Impact materiality

A  sustainability  matter  is  material  from  an  impact  perspective  when  it pertains  to  the  undertaking’s  material  actual  or  potential,  positive  or negative impacts on people or the environment over the short-, medium- and long-term. A material sustainability matter from an impact perspective includes  impacts  connected  with  the  undertaking’s  own  operations  and upstream and downstream value chain, including through its products and services, as well as through its business relationships.

The materiality of impacts is a fundamental concept in sustainability reporting that addresses the actual and potential effects of corporate activities on people and the environment. This analysis is conducted with respect to both positive and negative effects and takes into account both direct results of business operations and indirect impacts along the entire value chain. Companies must consider not only their own business practices but also the influences arising from suppliers, products, services, and business relationships.  The materiality of impacts is often illuminated by the Inside-Out perspective, which focuses on how corporate activities affect sustainability issues such as environmental protection, social justice, and human rights. This contrasts with financial materiality, which examines how sustainability issues can economically affect the company itself. The double materiality approach enables a holistic consideration of these questions.  The assessment of materiality is conducted according to various criteria, including the severity and likelihood of impacts, as laid out in the European Sustainability Reporting Standards (ESRS). Companies are required to systematically identify, analyze, and report significant environmental impacts that they cause or that occur within their value chain. This approach is not only relevant for compliance with regulatory requirements but also for developing sustainable business strategies and taking responsibility in society.  Through a comprehensive analysis of the materiality of impacts, companies can better recognize and address their risks, as well as create the foundation for effective sustainability strategies that go beyond mere compliance and take an active role in sustainable development.