Materiality is the principle of defining the social and environmental topics that matter most for your business, customers, investors, and other stakeholdersĪs a practice, ESG materiality is rooted in financial accounting materiality. A material ESG or climate risk is a headwind that could negatively impact a corporation's operating or financial performance. A material sustainability opportunity is something that can positively impact a company's business model, revenue, or profits. Not material like a physical ingredient, but material meaning important to an organization. What is Materiality? Materiality comes from 'material'. Materiality assessments are projects to help an organization understand, organize, and prioritize its material topics and themes.īut before going any further, let's define what we mean when we talk about materiality. For corporate leaders and ESG practitioners, materiality is a powerful concept to understand and put into practice. Materiality is a term that comes up often in sustainability and ESG (environmental social governance) strategy conversations. Materiality Assessment Essentials for ESG and Sustainability Strategy
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