What is Double Materiality in ESG? – Expert Talks – Océane Rabillon

[Music] hi and welcome back to expert talks i'm agatha today we're joined by ocean rubion who's going to give us clarity around double materiality and esg and how to use reporting to ensure your company's sustainability hi guys thanks for having me so let's start with the basics can you define what materiality in the context of esg and why it's important for organization yes materiality is really about identifying and assessing sustainability issues that have an impact and influence your organization and when you do this you can prioritize what has the most impacts and facilitates decision making

now we see two different sides of materiality for esg first and this one has been around most historically the impact materiality or impact outwards how your company is impacting the environment the economy and society and now we also see a new type of materiality emerging which is financial materiality or impact inwards how your company is impacted by environmental factors and this is where we have seen a growing trend for companies because it drives them to manage risks and opportunities and double materiality is becoming more and more important for companies it increases stakeholder engagement and it

also allows for greater transparency yes and and we see that this combination is helping companies making sure they're considering all material issues do you see any difference in the definition of materiality between all dsg reporting standards and frameworks yes they all have their own definition of materiality and it really depends on the angle that they are focusing on for example sasby has an in words financial definition of materiality so it identifies sustainability issues that are likely to affect the financial performance of an organization and another example is gri who has this time an outwards definition

of materiality and they define it as information that may be considered important for reflecting the organization's social and environmental impacts okay so let's look at a real example um let's see climate change as an issue can you show us how the concept of double materiality would apply in that context yes and climate change is a great example of turbulent materiality and many companies are focusing on this at the moment let's say your organization can face physical risks related to climate change for example due to severe weather these can impact your assets but it can also

impact your production and your supply chain either directly or indirectly and another example are financial risks because some sectors of the economy may lose value during the shift to a greener economy and climate regulations may also force you to adapt your products and services and then if we look from another perspective looking outwards your organization needs to measure its greenhouse gas emissions in order to evaluate the impacts on the environments okay so it looks like companies now need to look at their impacts from a new perspective which involves new stakeholders and function internally as well

can you tell us more about the main challenges organizations are facing when they're looking at double materiality yes one of the key challenges for companies is to use materiality as an ongoing and dynamic exercise so it is not just being used for reporting and then we can also see organizations struggling to identify what is truly material for them they can be lost in so much information to cross-reference and then another pitfall is to cherry-pick the material issues to focus on instead of focusing on the real impact you can have okay with all these challenges in

mind what advice would you give to companies in order to conduct double materiality assessments in reporting well my first advice would be to make use of industry standards and tools for example we really like the csb materiality map the sustainable development goals and the tcfd guidelines and all of them can really provide a basis to help identify a first layer of what materiality looks like for your company or for your industry and then the second one would be make a priority of managing stakeholders they should really be treated as a compass to point your company's

blind spots and finally i would say approaching materiality as a core element in your business strategy really incorporating esg risks and opportunity management and all together i would say double materiality can really be used as a key driver for generating business value for companies and facilitating their change management internally well thank you so much for the advice and for helping us understand double materiality in esg and thank you all for watching expert talks stay tuned for more on esg topics you