Materiality

How it is used

Companies carry out a materiality assessment and often show the results in a materiality matrix. Financial materiality looks at how a topic affects the company's value; impact materiality looks at the company's effect on people and the planet. The EU's CSRD requires both, called double materiality.

Example sentences

1. Water scarcity came out as a top issue in our materiality assessment.

2. Under double materiality, we must report both the climate risks to our business and our own impact on the climate.

Common collocations

• materiality assessment
• double materiality
• materiality matrix
• material topics
• financial materiality

Related terms

• sustainability reportA report, usually published every year, in which a company describes its environmental, social and governance performance, targets and impacts.
• ESGShort for environmental, social and governance: the three groups of non-financial factors that investors and lenders use to judge a company's risks, impacts and quality of management.
• disclosureThe act of making information public, especially the data, risks and targets that companies must or choose to report to investors, regulators and the public.
• climate riskThe possibility that climate change, or the policies and market changes it brings, will cause financial losses or other harm to a company, investor, community or asset.

This word in other fields

The same English word can have a different meaning in another field:

• materiality · Accounting & Tax

More terms: Environmental Reporting and ESG

• Scope 1, 2 and 3 emissions
• greenhouse gas inventory
• greenwashing