Materiality assessment as a strong basis for a sustainability strategy

In economically uncertain times and in view of the dynamic regulations of various sustainability issues, it is becoming increasingly important for companies to focus resources on the really important issues. A resilient corporate and sustainability strategy minimizes risks and creates stability. The double materiality assessment (DMA) - developed as a central mechanism for sustainability reporting in accordance with the CSRD (Corporate Sustainability Reporting Directive) and ESRS1 (European Sustainability Reporting Standards) - provides a strong basis despite the current omnibus initiative: companies now define for themselves what counts - not for an auditor.

Sustainability strategy: importance and benefits

A sustainability strategy is a company's structured roadmap for integrating environmental, social and economic responsibility and dealing with any resulting risks for the company into its business processes in a targeted manner. It defines clear goals, measures and key figures that make issues such as resource efficiency, dealing with the own workforce or suppliers measurable and controllable. If implemented correctly, it offers considerable financial benefits, such as optimized risk management and improved access to financing or funding. At the same time, a sustainable business orientation creates clear competitive advantages - whether through a more resilient business model or increased customer, investor and employee satisfaction. Companies that act proactively secure their stability, reputation and economic success in an increasingly turbulent economic and political environment.

Focus on minimizing risk and exploiting opportunities 

But how can a sustainability strategy be set up as robustly as possible and with maximum benefits for the company? This is where the DMA as defined by ESRS1 can provide a good basis. The assessment systematically identifies and evaluates both the impact of the company's own business activities on the environment and society and the financial risks and opportunities for the company itself. This dual perspective ensures that the strategy is not based on mere assumptions, but on well-founded, company-specific priorities. Companies can thus define targeted measures on topics that are actually relevant. The result is a solid long-term sustainability strategy that focuses on minimizing risks and exploiting opportunities.

How a double materiality assessment works

The principle of materiality analysis is not new and has been part of frameworks such as the GRI Standards or the German Sustainability Code (DNK) for years. Until now, the focus has been on assessing the impact of economic activities on the environment and society. With the European Reporting Standards (ESRS), this concept has been expanded to include the perspective of financial risks and opportunities for the company - for example due to flooding, resource scarcity or a shortage of skilled workers.

The double materiality assessment follows a structured process to identify and prioritize relevant ESG issues. Both internal assessments and the expectations of key interest groups (e.g. customers, investors, employees) are taken into account. Company experts then evaluate the defined topics from two perspectives:

1. Materiality of the impact (inside-out) - Which impacts does the company have on the environment and society?
2. Financial materiality (outside-in) - Which sustainability issues influence the firm's financial stability?
   
   

All topics identified as material are incorporated into strategic management. This ensures that the sustainability strategy is focused on relevant aspects and that resources are used efficiently.

DMA as a strategic tool

Even if the EU's omnibus initiative removes the direct obligations arising from the CSRD and ESRS for multiple companies, the DMA remains an extremely useful tool - especially in the interest of companies themselves. Without the pressure of complete documentation for the auditor, the DMA can now be used flexibly for internal purposes. Particularly when drawing up a robust sustainability strategy, it helps to systematically identify relevant topics, manage risks and opportunities in a targeted manner and use resources efficiently. This makes the DMA a strategic tool that helps companies strengthen their resilience, develop sustainable business models and proactively prepare for future market and regulatory requirements - even without statutory reporting and auditing obligations.

Would you like to develop an effective sustainability strategy that strengthens your company, minimizes risks and creates long-term stability?
We will be happy to support you - from strategic objectives to practical implementation. Please contact us - we will help you according to your needs and in a pragmatic manner.

Text: Olga Schmidt