Always focus on double materiality to document your priorities.
Your ESG initiatives should be reviewed annually.
Every company should have a process for conducting ESG risk and materiality assessments, both as a whole and against each of the 19 risk areas within the ESG spectrum. These risks are changing at an accelerated pace due to shifts in the regulatory environment and evolving consumer and business sentiment regarding ESG risks.
Learn more by reading some of our client stories.
Conducting a materiality assessment is a foundational element of any ESG and Sustainability programme. The materiality assessment must be an annual exercise to accurately identify the changing landscape.
Most companies conduct a risk assessment and pass this off as a materiality assessment. However, a materiality assessment for ESG and Sustainability is somewhat different due to the concept of double materiality. It should be a separate exercise that examines both sides of the ESG and Sustainability spectrum.
Some risk assessments that claim to cover materiality in ESG fail to address double materiality, particularly the aspect that considers the impact the environment might have on your business.
Results
A hybrid materiality and risk assessment of ESG risks spread across multiple countries and businesses.
A system to conduct annual materiality assessments with clear ownership and accountability.
Key increase in understanding of ESG and Sustainability and what it involves in a changing environment.
Situation or challenge
Our client had a risk assessment programme in place for years but had never considered overall ESG and Sustainability risks. They wanted to ensure their risk system followed best practices and included all emerging risk areas covered by ESG and Sustainability. There was also a lack of understanding regarding the company's definition of ESG and Sustainability and the impact of ESG and Sustainability risks. Additionally, the company was not considering double materiality.
Solution
Speeki applied Speeki Focus™ to conduct a risk and materiality assessment exercise focused on ESG and Sustainability risks. We reviewed their current risk identification system, including their knowledge and coverage of ESG and Sustainability risk areas. Training was provided on these key areas to increase awareness of these topics. The risk assessment involved examining each area and assessing it with teams to workshop potential areas of exposure. This was completed with double materiality in mind and also focused on whether these areas were truly material according to a defined method of measuring impact.
Results
The results clearly indicated that the company had much to do in order to integrate ESG and Sustainability risks into their existing risk assessment process.
The major issue was a lack of definition and understanding of the ESG and Sustainability risk areas, as well as an underappreciation of the impact of ESG risk failures on the business and the effects of the business on the planet.
The aim of making the materiality assessment system more robust, relevant, understood, and efficient was well achieved.
