Impact measurement and the concept of materiality—new requirements and approaches for materiality assessments

The materiality of a sustainability topic should be the deciding factor in determining to what extent a company concerns itself with that issue. A materiality assessment is the standard tool used to evaluate this. During such an assessment, companies not only ascertain the relevance of a specific sustainability topic from a stakeholder perspective but also assess the company’s own impacts with respect to the topic. The international financial market increasingly demands impact measurements from companies, and through the EU non-financial reporting directive (EU NFR Directive) the term impacts was explicitly embedded in the German Commercial Code (HGB).

This paper gives an overview of the various definitions and usual interpretations of the term materiality. We will show how most applications take an outside-in approach, which conflicts with the requirements of the GRI Standards in particular. In addition, possible approaches to impact measurement will be presented. We will conclude with a summary of how companies can employ an impact-oriented materiality assessment as the basis for sharpening the focus of their sustainability management.