Decarbonisation and ESG materiality

What it is

A two-part diagnostic. Double materiality asks which environmental and social issues are financially material to this business — could genuinely affect its performance — and separately, which issues this business is material about, meaning its activities have a genuine impact on the world regardless of the financial consequence. Both matter, and CSRD requires reporting on both. The second half establishes the emissions baseline and prices what a credible path to a stated target actually costs.

Financial materiality

Which environmental and social issues could genuinely affect this business's financial performance — through cost, regulation, customer demand or access to capital.

Impact materiality

Which issues this business has a genuine effect on, regardless of whether that effect comes back to hit its own financials. The half most businesses skip, and the half CSRD specifically requires.

The double-materiality matrix

Both dimensions scored for every candidate issue, so the result is a short, evidenced list rather than the sustainability topic list every company in the sector reports identically.

Emissions baseline

Scope 1, 2 and — where material — scope 3 emissions, stated with an honest account of what is measured directly and what is estimated. A baseline presented as more precise than the data supports is a liability, not an asset.

Credible pathway

A costed sequence of actions from the baseline to the stated target, with the hardest-to-abate portions named rather than assumed away by a generic industry curve.

Obligation check

Whether CSRD, SECR or an equivalent regime actually applies to this business, and by what date — the regulatory floor beneath whatever ambition sits above it.

How you run it

1. Establish which obligation actually applies firstCSRD, SECR or an equivalent regime, and by what date. The regulatory floor, established before anything else.
2. Score financial materiality for candidate issuesWhich issues could genuinely affect performance — cost, regulation, customer demand, access to capital.
3. Score impact materiality for the same issuesWhich issues this business has a genuine effect on, regardless of the financial consequence. The half most reporting skips.
4. Build the emissions baseline honestlyScope 1, 2 and material scope 3, with the gaps between measured and estimated data stated rather than smoothed over.
5. Cost a credible pathway to the stated targetSequenced, priced, with the hardest-to-abate elements named specifically rather than assumed away by a generic industry trajectory.

The prompt

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