For companies working to improve their approach to ESG management, prioritisation is everything. With regulatory requirements increasing, such as the Corporate Sustainability Reporting Directive (CSRD), companies are being mandated to conduct materiality assessments. However, our experience shows that these assessments are not just a compliance exercise—they are a strategic tool that can benefit businesses of all sizes. This article explores why companies should consider a materiality assessment as the starting point when developing its approach to sustainability and developing a list of ESG actions.
What is a Materiality Assessment?
A materiality assessment is a structured approach to identifying and prioritising the ESG issues that matter most to a company’s stakeholders and its long-term success. It helps businesses move beyond vague sustainability commitments by providing clarity on what areas demand focus, enabling them to allocate resources effectively.
By engaging with stakeholders—including investors, customers, employees, and regulators—businesses can determine where ESG efforts will have the greatest impact and align these efforts with broader business objectives.
The Regulatory Push: CSRD and Beyond
Under CSRD, large companies operating in the EU are now required to conduct double materiality assessments, considering both financial materiality (how ESG issues impact the business) and impact materiality (how the business impacts the environment and society). This regulatory shift acknowledges that businesses must take a holistic approach to sustainability—not only managing risks but also assessing their broader impact.
While CSRD applies to a specific subset of businesses, the lessons from it apply universally. Companies that proactively assess material ESG risks and opportunities can improve their resilience, enhance stakeholder trust, and position themselves ahead of future regulations.
Why It’s Valuable for Every Business
Even if your business isn’t directly subject to CSRD, conducting a materiality assessment is still one of the smartest ESG investments you can make. Here’s why:
Focus on What Matters: ESG can be overwhelming, but a materiality assessment helps cut through the noise. Instead of chasing every sustainability trend, businesses can concentrate on high-impact areas that align with stakeholder priorities.
Efficient Resource Allocation: Most companies operate with limited resources. A materiality assessment helps direct efforts to areas that offer the most value, ensuring time and investment go into initiatives that will make a real difference.
Strengthened Stakeholder Relationships: Whether it’s investors, employees, or customers, stakeholders want to see businesses acting on ESG issues that truly matter. A transparent materiality assessment process enhances credibility and trust.
Future-Proofing Against Regulation: ESG regulations are expanding worldwide. Even if you’re not required to comply with CSRD today, similar frameworks are emerging in other regions. A well-executed materiality assessment can help businesses prepare for evolving disclosure expectations.
Competitive Advantage: Companies that understand their ESG priorities and act on them effectively can differentiate themselves, attract responsible investment, and build long-term resilience.
How to get started
Identify Stakeholders: Engage key stakeholders to understand their expectations and concerns.
Gather Data: Assess ESG issues relevant to your industry, operations, and regulatory environment.
Prioritise Issues: Rank ESG topics based on their significance to stakeholders and their impact on business performance.
Develop an Action Plan: Use the findings to inform your ESG strategy, set measurable goals, and integrate sustainability into decision-making.
Communicate and Reassess: Transparency is key—share your materiality assessment outcomes and revisit the process regularly to stay aligned with evolving priorities.
How Jordisk can help
Materiality assessments are not just a compliance requirement—they are a powerful tool to help businesses navigate ESG strategically. Whether you are mandated to conduct one under CSRD or simply looking for a way to prioritise ESG actions with limited resources, this approach can drive real impact. By focusing on what truly matters, businesses can enhance efficiency, improve stakeholder trust, and stay ahead of regulatory developments.
If you’re ready to make ESG work for your business, a materiality assessment is the place to start.
