ESG Materiality by Sunny Revankar 1697812492

ESG MATERIALITY
A Comprehensive Guide
Prepared by
Sunny Revankar
October 21, 2023
DISCLAIMER
This article is intended to provide
general information about
materiality in ESG and
sustainability. It is not intended to
provide specific advice. The
author does not claim copyright
of the data used in the report. This
article is purely for knowledge-
sharing purposes. TABLE OF
The author has made reasonable
efforts to ensure that the
CONTENTS
information in this article is
accurate and up-to-date, but UNDERSTANDING
does not guarantee MATERIALITY
completeness if the data gets
changed at its source after the
publishing of this article.
KEY PERFORMANCE
INDICATORS
Readers are advised to consult
with a qualified professional for
MATERIALITY MAPPING
specific advice on materiality in
ESG and sustainability.
DOUBLE MATERIALITY
FUTURE PROSPECT
Sunny Revankar
UNDERSTANDING
MATERIALITY
Materiality is a key concept in ESG and sustainability. It refers to the

environmental, social, and governance (ESG) issues that are most important
and relevant to a company or organization and its stakeholders based on their
business or operational activities. Materiality analysis is the process of
identifying and prioritizing these issues.
Materiality is important for ESG and sustainability because it helps companies

and organizations to focus on the ESG issues that have the greatest impact on
their business and stakeholders.
By understanding which Key performance

indicators are material to their business and
stakeholders, companies can develop more
effective ESG strategies and initiatives.
Sunny Revankar
Let's try to understand it with an example. Data security and the percentage of
female employees would be relevant indicators for a bank or a service oriented
company but not for a power generation company. Similarly, employee injury
rate or amount of GHG emission will be important for the power sector
company
Once an organization has identified its material ESG issues, it can use this
information to develop ESG strategies and initiatives to address these issues.
For example, if an organization identifies climate change as a material ESG
issue, it may develop a strategy to reduce its greenhouse gas emissions.
Organizations can use information about their material ESG issues to improve
the quality and relevance of their ESG reporting. For example, an organization
may choose to focus on its material ESG issues in its sustainability report.
Organizations can use information about their material ESG issues to

communicate with stakeholders about their ESG performance. For example, an
organization may publish a statement on its website about its material ESG
issues and how it is addressing them.
Finally, materiality helps companies and organizations to demonstrate their

commitment to ESG and sustainability to stakeholders. Companies and
organizations can build trust and credibility with these groups by showing that
they are focusing on the ESG issues that are most important to their business
and stakeholders.
Sunny Revankar
Key Performance Indicators
Key Performance Indicators (KPIs) in a sustainability report are specific metrics
or measurements used to assess and communicate an organization's
performance in various areas of sustainability. These indicators are crucial for
evaluating how well a company is meeting its sustainability goals and
commitments. KPIs help stakeholders, such as investors, customers,
employees, and the general public, understand the organization's sustainability
efforts and track progress over time.
Here are some common categories of KPIs found in sustainability reports:
Environmental KPIs:
Carbon emissions: Metrics related to greenhouse gas emissions, such as CO2

emissions per unit of production or emissions reduction targets.
Energy consumption: Measures of energy use and efficiency, like energy
intensity or the use of renewable energy sources.
Water usage: Metrics that quantify water consumption, conservation efforts,
and water recycling rates.
Waste management: KPIs related to waste reduction, recycling rates, and
hazardous waste disposal.
Social KPIs:
Employee diversity: Metrics on workforce diversity, including gender, ethnicity,

and age.
Health and safety: Measures of workplace safety, accident rates, and
occupational health programs.
Community engagement: Indicators assessing a company's involvement in
local communities, charitable contributions, and community development
initiatives.
Employee satisfaction: Surveys or assessments of employee well-being and
job satisfaction.
Sunny Revankar
Governance KPIs:
Board diversity: Metrics on the diversity of the board of directors and its
committees.
Ethics and compliance: Indicators related to the organization's adherence to
ethical standards, codes of conduct, and legal compliance.
Anti-corruption efforts: Measures to assess and report on anti-corruption
policies, training, and incidents.
Shareholder engagement: KPIs tracking interactions and engagement with
shareholders on ESG matters.
The specific KPIs included in a sustainability report can vary from one
organization to another, depending on their industry, size, and sustainability
priorities. These indicators are typically quantifiable and are often
accompanied by data, targets, and contextual information to provide a
comprehensive picture of the organization's sustainability performance.
By reporting on KPIs, organizations demonstrate their commitment to
transparency and accountability in their sustainability efforts, allowing
stakeholders to make informed decisions and hold the company accountable
for its environmental and social impact.
Sunny Revankar
MATERIALITY
MAPPING
In this segment, we will see how

the industry leaders are disclosing
their Materiality
Sunny Revankar
Materiality matrix of Wipro extracted from
their Sustainability Report
Materiality matrix of Reliance Industries Limited

extracted from their Integrated Annual Report
Sunny Revankar
Materiality matrix of ITC Limited extracted from
their Sustainability & Integrated Report
Materiality matrix of HDFC Bank extracted from

their Integrated Annual Report
Sunny Revankar
Double Materiality
Double materiality is a concept that refers to the importance of disclosing both

the financial and the non-financial impacts of a company's activities. Financial
impacts are those that affect the company's value, performance, and risk profile,
while non-financial impacts are those that affect the environment, society, and
stakeholders. Double materiality is relevant for investors, regulators, and other
users of corporate information, as it provides a more comprehensive and
balanced view of a company's sustainability performance and strategy.
Some examples of double materiality from the industry are:
A pharmaceutical company that discloses not only its revenues and profits, but
also its research and development activities, its access to medicines initiatives,
its environmental footprint, and its social contributions.
A mining company that discloses not only its reserves and production, but also
its health and safety practices, its human rights policies, its community
engagement, and its greenhouse gas emissions.
The main difference between materiality and double materiality is that double
materiality takes into account the ESG issues that have a material impact on a
company or organization and its stakeholders, as well as the ESG issues that the
company or organization has a material impact on. Materiality, on the other
hand, only takes into account the ESG issues that have a material impact on a
company or organization and its stakeholders.
In other words, double materiality is a more comprehensive approach to ESG

than materiality
Double materiality is becoming increasingly relevant in the context of

sustainability-related financial disclosure, as regulators and standard-setters
are developing frameworks and requirements that incorporate this concept. For
example, the European Union's Corporate Sustainability Reporting Directive
(CSRD) mandates companies to report on both financial and non-financial
materiality aspects using common standards. Similarly, the Global Reporting
Initiative (GRI) Standards use double materiality as a guiding principle for
determining the content of sustainability reports.
Sunny Revankar
FUTURE PROSPECT
The future of ESG materiality is likely to be characterized by the following trends:
Greater focus on financial materiality: Investors are increasingly demanding

that companies disclose and manage ESG factors that are financially material,
meaning that they have a significant impact on the company's financial
performance. This is being driven by a growing body of evidence that shows that
ESG factors can have a positive impact on stock returns, reduce risk, and
improve access to capital.
More dynamic materiality assessments: Companies will need to update their

materiality assessments more frequently to keep up with the rapidly changing
ESG landscape. This is because new ESG risks and opportunities are emerging all
the time, driven by factors such as climate change, technological innovation,
and social movements.
Greater alignment with global standards: There is a growing movement to

develop global standards for ESG reporting and disclosure. This will make it
easier for investors and other stakeholders to compare companies' ESG
performance across different sectors and regions.
Increased use of technology: Technology is playing an increasingly important

role in ESG management. For example, companies are using data analytics to
identify and assess ESG risks and opportunities, and to track their progress on
ESG goals.
Sunny Revankar
THANK YOU.!
Sunny Revankar

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ESG MATERIALITY

Materiality is a key concept in ESG and sustainability. It refers to the

Materiality is important for ESG and sustainability because it helps companies

By understanding which Key performance

Organizations can use information about their material ESG issues to

Finally, materiality helps companies and organizations to demonstrate their

Here are some common categories of KPIs found in sustainability reports:

Carbon emissions: Metrics related to greenhouse gas emissions, such as CO2

Employee diversity: Metrics on workforce diversity, including gender, ethnicity,

In this segment, we will see how

Materiality matrix of Reliance Industries Limited

Materiality matrix of HDFC Bank extracted from

Double materiality is a concept that refers to the importance of disclosing both

Some examples of double materiality from the industry are:

In other words, double materiality is a more comprehensive approach to ESG

Double materiality is becoming increasingly relevant in the context of

Greater focus on financial materiality: Investors are increasingly demanding

More dynamic materiality assessments: Companies will need to update their

Greater alignment with global standards: There is a growing movement to

Increased use of technology: Technology is playing an increasingly important

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