure to exclude it to avoid any mistakes or to include a topic that doesn't seem important to your business.
Important: If you select “No” in the materiality check, you must provide a justification for your decision to ensure transparency and for audit purposes.
2. Returning to the Materiality Check
If you’ve already started answering detailed questions for an ESRS and later realize it’s not material, you can always return to the materiality check. At the top right of your ESRS form, you’ll find the “ESRS Materiality” button, which allows you to revisit the initial materiality decision. This flexibility is designed to help you adapt your assessment as you gather more information.
3. Why Materiality Justification is Important
When choosing “No” in the ESRS materiality check, you must justify this decision clearly in the platform. This justification is necessary to comply with audit requirements and ensures that your Double Materiality Assessment process is well-documented and accountable.
3. Assign Stakeholders to Questions in Your Double Materiality Assessment
In the process of conducting a Double Materiality Assessment in the platform, some questions are best answered by internal specialists from different departments of your company. While ESG experts may manage several questions, other topics may require input from teams such as HR, Procurement, Operations, or Product Design. Assigning the relevant questions to the right stakeholders helps distribute the workload effectively and ensures the most knowledgeable people are providing answers.
1. Why Assign Stakeholders to ESRS Questions?
Certain questions in your Double Materiality Assessment may fall outside the expertise of your ESG team. For example, questions on greenhouse gas (GHG) emissions might be better addressed by the Operations team, while questions on labor conditions may be better handled by the HR department. Assigning specific questions to the appropriate stakeholders ensures that the most accurate and relevant information is gathered during the materiality assessment process.
The goal is to spread the responsibility across internal specialists identified during the framing phase of your Double Materiality project, thereby improving accuracy and efficiency.
2. How to Assign Questions to Stakeholders
Follow these steps to assign specific questions from an ESRS (European Sustainability Reporting Standards) form to internal specialists:
Add Stakeholders to the Platform: First, ensure that the relevant stakeholders have been added as users within the platform. To do this:
Navigate to the “Settings” menu.
Go to the “Users and roles” tab to add or manage users.
Open the Relevant ESRS Form: In the Double Materiality Assessment module, open the ESRS form you want to work on.
Select the Question to Assign: Inside the ESRS form, find 1 or several questions you want to assign to a stakeholder
Assign the Question: Select 1 or several questions, and choose an assignee in the list In the top-left corner. This stakeholder will now be responsible for completing that question.
3. Filtering Questions by Stakeholder
Once you’ve assigned questions to different stakeholders, you can easily follow up by filtering the questions by assignee. To do this, use the “Assignee” filter, which is located at the top of the questions list in the ESRS form. This allows you to:
See which questions have been assigned to which stakeholder.
Monitor progress and follow up on incomplete questions.
This feature is especially useful for project management and ensuring that the Double Materiality Assessment stays on track.
4. Why It’s Important to Assign the Right Stakeholders
By assigning questions to the right internal experts, you ensure that:
The most knowledgeable people are providing answers for their area of expertise.
The form completion process is streamlined, saving time and effort for your ESG team.
Follow-up is easier since each stakeholder is accountable for their respective section.
4. Onboard Stakeholders and Guide Them to Complete the ESRS Forms
To successfully complete the Double Materiality Assessment, it's essential to onboard the relevant internal stakeholders and ensure they understand their tasks. This process helps ensure that each stakeholder addresses the ESG topics pertinent to their area of expertise, contributing accurate data for the assessment.
Here’s how stakeholders can complete their tasks:
Key Criteria Before Starting the Detailed ESRS Forms
Before stakeholders begin working on the ESRS forms, make sure the following steps have been completed:
Review of Topics and Sub-topics:
You should have already reviewed the topics and sub-topics covered by each ESRS form to understand what needs to be addressed (see Step 1).Determining Non-Material ESRS:
Identify which ESRS topics are obviously not material for your company. These topics won’t need to be treated during the detailed data collection process (see Step 2).Assigning Stakeholders:
Ensure all relevant stakeholders have been assigned to their respective questions in the ESRS forms (see Step 3).
Steps for Stakeholders to Complete Their Double Materiality Tasks
As a stakeholder, follow these steps to complete your tasks in the platform:
Log in to the Platform:
Access the platform and navigate to the CSRD – Double Materiality Assessment module.Open the ESRS Forms:
On the landing page of the module, open the ESRS form displayed for your assigned tasks.Filter by Your Name or Email:
Inside each ESRS form, use the Assignee filter at the top of the form to display only the questions that are assigned to you.Complete the Assigned Questions:
Open the questions with a “To Do” or “In Progress” status and complete them. Your job is complete once all assigned questions have a “Complete” status.Provide Justifications:
After answering each question, write a brief justification or explanation in the comment box. This provides context and reasoning for your answers, which is essential for auditability.Ask for Help if Needed:
If you’re unsure how to answer a question, use the platform chatbot (located in the bottom right of the screen) to ask for help.
If you’re still stuck, reach out to your company’s project manager for further guidance.
Notify Your Project Manager:
Once you’ve completed all the questions assigned to you across all ESRS forms, notify your project manager. They may need to review your answers.
5. Follow-Up on Form Completion Progress as a Project Manager
As a project manager responsible for overseeing the Double Materiality Assessment process, it is essential to track the progress of the ESRS (European Sustainability Reporting Standards) forms to ensure that all data collection tasks are completed on time. Our platform provides a dashboard that allows you to monitor form completion, helping you manage contributors and track the overall status of the project.
1. Monitoring Progress on the Dashboard
In the Double Materiality Assessment module, the landing page includes a progress dashboard that shows the status of your data collection process:
Global Status (%):
Displays the percentage of questions that have been completed across all ESRS forms.Completed Forms:
Shows the number of ESRS forms that have been fully completed and treated. Each form is considered complete when all the questions have been answered and justified.In Progress Forms:
Displays the number of ESRS forms that are still in progress and require attention.
Note: The Data Collection process is considered complete when the Global Status reaches 100%, meaning all questions across all ESRS forms have been answered.
2. Follow-Up with Contributors
To ensure all tasks are completed and to address any questions that are still pending, you can follow up with individual contributors. Here’s how to track their progress:
Open the Relevant ESRS Form:
Begin by opening the ESRS form you want to review.Filter by Contributor Name or Email:
Use the Assignee filter at the top of the form to display only the questions assigned to a specific contributor.Check In-Progress Questions:
Review the list of questions and focus on those marked as “In Progress”. These are the questions that the contributor has not yet completed.Contact the Contributor if Needed:
If a contributor has questions that remain incomplete, you can reach out to them to discuss their progress and provide any necessary support. Encourage them to complete their questions and add justifications in the comment box.
3. Completing the Data Collection Process
Once all the contributors have completed their questions and the Global Status reaches 100%, the data collection process for your Double Materiality Assessment is considered finished. You can then review the collected data, analyze the results, and move forward with the reporting phase.
Monitoring progress regularly and following up with contributors helps ensure that the Double Materiality Assessment is completed efficiently and accurately.
6. Review Your Results Once Stakeholders Have Completed Their Questions
After achieving 100% Global Status in your Double Materiality Assessment, as a project manager, you must ensure that the provided answers are accurate and consistent with the ESG impacts, risks, and opportunities relevant to your company. This review process ensures the integrity of the results and identifies any inconsistencies that may require further attention.
Steps to Review the Results:
Follow this step-by-step guide to review the sub-topic scores and the associated questions in the platform:
Access the "Analytics" Tab:
View the Sub-Topics Results Table: Scroll down until you see the table showing the results for each sub-topic.
Check Impact and Financial Materiality Scores: For each sub-topic listed, review the Impact Materiality and Financial Materiality scores displayed in the table.
Click on the Sub-Topic Name: To investigate further, click on the sub-topic name (in the second column of the table). This will open a detailed view of all questions related to that sub-topic.
Acknowledge the Associated Questions: In the displayed pop-up, carefully review all the questions related to the selected sub-topic. This will allow you to see how each question contributed to the overall score.
Identify the Question with the Maximum Score Value: For each materiality type (impact or financial), identify the question with the maximum score value. This is the most influential question for the sub-topic's final score.
Verify Inconsistent Scores: If any of the scores seem inconsistent with what you expect, go back to the Double Materiality Assessment tab and access the relevant ESRS form. Review the provided answers for that sub-topic to ensure they are correct and justified.
Next Steps
Export the Scores:
If needed, you can export your materiality scores using the “Export Materiality Scores” button to share results or for further analysis.Make Adjustments:
If any inconsistencies or inaccuracies are found during the review, make adjustments by working with the relevant stakeholders or updating the answers in the ESRS forms.
7. Improve Your Auditability by Commenting on Your Answers
The Double Materiality process is inherently subjective, as companies are often asked to provide answers based on internal insights rather than concrete data or scientific evidence. The goal is to ensure that your answers faithfully represent the company’s view on its impacts, risks, and opportunities. To strengthen the auditability of your responses, you should include justifications where appropriate. These comments will be reviewed by third-party auditors to verify the validity of your approach.
1. Why Commenting is Important
Your answers may be audited by third-party assurance providers, and providing context to your answers improves transparency. By offering additional details, you increase the confidence that your answers are comprehensive and well thought out.
To facilitate this, our platform provides a Comment Box at the end of each question in the ESRS forms, where you can justify your responses.
2. When to Provide Comments
While it’s not necessary to comment on every question, adding justifications to certain key questions is important. Here's where to focus:
Questions with High Scores:
Prioritize adding comments to the questions that generated the highest sub-topic scores, as they will have the greatest impact on your final materiality results.Key ESG Sub-topics:
Comment on well-known ESG topics such as employee well-being, GHG emissions, and waste management, as these are often of interest to stakeholders and auditors.Uncertain or Debated Questions:
If there were internal discussions or debates about how to answer a question, it’s important to document these insights to clarify why a particular score or answer was chosen.
3. What to Include in Your Comments
Here are some ideas for what to include in your comments to strengthen auditability:
Specific Examples:
Include concrete examples or case studies that illustrate your company’s activities, products, or services that influenced your answer.Reasoning Behind Scores:
Provide reasoning behind your assigned scale, scope, and remediability scores, especially if the question addresses materiality thresholds.Timeframes:
Clarify whether your answer refers to a current, past, or future impact to help contextualize the financial or impact risks and opportunities.Additional Relevant Information:
Any extra details that might influence the overall materiality assessment can be useful. This can include industry trends, upcoming regulatory changes, or shifts in company strategy.
4. Conclusion: Focus on Key Questions
Not all questions will require comments, but focusing on the most significant ones will ensure that your Double Materiality Assessment is robust and ready for audit. By adding context, you provide a clear rationale for your responses, which helps auditors and stakeholders understand the full picture.
8. Define your Materiality thresholds
Once you have reached a 100% Global Status for forms completion and review all answers, you should now have materiality scores for every single ESRS and Sub-topic. You must now determine the materiality thresholds of those scores.
Those thresholds are to be determined by the company, so the final materiality assessment provides results representative with the company’s ESG stakes and proper priorities.
You can leave by-defaut values if you don't know how to actually challenge the proposed values, of course.
9. Finalize your assessment to move on to ESG Data Collection
Once you are completely satisfied with your results, and no more updates are needed, click on the “Freeze my Results” button (Analytics tab, above the detailed results table).