A materiality assessment is a structured process enabling companies to pinpoint and rank the most critical ESG concerns. It includes assessing the effects of a company's operations on various facets, integrating both internal and external viewpoints.
The objective is to identify which concerns are material – or substantial – to a company's overarching sustainability strategy and reporting measures. Materiality assessments direct companies in concentrating their strategies on aspects genuinely significant to stakeholders, investors, and the company itself.
Within the SAP Sustainability Control Tower framework, materiality assessments play a pivotal part in the following ways:
- They help companies in selecting relevant sustainability metrics and measures.
- They influence the choice of dimensions (like organizational hierarchy, timeline, and data source) used in reporting.
- They provide companies with clarity on what matters most, enabling them to align their sustainability initiatives with stakeholder expectations and strategic objectives.
Key Phases of Materiality Assessment
The following video shows the key phases of Materiality Assessment.