• stratESGy

Materiality: Double and Dynamic


While we fully agree on the need of double materiality -and are convinced that GRI ‘s contribution as a co-constructor of the EU Corporate Sustainability Reporting Directive is essential- we somehow have a different view on the “dynamic materiality” concept as described in a GRI article (The materiality madness: why definitions matter). (1)


Putting recent standards developments into perspective, one may simplify it as differences in EU/US prisms.

Basically, ISSB focus is on financial materiality of ESG and climate risks that could affect investors, thus looking at it under a kind of “US business touch” prism.

The CSRD focus is on financial materiality of ESG risks on company accounts, AND materiality of the company’s activities on their environment and their ecosystem, thus looking at it under “EU political touch” prism.


And then, dynamic materiality comes into play. According to the GRI article, the concept of dynamic materiality is basically a postponement of double materiality. Not to forget, GRI was among the 5 signatories of the “Statement of Intent to Work Together Towards Comprehensive Corporate Reporting” (Sept 2020). This document was a “Summary of alignment discussions among leading sustainability and integrated reporting organisations CDP, CDSB, GRI, IIRC and SASB”. (2)

It mentions: “The nature of sustainability topics, including their interest to different types of users of information and their influence on companies’ performance, can also change, sometimes slowly but sometimes rapidly. We refer to this concept as “dynamic materiality”. (See “Dynamic Materiality: Measuring what Matters” - TruValue Labs, January 2020 (3))” So, at that time GRI was considering dynamic materiality as being part of the landscape.


The reason why we believe dynamic materiality still makes sense today is that it can act as a “transition” phase tool. Today, not all risks are financially quantified. Not all financial decisions impacts on society and the environment are traceable. In an ideal world, all data, for all impacts, for all stakeholders should be measurable and comparable. The CSRD ambition to digitalize ESG data is great and will definitely help address this. But, as we do with carbon neutrality, a transition phase will be needed. As such, dynamic materiality can be a way to keep evolving topics “on the radar” instead of having a defined (but incomplete) list of material topics. We also see it as a way to bring ISSB closer toward double materiality.



(1) https://www.globalreporting.org/media/r2oojx53/gri-perspective-the-materiality-madness.pdf


(2) https://29kjwb3armds2g3gi4lq2sx1-wpengine.netdna-ssl.com/wp-content/uploads/Statement-of-Intent-to-Work-Together-Towards-Comprehensive-Corporate-Reporting.pdf


(3) https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3521035