Search Results

Blog | Thursday November 30, 2023

Beyond Compliance: Eight Considerations for Your Materiality Assessment

Preview

The emergence of mandatory disclosure regulations has sustainability, compliance, risk, finance, and legal teams focused on the humble materiality assessment as never before. It’s hard to overestimate the importance of these standards in raising the floor on sustainability performance and ensuring that all businesses understand and are responsible for reporting on important environmental, social, and governance topics.  

With “materiality” serving as the foundation of what should be reported, there is significant new attention paid to how the assessment, which has long been the sole responsibility of the sustainability team, is conducted, documented, and assured.  

In some ways, this is what many of us in the sustainability management field have been working on for our entire careers. We are seeing the mainstream adoption of fundamental sustainability concepts in real-time.  

Yet, as we devote much of our time to answering question after question on whether our approach to materiality is “CSRD compliant” we need to ensure we don’t lose the plot. While we’re ensuring appropriate documentation and sufficiently quantitative, representative, and impartial input (all of which is important and much needed), we must also keep a clear-eyed view of what has historically made materiality assessment such a valuable strategic exercise.  

Reflecting on nearly 20 years of BSR materiality assessments, we know three things to be true: 

• Materiality is as much about the process as it is about the results. Internal and external stakeholder engagement and alignment drive as much, if not more, value as topic identification. 

• You get out of it what you put in. Broad and superficial topic ranking exercises lead to limited insights, but deep engagement, conversation, and debate lead to moments of sudden inspiration that unlock progress on critical priorities for business and society. 

• Our understanding of impact is not perfect and continuously improving. For example, our ability to consistently and comparably quantify climate impacts accelerated dramatically in the past decade, as has our understanding of human rights impacts. But significant gaps remain in social and environmental due diligence and understanding of impacts across the full value chain. 

Looking ahead we see a world of possibility with: 

• Harmonization between assessment and reporting approaches. 

• Strengthening the connections between people, regions, and professional domains. 

• Stronger, more resilient, business strategies that focus on long-term value.  

However, can only turn this vision into reality if we retain a focus on the spirit of the exercise: truly understanding the most important impact areas for each business and authentically engage with affected stakeholders to accelerate progress toward a just and sustainable world.  

With this in mind, we are left with several important methodological questions that we will continue to focus on, with the aim of driving coherence and consensus amongst practitioners: 

• How can materiality and due diligence processes become mutually beneficial and reinforcing? 

• How should we engage affected stakeholders in the process?  

• Should a company assess and report inherent or residual risks or both? 

• When is a qualitative approach considered appropriate? 

• How do we effectively surface the connections between seemingly discrete disclosure topics? 

• Should we differentiate material topics for disclosure from strategic priorities or are they one and the same?  

• How can we better understand and incorporate emerging topics and potential long-term impacts into the process? 

• How can technology support our work? 

All stakeholders engaged in these assessments have a valuable piece of the puzzle and the answers may vary considerably based on unique circumstances. We look forward to working alongside our current and future member companies, peers, and partners to strengthen our collective thinking and ensure our efforts continue to help us reach the future we aspire to build together.

For more from Beth and Materiality, check out her episode in our BSR Insights Audio Series:

Audio Transcription

Insights+ | Wednesday November 29, 2023

COP28: Tackling Fossil Fuels, and a Final Push to Keep 1.5 Alive

Preview

Reports | Tuesday November 28, 2023

Just Transition and Modern Slavery

Preview

To plan for and achieve a just, equitable, and inclusive transition, business has a responsibility to ensure its efforts to transition to net zero that does not place people at risk. To this end, BSR’s Energy for a Just Transition collaboration explored the modern slavery risks associated with the energy transition and identified ways to address these risks.  

Affected communities and impacted populations, including workers, must be engaged in dialogue and decision-making processes to ensure the impacts of the transition on their social and economic well-being are considered. It is crucial to ensure that social protections for workers and communities and the rights of workers are upheld. 

Business can proactively manage modern slavery risks by: 

• Outlining expectations on ethical business practices 

• Increasing understanding of modern slavery 

• Identifying and assessing risks 

• Engaging suppliers 

• Providing remedy and supporting survivors 

• Collaborating

The team would like to thank Andrey Pertsov and Claudio Formisano for their contribution to the report.

Audio | Tuesday November 28, 2023

The Evolving Reporting Landscape Trailer

Preview

Audio | Tuesday November 28, 2023

Human Rights and the Future of Compliance with Dunstan Allison-Hope

Preview

Dunstan Allison-Hope, BSR Vice President, Human Rights chats with David Stearns on Human Rights and the Future of Compliance, exploring:

• Why compliance is important and why it deserves its moment in the sun. 
• The difference between complying with the spirit of the law and the letter of the law, and some of the issues posed by the double materiality requirements in the ESRS.
• Collectively, whether these rules are up to the task considering the urgent need for action. 
• Why the new convergence between human rights due diligence and materiality reporting is noteworthy.  
• How companies should address human rights in their materiality reporting.

Audio | Tuesday November 28, 2023

The Impact on Climate and Nature with David Wei

Preview

David Wei, BSR Managing Director, Climate and Nature chats with David Stearns on The Impact on Climate and Nature, exploring:

• How these rules and regulations apply specifically to net zero reporting and other climate-related commitments.
• What impact they may have on greenwashing, specifically making it less permissible. 
• To what extent the new requirements may help companies increase their ambition and drive greater impact toward net zero goals. 
• New challenges for climate-focused sustainability practitioners, including the Chief Sustainability Officer. 
• Key competencies that boards will need to develop to ensure that actions are commensurate with disclosure.
• To what extent the politicization of these efforts in the U.S. may a challenge for Chief Sustainability Officers or other leaders at the forefront of this work.

Audio | Tuesday November 28, 2023

The Impact Across Business Units with Adam Fishman

Preview

Adam Fishman, BSR Associate Director, Transformation chats with David Stearns on The Impact Across Business Units, exploring:

• The latest regulatory frameworks, how they are distinct and how they work together.
• Why this is an important time for those in sustainability functions within a company and advice to help them navigate this rapidly evolving landscape. What should they be doing in the near and long-term? 
• How this is likely to affect different job functions and teams within a company, specifically finance, procurement, marketing, human resources, boards, and the c-suite. 
• Do these regulatory frameworks go far enough as far as requiring companies to report and disclose on elements of their sustainability activities? 

Audio | Tuesday November 28, 2023

Leading with Ambition with Aron Cramer

Preview

Aron Cramer, BSR President and CEO, chats with David Stearns on the topic of Leading with Ambition, exploring:

• Why companies should be enthusiastic about these changes to reporting requirements and regulatory frameworks.
• The apparent tension that these reporting requirements have created between ambition and compliance and where the pitfalls might be for companies.
• Whether there is a possibility that new requirements and reporting rules might actually unlock greater ambition.
• Advice for companies pursuing an ambitious sustainability strategy, and whether there is business value in this approach. 
• The evolving role of the Chief Sustainability Officer on strategy, leadership, and external communications.
• Whether these regulations and compliance frameworks go far enough.

Audio | Tuesday November 28, 2023

Unpacking Double Materiality with Beth Richmond

Preview

Beth Richmond, BSR Director, Transformation chats with David Stearns on Unpacking Double Materiality, exploring:

• How the different frameworks and guidelines define materiality, where they are similar and where they are different.
• Why companies should apply the concept of double materiality, and why it is the approach that BSR favors.
• What BSR says to companies who only engage in financial materiality to help them understand why they should embrace double materiality.
• Whether double materiality requires engagement with new stakeholders, both internal and external.
• What Beth is hearing from companies who are going through the process of coming into compliance with mandatory reporting.

Audio | Tuesday November 28, 2023

Role of Boards and Governance with Christine Diamente

Preview

Christine Diamente, BSR Managing Director, Transformation chats with David Stearns on the Role of Boards and Governance, exploring: 

• What new skills boards need to have in light of these new regulatory and reporting requirements.
• What platforms or opportunities exist for upskilling and what kind of requests is BSR receiving from boards.
• What do we mean by business transformation and what hurdles and opportunities exist for corporate leaders in this new environment.
• Lessons learned from Christine’s experience engaging in scenario planning exercises with BSR members.