According to EFRAG guidelines, companies set their own thresholds for financial and impact materiality based on their specific context and operational dynamics. These thresholds determine which ESG issues are significant enough to require reporting, using a combination of qualitative and quantitative assessments.

Companies evaluate the likelihood and potential magnitude of financial impacts from ESG issues, considering factors like revenue changes, cost implications, and stakeholder reactions. The threshold for what is considered financially material is set internally by each company​ (Efrag)​​ (Thomson Reuters: Clarifying the complex)​.

For environmental and social impacts, companies assess the severity, scope, and difficulty of reversing impacts, again setting thresholds to identify significant issues that need to be disclosed​ (Efrag)​.

By default, Greenly considers an activity material if either its impact or financial score exceeds 50% when scores are normalized to 100. This approach simplifies the materiality assessment, ensuring significant issues are flagged for action and reporting​ (EFRAG)​​ (Thomson Reuters: Clarifying the complex)​.

If necessary, the user is able to modify the 50% thresholds in case the quantitative scores may be biased and additional adaptation is needed to represent more faithfully the material sub-topics of the company.

For more detailed guidelines, refer to the EFRAG implementation guidance.