Last updated: May 20, 2026.
A sustainability materiality assessment helps a company decide which sustainability topics deserve management attention, data collection, reporting, and stakeholder communication. It turns a broad ESG universe into a clear list of topics that matter for the business, its stakeholders, and its impacts.
The topic has become more important because materiality is now central to major reporting frameworks. GRI focuses on the organization's significant impacts on the economy, environment, and people. ESRS reporting under the CSRD uses double materiality, which looks at both impact materiality and financial materiality. ISSB standards focus on sustainability-related risks and opportunities that could affect enterprise prospects and investor decisions.
This guide explains what materiality means, how the different lenses compare, and how to run a practical assessment that can support strategy, reporting, customer requests, and communications. Keslio can help with sustainability strategy, reporting and communications, and GHG emissions calculations where material topics need credible data behind them.
Short answer: A materiality assessment identifies and prioritizes the sustainability topics that are most relevant to a company and its stakeholders. A useful assessment starts with business context, maps impacts, risks, and opportunities, engages the right internal and external stakeholders, scores topics using a clear method, documents the evidence, and turns the results into reporting and action plans.
What materiality means in sustainability
In ordinary business language, materiality means something is important enough to influence a decision. In sustainability, the meaning depends on the framework being used.
- Impact materiality: focuses on the organization's actual or potential impacts on people, the environment, and the economy. This is central to GRI reporting.
- Financial materiality: focuses on sustainability-related risks and opportunities that could affect the company's financial position, performance, cash flows, access to finance, cost of capital, or enterprise value.
- Double materiality: combines both perspectives. A topic may be material because the company affects people or the environment, because the topic affects the company financially, or because both are true.
These lenses overlap, but they are not identical. For example, worker safety may be impact material because it affects people directly and financially material because poor safety performance can lead to disruption, litigation, insurance cost, or reputational damage. Biodiversity may be financially material for one company because its operations depend on land, water, or natural resources, but less financially material for another company while still being an important impact topic.
Why companies run materiality assessments
A materiality assessment gives sustainability work a practical order. Without it, teams often try to report on everything, collect too much low-quality data, or choose initiatives based on what is easiest to communicate rather than what matters most.
A good assessment can help companies:
- Choose which topics to include in a sustainability report.
- Prioritize sustainability initiatives and budgets.
- Prepare for GRI, ESRS, CSRD, ISSB, customer, or investor reporting expectations.
- Identify data owners and evidence gaps.
- Improve board and management oversight of sustainability topics.
- Connect stakeholder concerns to business decisions.
- Make sustainability communications more specific and defensible.
For reporting teams, materiality also prevents the report from becoming a catalogue of unrelated initiatives. The strongest reports explain why the chosen topics matter and how the company manages them.
Materiality under GRI, ESRS, and ISSB
Different frameworks use materiality differently, so the first step is to confirm the reporting purpose.
GRI impact materiality
GRI 3: Material Topics 2021 provides guidance on determining material topics. Under GRI, material topics represent the organization's most significant impacts on the economy, environment, and people, including human rights impacts. GRI also expects organizations to explain the process used to determine material topics, list those topics, and describe how each material topic is managed.
If a GRI Sector Standard applies, it should be used when determining material topics. The Sector Standard is not a substitute for company-specific analysis, but it helps identify likely sector impacts.
ESRS double materiality
Under ESRS, companies assess both impact materiality and financial materiality. EFRAG's implementation guidance describes double materiality as a structured process for identifying material impacts, risks, and opportunities across the business model and value chain.
Because EU sustainability reporting rules and ESRS simplification work have continued to evolve, companies should check the current CSRD scope, timing, and final ESRS text before designing a full compliance process. The practical principle remains the same: document the process, evidence, assumptions, and judgments behind the materiality conclusion.
For more detail, see Keslio's guides to getting ready for CSRD reporting and the European Sustainability Reporting Standards.
ISSB financial materiality
ISSB standards focus on sustainability-related financial disclosures for capital markets. The key question is whether information about sustainability-related risks and opportunities could reasonably be expected to affect the company's prospects and influence investor decisions.
This financial materiality lens can be useful even outside formal ISSB reporting because it forces the company to connect sustainability topics to risk, resilience, revenue, costs, access to capital, and strategic planning.
How to run a materiality assessment
A practical materiality assessment usually has seven stages.
1. Confirm the purpose and framework
Start by deciding what the assessment needs to support. Is it for a first sustainability strategy, a GRI-aligned report, CSRD and ESRS readiness, an investor request, a customer questionnaire, a board discussion, or annual report content?
The purpose changes the method. A light strategic assessment may be enough for an early-stage company, while a CSRD-oriented double materiality assessment needs stronger documentation, value-chain coverage, governance review, and traceability.
2. Understand the business context
Map the company's business model, products and services, locations, workforce, ownership structure, value chain, supplier base, customers, regulations, and strategy. This context helps the team identify impacts, risks, and opportunities that generic ESG checklists may miss.
Useful sources include policies, risk registers, customer requests, supplier questionnaires, prior reports, audit findings, incident logs, employee data, emissions data, procurement data, investor materials, and management interviews.
3. Build a long list of topics
Create a broad topic list before prioritizing. Common topics include climate change, energy, emissions, waste, water, biodiversity, circularity, occupational health and safety, workforce practices, diversity and inclusion, human rights, responsible sourcing, data privacy, product safety, anti-corruption, tax, community impacts, and governance.
The long list should reflect sector, geography, business model, value chain, and stakeholder context. It can be informed by GRI, ESRS, SASB or ISSB materials, peer reports, customer requirements, and internal risk documents.
4. Identify impacts, risks, and opportunities
For each topic, describe the actual or potential impact, risk, or opportunity. Avoid scoring vague labels without understanding what they mean for the company.
For example, "climate" might include Scope 1 and Scope 2 emissions, purchased goods emissions, physical climate risks, customer decarbonization requirements, renewable electricity, logistics emissions, and transition risks. "Human rights" might include direct employees, contracted workers, suppliers, subcontractors, or communities affected by operations.
5. Engage stakeholders and experts
Stakeholder engagement should help test whether the topic list reflects reality. Internal stakeholders may include leadership, finance, legal, procurement, operations, HR, sales, risk, sustainability, investor relations, and communications. External stakeholders may include customers, suppliers, investors, lenders, workers, communities, NGOs, or subject-matter experts.
Not every stakeholder group needs the same format. Interviews, workshops, surveys, document review, supplier conversations, and expert input can all be useful. The important point is to record who was consulted, what evidence was used, and how their input affected the assessment.
6. Score and prioritize topics
Scoring should be transparent and proportionate. For impact materiality, companies often consider scale, scope, irremediable character, and likelihood. For financial materiality, companies may consider likelihood, magnitude, time horizon, resilience, revenue exposure, cost exposure, and access to finance.
A matrix can be helpful, but the matrix is not the assessment. It is a way to summarize judgment. The stronger output is a documented list of material topics, the rationale for each conclusion, and the data or stakeholder evidence behind it.
7. Turn results into action
The assessment should lead to decisions. Material topics can shape the sustainability strategy, reporting structure, data collection plan, board agenda, customer response process, supplier engagement program, and communications calendar.
For example, if emissions and supplier practices are material, the next step may be a GHG inventory, Scope 3 data request, supplier questionnaire, and methodology note. If workforce health and safety is material, the next step may be better incident tracking, policy updates, training, and governance reporting.
What evidence to keep
Materiality assessments involve judgment, so documentation matters. Keep a record of:
- The purpose and reporting framework used.
- The entities, geographies, operations, and value-chain activities considered.
- The long list of topics and how it was created.
- Stakeholder groups consulted and engagement methods used.
- Documents, data sources, and external references reviewed.
- The scoring method and thresholds.
- Decisions, assumptions, exclusions, and changes from prior years.
- Management or board review of the results.
- The final material topic list and how each topic will be managed or reported.
This record helps the company explain its approach in a report, respond to reviewer questions, and update the assessment later without rebuilding everything from scratch.
Common mistakes
- Starting with a survey too early: stakeholders can only give useful input if the company has already framed the business context and likely topic list.
- Treating the matrix as the final output: the real output is a documented topic list, rationale, evidence base, and action plan.
- Confusing framework lenses: GRI impact materiality, ESRS double materiality, and ISSB financial materiality are related but not the same.
- Ignoring the value chain: supplier, customer, logistics, product-use, and downstream impacts can be central for many companies.
- Overweighting the loudest stakeholder: stakeholder input matters, but it should be balanced with evidence and expert judgment.
- No governance review: senior management or the board should understand and approve the final material topics.
- No link to data: once a topic is material, the company needs data owners, metrics, evidence, and a plan for annual refresh.
How materiality connects to reporting and communications
Materiality should make reporting and communications sharper. If a topic is material, the company should explain why, how it is managed, what data is available, what progress has been made, and what gaps remain. If a topic is not material for the report, the company should avoid overemphasizing it simply because it is easier to market.
This is also a greenwashing control. Sustainability communication is stronger when it is anchored in material topics, supported by data, and clear about boundaries. Keslio's guide on communicating sustainability efforts without greenwashing explains how to turn evidence into credible messaging.
For data readiness, see best practices in managing ESG data. For GRI reporting structure, see Keslio's practical guide to the GRI Standards.
How Keslio can help
Keslio helps companies turn broad sustainability questions into practical strategy, reporting, and data workplans. For materiality assessments, this can include:
- Confirming the right materiality lens for the company's reporting purpose.
- Building a topic universe based on sector, geography, value chain, and stakeholder context.
- Designing stakeholder interviews, surveys, and workshops.
- Scoring impacts, risks, and opportunities using a documented method.
- Preparing a materiality summary for management or board review.
- Translating material topics into reporting structure, ESG data requests, and communications priorities.
- Connecting material topics to GHG calculations, supplier requests, and customer reporting where relevant.
If you need a materiality assessment that is practical enough to guide decisions and documented enough to support reporting, Keslio's sustainability strategy and reporting and communications services can help.
